Archives for September 2009

How Business Credit Can Make A Difference

September 30, 2009 By Marco Carbajo

Business credit also referred to as corporate credit, is the ability to obtain financing under the name of a corporation or business rather than an individual person. Now I’m happy to tell you how business credit can make a difference in more ways than you can imagine but first you have to realize that the only way you can benefit is by taking action. Start digging your well before you get thirsty!

Don’t put your business in a position where you are desperately seeking funds to survive and/or expand. You will find that banks and lenders are much more likely to extend credit to a business in large amounts that don’t need the funds when they apply. The best time to build busness credit is when you don’t need the money!

The advantages of having established business credit range from simple operational issues, all the way up to allowing your company to withstand scrutiny from a potential client or potential business partner who may gauge how reliable and proficient your company is by how well your business credit profile reads.

From an operational standpoint, business credit allows you to do several things such as purchase supplies, pay debts, maintain facilities, hire additional staff, compensate for a downswing or upswing in business without depleting your vital cash assets. If you establish business credit you’ll have the ability and the financial resources available to respond to market demands or growth.

Another advantage includes the fact that many lenders and lease providers base their interest rates on what the business credit profile and rating is for your company. Having established credit can lead to incredible savings in interest rates and much more favorable lease and loan terms.

So let’s suppose that you need $50,000 for a piece of equipment for your business. Without a strong business credit rating, your bank will use your personal credit only. If you get approved, you’ll have an interest rate of let’s say 18%. With a D&B report, you can lower your rate to maybe 10% and you don’t have to guarantee the loan with your personal assets. So these are just a few of the examples on how business credit can benefit your company

Finally, instead of putting your personal credit and assets at risk every time your company requires financing you would now be in a position to secure the financing you need with even more favorable terms and lower interest rates without a personal guarantee. That is a major difference from how you may be running your business today!

Some other ways that business credit can make a difference include:

Business credit cards have much higher limits than personal credit cards.
Your corporation has the ability to obtain 10 to 100 times the credit then you can obtain personally
Having the cash lines available for unforeseen expenses like expansion, equipment, operations or fulfillment
Prevent the risk of damaging your personal credit
Prevent the limits that lenders will impose on you for personal credit for you and your family’s needs
Reduce your tax burden and improve accounting
Last but not least you SAVE MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.

How has business credit made a difference for you and your business?

CLICK HERE to become a member and discover what a difference business credit can do for you!

To Your Success!

Marco Carbajo

About the Author

marco-picture-2009-small-pic2

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below To Your Success! =>

Are Credit Cards for Small Business on the Rise?

September 23, 2009 By Marco Carbajo

Many business owners across the country have experienced the cold shoulder from their banks and seen their credit lines reduced as a result of rising losses, the credit crisis, and economic uncertainty. Are credit cards for small business on the rise or decline?

While major credit card issuers like Advanta have left the business earlier this year it’s refreshing to see that banks like J.P. Morgan Chase card services announced today that it plans to launch four more credit cards specifically targeted at small-business owners! Among them will be a credit card that requires the cardholder to pay their balance in full each month similiar to Amex’s card.

Richard Quigley, president of Chase Business Cards said “It’s really going to be small businesses that are going to help pull the U.S. out of the recession.” Now we have all known this from the very beginning of this financial mess but it’s about time that these national banks realize it and do something about it.

Even though this is good news for small business owners there are some that see this as a strategy that banks are pushing simply because business credit cards aren’t covered under the new regulations that restrict issuers from raising rates and fees on consumer credit cards. Whatever the reason is I believe that the more options small business owners have when it comes to credit cards the better. Hopefully Chase will roll out some true business credit cards but I do like that they are positioning themselves to compete with American Express.

Competition is a good thing and when it comes to small business credit cards the winner is the small business owner! For example, Chase’s Ink Bold card—the first charge card offered by a Visa or MasterCard issuer—is aimed at business owners who want to avoid paying interest charges. It comes with a variable credit line that automatically adjusts to the business owner’s spending patterns. Annual fees are $95, but the first year’s fee is waived.

Here are some other aspects to Chase’s new small business credit cards compared to Amex.

Chase’s Four New Small Business Credit Cards – Ink Bold, Ink, Ink Plus and Ink Cash

*They are accepted at twice as many locations worldwide as American Express

* InkSM Bold — Chase’s first pay-in-full charge card with no interest
charges

– Ink Bold has no annual fee for the first year and $95 thereafter

*InkSM — Developed for small business owners seeking business-sized
      credit limits, flexible payment options and online expense management
      tools with the ability to earn rewards from business purchases with no
      limit on how many points may be earned and the points do not expire.

