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Building Business Credit for Small Business

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Building Business Credit for Your Small Business

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Building Business Credit

 

If you hope to qualify for financing for your business without having to use your personal credit then building a solid company foundation with positive business credit history is mandatory.

Here is a brief overview of the steps you will take to move you through the process and get your company on the path to obtaining the funding it needs based on its own creditworthiness.

Shelf Corporations

If you think purchasing shelf corporations will open up the credit floodgates for your company think again! These aged corporations provide the perception of years in business which is important in the eyes of lenders and customers. But there is a lot more to building corporate credit then age alone but if you do decide to purchase one make sure it’s reasonably priced and at least two years old with no liabilities attached.

Dun & Bradstreet

Once you have a corporation set up and completed all the necessary corporate conformity guidelines including but not limited to 411 listings, verifications and licenses you will be ready to register with Dun & Bradstreet.

Establish Business Credit

Once your registered you will need to establish business credit by first applying for vendor credit accounts with companies that report on a monthly basis. Once you get approved and start making purchases make sure to pay your invoices on time and monitor your files.

To get listed with Corporate Experian and Equifax Small Business you will need to establish accounts with companies that report to these specific bureaus.

Business Credit Cards

One of the ways you can start establishing business credit is through a secured card. This helps prevent your company from incurring any revolving debt so it’s a good place to start but as you continue building corporate credit you may soon qualify for no personal guarantee business credit cards.

If you must apply for business credit cards that requires your personal guarantee be sure that it reports your payment history to your business credit files and not your personal credit reports.

Small Business Loans

Obtaining small business loans can be difficult but it’s not impossible. It really depends on the level of bank credit that you have established. I would first focus on securing a business line of credit for your company so you can have the funds readily available when needed. This is much more convenient then having to apply for a loan every time your business needs the funds.

Business Credit Information

Finally you should stay plugged in and up to date with the latest news, resources and business credit information so your company can continue to expand its funding capabilities as well as leverage its diversity of credit.

Building business credit is not something you should spend your precious time or resources trying to figure out. It’s simply smart business to utilize a system that can take you through the process. With the right plan and execution of that plan you can expect your company to qualify for business financing without having to put your personal credit and personal assets at risk.

Looking to access a proven step by step business credit building system? A system  that provides you access to premium vendors, business credit cards, funding sources and lenders that report to all the major business credit bureaus? Become a member of my Business Credit Insiders Circle. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit builder membership helping business owners build business credit. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Small Business Loans for Bad Credit

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Small Business Loans for Bad Credit

Recently I recorded a podcast titled ‘Don’t Let Bad Credit Keep You from Getting a Business Loan’ which covers several ways of obtaining small business loans for bad credit risks.

If you’re in the process of starting a business with bad credit one of the things that I would suggest is starting a personal credit recovery plan.

Now I know time is of the essence for you but as your listen to this podcast and gain some insight into what business financing for bad credit means and what options are available consider the solutions as well.

It’s not a shame to have bad credit due to financial setbacks but it is a shame to keep it.

Are you looking to raise your credit scores?  Need credit repair to jump start your personal credit recovery plan? Be sure to take advantage of all the resources available so you can get back on track.

As you can see a business loan with bad personal credit is possible even during these challenging times. As you work on repairing your personal credit these options can be a temporary solution for your business to obtain the funding it needs. While some of these choices are costly you have to ultimately decide if it’s a price your willing to pay.

To access more business credit building secrets become a member of my Business Credit Insiders Circle! Submit your name and email below for details and receive a free audio seminar ($597 value) =>

About the Author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit building membership helping business owners build business credit. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.

Raise Credit Scores:Product Review

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Raise Credit Scores

In the business world, a strong FICO credit score rating is necessary during the early stages of business financing especially if your small business credit reports are not strong enough.

Due to the current economy and credit markets, banks and lenders are looking at both personal FICO scores and business credit scores. Now keep in mind that if your business credit report can stand on its own they may not require a personal guarantee but can still check your credit scores as part of their underwriting process.

