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Commercial Credit Cards: 7 Key Steps Before Signing the Dotted Line

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Commercial Credit Cards

 

Major credit card issuers are targeting small business owners in an all out effort to expand its commercial credit card business.

According to Synovate, issuers sent out a whopping 46 million commercial credit card offers in just the first quarter of 2010! That’s over a 250% increase from the previous year while consumer credit card offers only increased by 29%.

With these types of numbers it’s led people like Senator Charles Schumer to believe that credit card issuers are attempting to evade the new restrictions on consumer cards.

Even though the CARD Act does not address commercial credit cards business owners should take a careful look at the benefits that these cards provide over personal credit cards.

Here are some of the major benefits:

  • Obtain higher credit limits
  • Build business credit files
  • Protect personal credit files
  • Control employee spending
  • Take advantage of business perks

These benefits alone should give you reason enough to utilize commercial credit cards for your company. But before you apply here are my seven key steps you should take in order to select the right cards that best fit the needs of your business.

  1. Complete a Credit Assessment – Determine what type of assets you and your company have so you know what types of credit types and limits you can expect to qualify for.
  2. Select Business Credit Applications – After reviewing the six major types of business credit applications decide which ones that your company is willing to apply for. This step alone will prevent you from making costly mistakes and taking unnecessary risks.
  3. Select Commercial Credit Card Types –Each type of card has its own unique purpose so if you are looking for the best small business credit card you should know every type of card that’s available. This will enable you to decide what types of cards will meet your company’s needs.
  4. Identify Cards Matching Your Criteria – Once you have identified the applications and types of cards your company is looking for now you will need to locate the cards that fit your commercial credit card criteria.  This makes the whole process so much easier and less time intensive because you know exactly what you’re looking for.
  5. Review Approval Requirements – As soon as you find cards that match your criteria review the card’s credit qualifications. For example, some cards may require a personal guarantee if your company does not meet certain requirements so be prepared ahead of time before you apply.
  6. Set User Guidelines – If you plan to issue cards to employees be sure to set user guidelines as well as credit restrictions with the card issuer so you can protect your company.
  7. Set Credit Guidelines – As a company it’s vital that you maximize the payment experience being reported on your business credit reports. For example, you decide that each card will not exceed 30% of the debt to credit limit ratio and all invoices will be paid a minimum of 10 days ahead of the due date.

All of these steps are meant to serve as a helpful guide and a reminder to you that all commercial credit cards are not created equal. Choosing cards that meet the guidelines you set will not only empower you but protect you from risks that you’re not willing to take.

Looking for the best commercial credit cards for building business credit? 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,commercial 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) =>

About the author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A step-by-step business credit builder system for busines owners. He is a business credit blogger for AllBusiness.com, 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 American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Extending Credit to Customers: Key Points to Remember

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Extending Credit to Customers

 

During tough times business owners are looking to build more customer loyalty and discover new ways to increase sales. You may have already implemented the specials, bonus gifts, certificates and discounts but there is one option that can make a dramatic impact to your bottom line.

This has proven to improve sales by as much as 50% and may even attract a new kind of customer to your business. By extending credit to qualified customers you not only improve sales but also offer an excellent alternative to those wanting to conserve their cash.

Extending credit allows customers to purchase your products and/or services upfront but defer the actual payment for a later date. In our industry this is known as trade credit or vendor credit. The larger the purchase amounts your average customer makes in your business the greater the risk your company will be exposed to.

If this sounds like a risk that you are not willing to take because you have hard costs that must be covered keep in mind that you are the one that decides what the credit terms will be.

Some businesses are willing to extend 100% financing for their customers while others require a 25% or even 50% down payment towards the amount of the purchase price.

So before you get started there are several key points to remember:

Credit Risk Assessment

Decide what amount of risk your business is willing to accept including whether it has the financial resources to support the transaction. You will also need to consider the chances of never being paid on a purchase as part of this assessment.

Credit Terms and Conditions

Decide how much credit you are willing to extend as well as how long you expect to wait for payment. The terms and conditions can vary all the way from expecting payment in full in as little as 10 days to as long as net 90 day terms or even more.

Requiring a down payment can also minimize your risk which many companies utilize for the first few purchase orders prior to accepting 100% financing.

Credit Approval Qualification

Will you extend credit to both consumers and businesses? If so, how will you determine whether or not they are creditworthy?