-Ink has no annual fee.

*InkSM Plus — The solution for small business owners seeking
      business-sized credit limits, flexible payment options, online expense
      management tools and the ability to earn rewards from business purchases
      including extra travel benefits with no limit on how many points may be
      earned and the points do not expire. Rewards points also are worth 25
      percent more when redeemed for air travel through Ultimate RewardsSM and
      cardmembers can earn an annual spend bonus of up to 25,000 points.

-Ink Plus has no annual fee for the first year and $60 thereafter.

*InkSM Cash — Designed for small business owners seeking unlimited cash
      back and accelerated earnings on everyday business purchases: dining,
      fuel, home improvement and office supplies. Ink Cash provides
      business-sized credit limits, flexible payment options and online
      expense management tools.

-Ink Cash has no annual fee.

Ouch! I’m sure Amex doesn’t like to see this!

If you like to stay informed and here about the latest news regarding business credit be sure to subscribe to my blog.

Better yet CLICK HERE to become a business credit member and discover what business credit can do for you!

By the way, what would you like to see more of on this blog? Any questions? Let me know 🙂

To Your Success!

Marco Carbajo

About the Author

marco-picture-2009-small-pic2

What has Business Credit done for you lately?

September 14, 2009 By Marco Carbajo

During the early stages of starting and operating a business, many small business owners have become accustom to using personal credit cards to finance purchases, equipment, and even payments to suppliers or vendors. What’s even more alarming is if you personally guarantee each and every credit card, credit line, or loan for your business then you are putting your personal assets and family at risk!

This leads me to ask you “What has business credit done for you lately?”

Statistics show that over 65% off all small businesses use credit cards on a regular basis; but the problem is less than half of those credit cards are actually in the business name.

The single greatest challenge facing small business owners is awareness. Less than ten percent of business owners in America know about let alone understand how business credit is established or how to even generate a business credit rating.

Business credit can do much more than personal credit can or ever should do for your business!

So what is business credit?

It’s the ability to obtain financing under the name of your business entity without using personal credit. Business credit should be separate and based on the corporation’s credit worthiness not yours! Recently Entrepreneur Magazine was quoted as saying “You should differentiate your personal credit from your business credit.”

Entrepreneurs and small business owners who have a separate legal entity for their business have a unique opportunity that no other individual or sole proprietor has. It’s the ability to establish a business credit profile that is completely separate from a personal credit profile.

If you think you’re business is doing just fine and you don’t need the credit think again! The reality is that every business will at one point require an influx of cash in order to cover unforeseen operating expenses, development, expansion, legal fees, inventory or a range of other items the business may require in order to grow. Adopting a ‘cash only’ strategy is a good plan but should never be the only plan.

After the recent economic downturn today’s small business owner is facing a new era when it comes to business financing. Banks, lenders, suppliers, leasing companies and others are making adjustments, adopting new rules, and facing new regulations in the lending arena.

Now more than ever you need to be pro active and establish a new level of financial preparation including a strong business credit profile, a favorable business credit rating, and a solid bank rating. Wells Fargo states “The longer you delay establishing business credit, the longer you delay taking advantage of business loans.”

One of the key advantages of having business credit is instead of putting your personal credit and assets at risk every time your company requires financing you would now be in a position to secure the financing you need with your businesses’ credit. Here are some other benefits of building business credit:

1. Any debt you accumulate for the business would only report to your business credit file not your personal credit file.

2. Eliminate the co-mingling of funds–and this includes the “co-mingling” of credit profiles so you won’t jeopardize the protection of the corporate veil.

3. Protect you and your family from personal liability when you get approved solely on your businesses’ credit file.

4. Improve your personal debt to credit limit ratios by transferring the balances of business debt used with your personal credit to your business credit.

5. Eliminate personal liability you have on your existing business debt by balance transfer from personal credit to your business credit.

6. Increase your personal credit limit availability for you and your family.

7. Increase your businesses’ ability to obtain cash credit 10 to 100 times greater than you can obtain personally.

8. Improve the appearance of your businesses’ funding capacity and stability.

9. Eliminate inquiries on personal credit when applying for business financing.

10. Last but not least you SAVE MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.

CLICK HERE to become a business credit member and discover what business credit can do for you!

To Your Success!

Marco Carbajo

About the Author

How to Build Bank Credit for Your Business

September 8, 2009 By Marco Carbajo

Recently I shared the benefits of building business credit with each of the business credit agencies. Separation of personal and business credit is a must for small business owners in order to eliminate personal liability and protect the integrity of the corporate veil.