By raising credit scores for both you and your business, you can expect to have much more cash credit and resources available to your company at better interest rates and terms.

One particular product that I suggest to clients in my business credit practice has proven to increase a FICO credit score rating 95% of the time in as little as 60 days, which you and I know is pretty fast.

I’m sure you’ll agree that there are quite a few services out there that promise to raise credit scores, but this is one of the few that really does get the job done.

So how does it work?

First you will need to decide what amount of credit you are looking to add to your personal credit files. Remember the larger the credit line the greater the impact it will have on dropping your debt to credit limit ratios. Currently the unsecured line of credit options range from $5k, $6k, $7,500 and $10k.

Next step is simply opening an account and making a small advance purchase based on the amount of credit you want. For example, if you select the $5k line of credit then you will need to purchase $295 worth of products.

What I really like about this program is that from your advance purchase you get to select from thousands of dollars of merchandise items on their website. So for simply purchasing $295 worth of products you are automatically receiving a $5k unsecured line of credit that reports to your personal credit report with two of the major consumer credit reporting agencies.

Now that’s what I call a solid offer for raising credit scores! Imagine if a store like Best Buy offered its customers a $5k line of credit if they made an initial purchase of $295 at its store. I know that sounds far-fetched but I’m just trying to make a point.

Once your set up you can continue to use this line of credit towards the purchase of over 4,000 books and 5,000 music selections and it’s important that you do so you can continue to build positive payment history.

I also like the fact that they offer a payment option if the $295 is a bit of a stretch for you. You can pay $195 down and $20 a month for 10 months.  Once you enroll you’ll receive a welcome package which includes a bonus cd and payment coupons if you select the payment option.

You can apply for this $5k line of credit online but if you want a greater amount then you will need to fax or email a full credit report first.

By taking advantage of this program and optimizing your scores with the credit rating bureaus the benefits for you on a personal and business level can be very rewarding. Your credit report and scores have the power to lower interest rates, give you better terms on loans and put more money back in your pockets.

Ready to raise your credit scores? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

business credit expert

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for AllBusiness, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in the SBA Community, American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.

Vendor Credit Lines Are Like Small Business Loans

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Vendor Credit Lines

Qualifying for a bank loan or other traditional sources of business financing can seem like an impossible task if you’re like most small business owners that haven’t even begun to establish credit in the name of your business let alone have any type of business credit scores.Vendor Credit

You probably believe that you have no other choice but to use your personal credit but let me share with you a viable alternative before you slap down your plastic.

Vendor credit lines also known as trade credit is when a company extends credit to your company in order to allow you to buy its products and services upfront but defer the payment for a later date.

After you purchase a product they will issue an invoice which must be paid according to the terms of your agreement. If you’re a startup company or have no business credit then most net 30 vendors will have net 10 or net 15 day terms initially. Keep in mind these terms can be extended to net 30, 90 or even 120 day terms if you continue to build a solid payment history with your vendors.

Some of the major benefits include:

  • Conserving Cash Flow – By purchasing products or services and deferring the payments for a later date your business is able to conserve cash and have the funds it may need for other important expenses.
  • Establish Business Credit Scores – As each invoice is paid on time you begin establishing a positive payment history on your company’s credit files. Remember it takes a minimum of four accounts reporting to generate business credit scores on your Dun & Bradstreet business credit report.
  • Improve Credit Capacity – When your vendor credit limits increase so does your company’s overall credit capacity. Larger credit limits showing on your files will improve the overall creditworthiness of your business simply from the fact that banks and lenders will see that other companies are willing to extend credit to you in much larger amounts.
  • No Personal Credit Check or Guarantee – The majority of vendors will not require a personal credit check or guarantee which clearly protects your credit scores and liability.

Now for business credit building purposes there are some key factors that never get mentioned which can make all the difference in the world.

You see not all vendors report your payment history, in fact out of half a million vendors in the U.S. less than 6,000 supply payment data to a business credit bureau.  So either you should select the right companies to apply with or you can always purchase one of DNBs trade reference programs.