For consumers you may decide on a credit application with references or take it a step further and include a credit check with a consumer credit agency.

For business customers you may want to include a business credit application along with checking their business credit file. There are a variety of reports you can pull and if you expect a large amount of applications you can even subscribe to a business credit bureau for unlimited reports.

Credit Policy

Develop a credit policy that covers the entire process of extending credit to customers. From application submission all the way to the collection process if it’s required. The more detail you have in place the better your accountant, sales staff and management can facilitate the program.

Be sure to also look at a customer’s purchase history by conducting a credit review every several months. With a review you may consider increasing the size of their credit limit especially if they are requesting an increase and have a solid payment record to back it up.

By extending credit to customers you can separate yourself from the competition, increase sales and gain a greater market share. While there is risk involved use the key points outlined in this post as a guide to extending credit.

Ready to get listed with the business credit bureaus? 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, merchant 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 Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit solutions membership helping business owners build small business credit. He is a business credit blogger for AllBusiness.com, 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 American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

6 Major Types of Business Credit Applications You Should Know

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Business Credit Application

 

Before you begin applying for credit it’s important to determine what strengths and weaknesses your company brings to the table.

Are you a startup or have you been in business for several years?

Do you have projected revenues or actual revenues coming in year after year?

Does your company process credit cards on a monthly basis? If so, how much volume?

Are you struggling with poor personal credit or do you have strong credit scores?

Does your company have any assets or are you relying on your own personal assets?

Once you have made an honest assessment you’ll have a better idea of what types of credit your company will be able to start obtaining right away.

I have assembled the six major types of business credit applications along with some examples so you can easily identify which best fit the needs of your business.

6 Major Types of Business Credit Applications

  1. Personal Credit Check -Personal Guarantee – Reports to Personal Credit Reports (Business Credit Cards from Chase, Bank of America and other major bank cards)
  2. Personal Credit Check -Personal Guarantee – Reports to Personal Credit Reports and Business Credit Reports (Capital One Business Platinum : that card reports to Corporate Experian, Small Business Equifax, Experian, Transunion, Equifax)
  3. Personal Credit Check –Personal Guarantee – Reports to Business Credit Reports (Discover Business, Comerica Business Mastercard)
  4. Personal Credit Check –Business Credit Check – No Personal Guarantee – Reports to Business Credit Reports (Sam’s Club Business Discover card)
  5. Business Credit Check – No Personal Credit Check –No Personal Guarantee – Reports to Business Credit Reports (First Equity Card, Secured business credit cards, Vendor credit lines)
  6. No Business Credit Check – No Personal Credit Check –No Personal Guarantee – No Business Credit Reporting (Merchant Card)

While most businesses start off with trade credit and secured business credit cards you can easily obtain other types of credit depending on what you are willing and not willing to do.

If you are against a creditor pulling your personal credit then you have to realize that your business must be able to show that it’s a creditworthy company.

Creditworthiness starts with establishing strong business credit files, solid business credit scores and favorable bank ratings.

Ready to start applying for business credit? 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 all types of business credit applications including vendor lines of credit, fleet cards, merchnt 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 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 step-by-step business credit building system for business owners. He is a business credit blogger for AllBusiness.com, 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 American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Consumer Credit Score Ratings below 600 Reach All Time High

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Credit Score Ratings

 

Just recently FICO released data showing that over 25 percent of consumers now have a credit score of 599 or below. That’s a whopping 43 million people that are considered subprime and what’s even more startling is those numbers continue to climb.

Credit scores play such an integral role in our country’s credit system and more consumers need to be aware of how today’s financial decisions will impact tomorrow’s borrowing potential.

In FICO’s world ‘damage points’ are applied to a consumer’s credit score when there is evidence of financial hardship or patterns of risky behavior. Some ‘damage points’ can cause a minimal 10-20 point drop in your scores while others can downright cripple your chance of getting any credit because of a 200 point drop.

Now the real question that plagues consumers is what types of mistakes or patterns trigger ‘damage points’ and how can they go about avoiding the most common mistakes.

The closest thing to address this widespread confusion is by using FICO’s score simulator which basically allows you to see what type of drop or increase you will have on your credit score if you take certain actions.

While it does prove to be helpful it barely scratches the surface when you compare all the other scenarios that you may encounter.

