Small Business Loans

[waynehartwig]

Somebody please tell me what this means?

I went down to my Bank of America to get a small business loan; since AllJeep hasn't sold yet I need the money to start the new venture. I answered their questions but they were having computer issues and couldn't give me answer and said they would call in a few with it. I hadn't heard from them until mid afternoon, so I called. The guy I was talking to said it was declined because of insufficient depth. When I asked what that meant, he couldn't give me an answer. So I asked what score they are looking for. He said no score, depth. When I pried again for the meaning, he said to ask TransUnion, the people they pulled the deciding report from.

Of course I never called Trans - how would they know what depth means. So I got my free report from the three bureaus and still dont' understand.

My TransUnion report is 9 pages long. There are 2 derog accounts from back in 2002 - paid and closed by me. My ex wife had no concept of paying bills, my credit showed it and so does my divorce papers. Since then I have had several home loans, car loans, leases, RV loans, credit cards, student loans, etc. and not 1 late in nearly 7 years. There are 20 satisfactory accounts listed.

I called back today after having a chance to view my report, and they are now telling me it's under review from the underwriter.

The last 2.5 years I haven't worked outside of AllJeep. Not having any derogs in the last 6.5 years shows I pay my bills. My wifes credit is better than mine, according to our scores that we got last month when we refied our house.

So what's the deal? It's not like I'm some college kid with a jewelry store loan and a secured credit card. Somebody explain it to me....

 

[Greg]

Depth refers to large loans; mortgages, big car loans, big business loans, etc. You need to have a long history of big loans to develop credit depth.

I've had credit since I was 15 (have to love Sears Cards! :greg: ) and had small signature loans, small car loans, more than a few lines of credit, credit cards, etc ever since. My credit was excellent, little money owed, etc. Fast forward 10 yrs... When I was 25 I tried to buy my 1st Dodge Ram at $16k. My CU wouldn't loan to me because I didn't have enough credit depth. Had to get my Mom to co-sign. :-\

Additionally, you may have good credit and history, but this credit crunch is effecting people. The problem may not be you, but the banks willingness to lend. They're could just be blaming it on your credit depth.

 

[waynehartwig]

Depth refers to large loans; mortgages, big car loans, big business loans, etc. You need to have a long history of big loans to develop credit depth.

I've had credit since I was 15 (have to love Sears Cards! :greg: ) and had small signature loans, small car loans, more than a few lines of credit, credit cards, etc ever since. My credit was excellent, little money owed, etc. Fast forward 10 yrs... When I was 25 I tried to buy my 1st Dodge Ram at $16k. My CU wouldn't loan to me because I didn't have enough credit depth. Had to get my Mom to co-sign. :-\

Additionally, you may have good credit and history, but this credit crunch is effecting people. The problem may not be you, but the banks willingness to lend. They're could just be blaming it on your credit depth.

That makes more sense. The gal that started taking my info said they raised the requirements to a 700 or better score, which I have. So when the guy on the phone declined me, I was really interested as to why.

Even though I had 700+ scores when I bought my first house, they needed a co signer. Now that makes sense as to why. Because it wasn't my financials or ability to pay. I guess I didn't have the depth then either.

I understand it, but I still don't understand it. I've proven that I pay my bills. I don't understand why they don't think I wouldn't repay this loan.

 

[SAMI]

Jacey and I had a similar issue with 'depth' when applying for our small business loan. In our case though, it was because none of our 6-7 credit lines had been opened for an extended period of time.. The longest line was maybe 4 years? They say they look for lines that've been opened for 6 or more years, to clearly show your record.. Out of all our lines open they were all perfect payments and so on.. They finally did approve us for what we needed, but we backed out.

Sounds like you have a great history.. I can't believe they're shakin you down like that.. I agree that lenders are extra choosey over who they lend their cash to right now.

I wish that someone smart enough would've told me to keep my card open while away in Florida for 2 years(I since do not take money tips from my parents).. Had I kept that card open, my history would be much better than it is now.

-Jason

 

[jdub]

They should teach this in elementary school. Being 27 and having to get Dad to co-sign is a drag due to no depth.

Just a curiosity, what does it mean to have a line open. I have lines open that I never use is that ok?

 

[Greg]

They should teach this in elementary school. Being 27 and having to get Dad to co-sign is a drag due to no depth.

Just a curiosity, what does it mean to have a line open. I have lines open that I never use is that ok?

You're totally right, finances should be taught in school, not learned by mistake. That's one point Robert Kiyosaki makes in his book 'Rich Dad, Poor Dad'. It's a really good read, BTW.

You don't want too many open lines of credit, open lines mean potential debt. You may not have much actual debt, but when they run your credit one thing they look at is how much potential for debt you have. The more potential debt you have, the higher of a risk you are.

IMO you don't need more than 2 credit cards, 3 at the most. If you have 5-6 then you have that much more potential debt.

 

[mikeh]

call oboma LOL.

 

[rollover]

It may be due to Obama's speech tonight.

They may of wanted to wait and see what he says before letting go of their-----our money. LOL

 

[rockreligious]

I dont know if you done it or not, but it doesnt hurt to include a complete buisiness plan to go to underwriting, allows your review to have an understanding of what your getting into to. It seems that no ones going out of there way to lend money, if they have any reserve as to lending you money they wont. You may have to sell them on it.

 

[sixb]

I have never had a co-sighner and I bought my first house when I was 21. Cash talks, banks are more willing to loan when you have a good down payment, it's really just that simple. I also think that even 2 credit cards is to many. I only have 1 for business and 1 for personal, and havent carried a balance since 1995. If you can't pay for it don't buy it, for me it's that simple but thats how I was raised.

As far as a sba loan goes it was just to complicated for me so I just started out real small at first with used manual equipment and built my self up from there.

Most people don't agree with my way of thinking and thats ok, personally I am debt free and very happy and until not so long ago UT was the highest bankruptcy state in the nation so that probably explains why most of you don't agree with me.

 

[Kiel]

Thats how i feel also, The bigger the down takes any questions out of the banks mind. Have purchased all my vehicles and my first home with no co signers, but I do put down decent amounts

 

[waynehartwig]

Rich Dad, Poor Dad is a very good read and I'd advise everyone to read it at least 3 times.

I'm trying to buy a business, so starting out with old machinery isn't going to help. My first lathe was an old 1900's model that I picked up for packing off. It was setup for the over head belt system and I converted it to have a motor on it but with the big flat belt. My current lathe and mill I aqcuired at scrap metal prices. Currently I'm trying to talk the owner into carrying the note for 2 years.

When I went to HS in Emery CO (Emery High), they did teach finances. They didn't get real deap in it, but we got a little bit. IMO it helped get things started. I've always liked money...

Maybe I shot myself in the foot. I had 3 high interest/yearly fee credit cards that I've had for years and I closed them a few months back and got a low interest/no yearly AmEx to replace them. Those were definately the only? items I had on there for any period of time - not counting home or car loans....

I wasn't able or even given the opportunity to submit a plan. Everything was done over the phone at the branch. The only thing the branch does is verify who you are and your legal documents for the person on the phone.

I understand cash talks, and we are going back into an economy where you have to have money to borrow money and prove that you don't need it to get it. I've never been afraid of credit and have no issues in using it - I've never had more than $10k in revolving debt at one time.

I learned early on that the world revolves around credit and if you don't have it, you can't get it. Yes, you can go through life paying cash for everything, but what happens when you all of a sudden need something and don't have the cash? I'd much rather put it on credit then pay it off later.

Anyone know about these guys??
www.advanceme.com