Several other factors to consider are the frequency of reporting and how the data is being reported by your vendors. Some report on a quarterly or even yearly basis which does not help in building your profile in a timely manner.

As far as your payment data it’s vital that the actual vendor credit limits that your company is approved for displays on your file not just the amount owed. Some vendors will not report this information and it can have a dramatic impact on how lenders view your company’s creditworthiness plus it affects the size of the credit limit recommendations that business credit bureaus list on your file.

I know this can seem confusing and time intensive but there are ways to streamline this whole process taking all the guesswork and frustration out of the equation. By taking advantage of all the tools and resources available you can improve your company’s ability to qualify for the business financing it needs.

Looking to access vendor credit lines? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

 

Marco CarbajoMarco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit services membership helping business owners build business credit without personal guarantee. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.

What’s on Your Small Business Credit Report?

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Small Business Credit ReportSmall Business Credit Report

 

I’m sure you have a habit of checking your personal credit scores, credit reports and credit card statements on a regular basis but how much attention do you pay to your small business credit report?

While there are several business credit bureaus that collect data let’s stick with the three main ones. Keep in mind that each file you have listed is going be different with each bureau so it’s important that you monitor your files on a regular basis.

Dun & Bradstreet Business Credit Report

This report also known as the Business Information Report or BIR is an overall profile that suppliers and lenders will use to evaluate your company and tends to be the most popular D&B report that creditors pull. The report is pretty extensive because it includes your company’s financial information, history & operations, payment history and details.

Keep in mind that the details of your company like financials are supplied by you when you set up your file so be sure to keep this information updated through eupdate so it matches the numbers you provide on credit applications. Any inconsistencies can cause your company to get declined.

Two things you should pay special attention to is the paydex score and credit limit recommendation listed in your report. A 75 or greater Dun & Bradstreet credit rating is considered a good risk but what carries more weight is the credit limit recommendation.

The conservative credit limit is for companies that prefer to minimize risk as much as possible and the aggressive limit is for creditors that will accept more risk.

Experian Business Credit Report

This report also known as the CreditScore Business Report includes you’re company’s business and credit information. It’s considered Experian’s most popular report used by creditors and specifically you want to pay attention to your business credit score.

A score of 90 or greater is excellent and it’s based on your company’s industry risk, number of trades, length of history and your debt to credit limit ratios. As I mentioned on previous posts you want to avoid selecting a high risk SIC and NAICS classification code for your company because this can have a negative impact on your scores.

Now don’t be surprised if your company is not listed with Experian because the only way to establish a small business credit report is when a supplier or lender reports your company’s payment experience to them.

Equifax Business Credit Report

This report could also be referred to as the Equifax Small Business Report and it includes a summary of your company’s financial and non-financial accounts. One of the unique differences in this file is the two credit rating scores known as the Equifax Credit Risk Score and the Equifax Business Failure Score.

Your risk score can range from 101 to 992 with the higher the number being the lower the risk. Some of the factors that contribute to this include derogatory trades, length of history, credit limit amounts and number of employees.

The failure risk score predicts the chances of your business failing over the next 12 months. This number ranges from 1,000 to 1,880 with the higher the number being the lower the risk of possible failure.

Some of the key factors that determine your score include length of time since the oldest account was opened, debt to credit limit ratios, negative payment history and number of trades.

This is another file that gets created only when a supplier or lender reports your company’s payment data. It’s said to be one of the most difficult bureaus to get listed with and this may be because many of the reporting partners are banks and lenders.

This is why I recommend establishing a reporting bank loan as soon as possible. This not only will have a positive impact on your small business credit report but it will also improve your overall bank rating.

As you can see your business credit files require the same level of attention that you give to your personal credit files. By knowing how your company’s risk level is being rated by the major business credit bureaus the greater level of confidence you will have when you apply for business financing.

Looking to build your small business credit reports? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit builders system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free business credit building audio seminar ($597 value) =>

To Your Success In Business and in Life!

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About the author

Marco CarbajoMarco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com,  have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.

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