While this strategy creates a Paydex, Small Business Credit Risk Score, and Intelliscore for your business it’s not the only rating you should pay close attention to.

Your business will also need to establish effective ‘Bank Credit’.

Bank credit is totally separate from building business credit and in no way affects your ability to build strong business credit scores.

“Bank Credit” makes your business more credible in the eyes of lenders. In this post, I want to share with you the ‘3 Main Components of Building Bank Credit’ which are:

Business Bank Account & History
Bank Rating Number
Obtaining Your First Business Bank Loan

So let’s get started!

Business Bank Account

The first step in establishing positive bank credit is to make sure that your business name and mailing address, as listed on your business bank account, matches exactly how your business name and address appear on any legal paperwork that’s been filed with the State. It must also match exactly with the name and address that appear on your Federal EIN paperwork. If it doesn’t match you’ll have to correct it immediately!

Business Bank History

Most lenders also determine the age of your business by the date you first opened your business bank account and not the date that appears on your Incorporation, LLC, or EIN paperwork. However, in some instances banks may also require 24 months seasoning from the start date of your business as well.

Your business banking history is vital to your ability of being able to secure larger business loans with banks. Lenders will look to see how long that relationship has been established, so once you get your account set-up don’t change banks!

The longer your business banking history, the better the borrowing potential you have.

Bank Rating Number

Your business bank account reflects how you manage your cash flow. Lenders want to know that your business cash flow is capable of handling the business debt and expenses on a consistent basis. Bank accounts with low average daily balances, or that show many NSF returned checks, can get your business loan applications declined right away.

If a loan amount requires a $1,000 month payments then lenders need to see at least a “Low 5” bank rating. Your “Bank Rating” is based on your average daily minimum balance over the last 3 months.

Bank Rating	Account Balance	Bank Rating	Account Balance
Low 4	$1,000 – $3,999	Low 5	$10,000 – $39,999
Mid 4	$4,000 – $6,999	Mid 5	$40,000 – $69,999
High 4	$7,000 – $9,999	High 5	$70,000 – $99,999

Bank ratings consist of three factors…

1. The first factor is your balance rating. This rating is your average minimum balance maintained in your account over a three (3) month period. $10,000 will rate as “Low 5”, $5,000 rates as “Mid 4”, $999 rates as “High 3”, and so on. You need to maintain a minimum “Low 5” bank rating ($10,000) for at least 3 months. Unfortunately, without at least a “low 5” rating, most lenders will assume your business has little ability to repay.

2. The second factor is the bank rating cycle which is three (3) months. You’ll want to have at least a low 5 for the three months prior to applying for larger loans.

3. The third and final factor has to do with how you manage the account. NSF (bounced) checks destroy bank ratings. From this point forward, NSF checks are something you can’t let happen. I would suggest that you add overdraft protection to your account as soon as possible.

Obtaining Your First Business Bank Loan

Getting your first business loan from a bank can seem like an impossible task. The majority of the business loan applications at banks get declined because banks won’t lend to just anybody … or will they?

This one business bank loan strategy provides a powerful boost to building business credit fast. The business bank loan needs to be in the exact name of your company. It should be under your Federal EIN and report to the business credit agencies, specifically Equifax Small Business and Corporate Experian.*

So how do you accomplish this? Under this Bank Loan Program you will be securing a business loan with a certificate of deposit (CD) at the bank that is extending the business loan. You’ll make a deposit into a CD account at an SBA preferred lending bank. Then, you receive a business loan for 100% of the value of the CD.

This process works very well and works every time as long as you’re personal credit scores are not in the low 500 range. If your scores are in the low 500’s, it’s best to try smaller business banks and talk to an individual banker first.

The Benefits of a Secured Bank Loan

It will appear on your business credit report just like any other loan.
There will be no note in the file, or on credit reports, that show it as “secured”.
It will make your business credit report stand out to other lenders and creditors who obviously know how difficult it is to get a business bank loan.

If you’re personal credit is a large issue and you just can’t find a business bank to do the CD program for you … don’t worry. You can still build your business credit without the bank loan; the bank loan just makes it faster.

*N.E.C. members are provided access to our list of banks who have done the CD-Secured Business Loan program

Remember – The secret of business is to know something that nobody else knows. ~ Aristotle Onassis

To Your Success!

Marco Carbajo

About the Author

Welcome to Your Business Credit Membership

September 3, 2009 By Marco Carbajo

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How Business Credit Can Make A Difference

Are Credit Cards for Small Business on the Rise?

What has Business Credit done for you lately?

How to Build Bank Credit for Your Business

Welcome to Your Business Credit Membership

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