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NAIC CODE/SIC CODE CAN GET YOU FLAGGED AS HIGH RISK

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Please Notice:  Applying for corporate credit is more involved at this time due higher standards in application for credit.  It's  unlikely to obtain more than $100,000 in credit lines, involving no collateral and with no guarantor.  Using a shelf company may be considered high risk in obtaining credit, regardless of the source.  Results vary.

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NAIC/SIC CODE AND THE HIGH RISK CLASSIFICATION

 

Your business may get red flagged by D&B solely based on the industry of your business.  Imagine that!

 

A likely way to red flag your business is to select an SIC code/NAIC code that is considered an high risk industry.  SIC stands for Standard Industrial Classification.  The other is called NAIC; North American Industrial Classification. 

 

Important issue here!  D&B uses the outdated SIC code because the government uses SIC.  It was outdated in 1997 because many industries were created, that didn't fall under the SIC.  NAIC was a better fit.  D&B uses SIC because they report and sell data to the IRS and the federal government.  In other words, if your tax return information doesn't match up to what D&B collected about your business, the business may be audited.

What are traditionally "low risk" industries?

  • Agriculture
  • Educational services
  • Fishing
  • Forestry
  • Healthcare
  • Hunting
  • Information
  • Management of companies and enterprises
  • Mining
  • Social Assistance
  • Utilities

What industries are considered moderate risk?

  • Construction
  • Manufacturing
  • Finance and Insurance
  • Real estate leasing
  • Professional, scientific and technical services
  • Administrative support, waste management & remediation
  • Arts, Entertainment and Recreation
  • Accommodation and Food Services
  • Other services, except Public Administration
  • Public Administration

What industries and NAIC codes are red flagged as high risk?

 

  • Aircraft Dealer
  • Auto Dealers
  • Automotive Parts
  • Automotive Repair
  • Automotive Repair
  • Boat Dealer
  • Casinos
  • Check Cashing
  • Consumer Loans
  • Convenience Store
  • Convenience W/Gas
  • Currency Exchange
  • Electronic Fund Transfer
  • Jewelry Store
  • Jewelry/gem
  • Laundromat
  • Liquor Store
  • Money Order Sales
  • Money Transmitter
  • Motorcycle
  • Non-governmental charity
  • Parking Garage
  • Pawn Shop
  • Private ATM's
  • Real Estate
  • Recreational Vehicles
  • Restaurant
  • Retail
  • Tobacco Distributors
  • Transportation and Warehousing
  • Travel Agency
  • Vending Machine
  • Wholesale Trade

 

Source:   

https://www.naics.com/naicswp2014/wp-content/uploads/2014/10/NAICS-ASSOCIATION-High-Risk-and-Cash-Intensive-NAICS-Codes-List.pdf

 

Why?  Many of the above high risk businesses accept cash.  And cash businesses are considered High Risk.  Can you believe that?  Why would a cash business be considered high risk?  Because their revenue cannot be confirmed by D&B.  So, D&B calls them high risk.  They may have other arbitrary reasons.

 

D&B's recommendation of Low Risk, Moderate Risk or High Risk cannot be created when they don't have enough information match your business to the "limit matrix" such as "no industry classification."  Source:

https://creditreports.dnb.com/wcsstore/ConsumerDirect/HelpFiles/ebir/credit_line.htm

 

 

 

 

 

 

 

 

 

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