To help you gain a better insight into FICO’s scoring model I have assembled some key tips and strategies that you may find useful.

Leverage your highest credit score

Find out what your credit scores are with Equifax, Transunion and Experian. Once you identify which score is the highest use it to your advantage when applying for credit.

For example, let’s suppose you have an Equifax score of 680 but only a 650 and 645 with the other two agencies. Apply for credit with a creditor that pulls from Equifax so you get the best available rates. It’s that simple!

Lower Overall Debt to Credit Utilization

You can lower your overall debt to credit utilization by paying down your balances and increasing your credit availability. By increasing your credit utilization you can raise your credit scores in a matter of weeks.

Avoid Excessive Inquiries

You can drop your credit score a few points with excessive credit report inquiries. Be sure to review what ‘hard inquiries’ are listed on your reports and take the necessary steps to remove unauthorized ones.

Dispute Inaccurate, Erroneous or Obsolete Information on Credit Reports

Review your credit files and if you uncover any information that is incorrect be sure to file a dispute with the consumer credit agency and repair your credit. A single derogatory item that is incorrect can cost you ‘damage points’ towards your credit score and may end up costing you thousands of dollars in unnecessary interest.

There are many other ways you can maximize your credit scores but one in particular that the majority of business owners need to pay close attention to is business debts reporting on their personal credit files.

This has a dramatic impact on your personal debt to credit utilization ratios along with a host of other factors that can hurt your chances of obtaining personal credit. It’s just smart business to separate your personal credit from business credit otherwise your scores will reflect an entirely different picture of you financially.

Ready to repair your credit? 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 personal credit recovery services, 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 Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit solutions membership helping business owners build small business credit. He is a business credit blogger for AllBusiness.com, 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 American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Company Credit: It’s a Journey Not a Destination

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Company Credit

 

What should you expect when building company credit? How long should it take to obtain the financing your business needs?

There’s no cookie cutter answer to these questions because every business is different and has its own unique contributing factors. For example, a five year old business will have greater business credit opportunities than a company that just opened its doors a month ago.

In addition, the credit needs for every business will continue to change as the business expands and requires additional funding. There’s not a point when a business owner says I’ve arrived because there’s always room for growth, expansion and improvements.

I love using analogies so I thought this would be a great opportunity to share with you a personal story of mine that can be compared to what many business owners face when establishing company credit.

August of last year I took a trip to visit my sister in New Mexico and I never would have imagined that it would be such a life changing experience. During my visit we decided to take on the La Luz trail which was a 10.5 mile hike up the Sandia Mountain which reaches over 10,300 feet.

I thought the hike would be no problem for me because I was in fairly good shape. But, what happened next was not at all what I expected.

After enduring the steep foothills and rough terrain during the first 2 miles I found myself utterly exhausted. My heart felt like it was going to pop out of my chest and my legs and feet were in agonizing pain.

I stopped and realized there was no way I could continue this hike so I turned around and walked back down the mountain. I felt defeated and mad at myself for not being physically capable of finishing what I started.

On the way down I made a promise to myself to make some serious lifestyle changes. I knew I would be coming back next year for a visit and would face the Sandia Mountain hike again.

When I got back from the trip I started going to the gym every day. I even took a before photo shot of my hefty 244pound body.

In just two months I lost 44 pounds, 4 inches off my waist and was working out six days a week. My energy levels soared and I was now in the best shape of my life.

Just last week I went back to New Mexico again to visit my sister and I was ready to take on the La Luz trail hike for the second time. This time I was 44 pounds lighter and also had my 14 year old son with me which was some extra motivation.

After 5 hours, 3,159 calories and 10.5 miles later I reached the top of the 10,357 foot Sandia Mountain! It was an amazing feeling to win and share that success with my family. The right training and preparation paid off and now I’m ready to take on the next big hike!

This personal story of mine is a lot like what business owners may experience when they decide to start establishing company credit.

They begin with positive expectations but lack the much needed preparation and training to complete all the steps required for building company credit. Without being prepared they face setbacks and even roadblocks that prevent them from progressing.

As a business owner you will need to first plan, prepare and then take action. Building company credit is nothing like hiking a big mountain but it sure can feel like an uphill battle without the right training, guidance and support.

Looking to establish company credit? 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 Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit building program providing no personal guarantee business credit. He is a business credit blogger for AllBusiness.com, 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 American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

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