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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. 

Business Credit: Top 10 Myths-Part 2

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Business Credit Building MythsBusiness Credit: Top 10 Myths

 

On the previous post I covered the first four myths on building business credit. I encourage you to bookmark these posts so you can revisit them at any time.

Here are the remaining myths of the top 10 surrounding the corporate credit industry:

6: All vendors, suppliers and lenders report to the business credit bureaus

Not true! There are over a half a million vendors and suppliers that are willing to extend vendor lines of credit to your business but less than six thousand of these companies report to the business credit bureaus. What’s even more alarming is not all of these companies report on a monthly basis either. Some only report to the business credit bureaus once every six months!

5: All business credit cards report to the business credit bureaus

Currently there are over five hundred business credit cards in the marketplace but less than forty will issue a card without requiring a personal credit check or personal guarantee. These select cards report solely to the business credit bureaus and not your personal credit reports. However, there are also a few business credit cards that require a personal guarantee but only report to the business credit bureaus.

4: Every business has a business credit profile with the business credit bureaus

A Dun & Bradstreet profile requires that a business owner first apply for a DUNs number and submit their business information. Corporate Experian and Small Business Equifax create a business profile report for your company once a lender or supplier that you have payment experience with submits a data record. There are many other business credit bureaus that require business owners to complete a registration process prior to creating a profile.

3: Buy a shelf corporation and get all the business credit you’ll ever need

Shelf corporations provide certain advantages when it comes to obtaining credit simply from the fact that a business that is five years old has a much greater influence to a lender than a business that’s been in business for a few months.

With that said a shelf corporation alone will not enable you to obtain all the credit you need because there are many other factors that are taken into consideration. For example, if you have a ten year old shelf corporation that needs a $100k business line of credit a bank will need to view your company’s bank rating, balance history, financials, tax returns, profit & loss statements and so on.

2: All you need is a strong paydex score to qualify for a business line of credit

While a strong business credit file does play a part in qualifying banks look at many other factors. This includes your bank rating, balance rating, NSF track record and personal credit scores.

1: All you need is an 80 paydex score to get unlimited business financing

This by far is one of the biggest myths in business credit because an 80 paydex score with Dun & Bradstreet is said to be like having a 720 personal credit score. While that may be true to some degree there are some important details that many fail to mention. For example, you can have four positive trade references reporting with $200 being the highest credit limit on all four accounts and still score an 80 paydex.

This is because DNB’s rating system requires a minimum of four positive trade references but if the four you have are small limits then this hardly qualifies your business to get approved for thousands of dollars of cash credit, lease credit, business loans and business lines of credit.

In addition, having only a DNB file is like having only one personal credit file with the credit reporting agencies. Let’s say all you have is a personal credit file with Equifax but have no file with Transunion or Experian. You would never be able to get approved for a mortgage because you don’t have a completed financial picture for lenders to review your creditworthiness.

This holds true for your business as well. In order to show a complete business credit report for your company then you will need to have a profile with the three main business credit bureaus.

Now that you know the myths surrounding the industry I encourage you to share this information with other small business owners and put your company on the path to corporate credit success!

Business Credit Resources

» Start Business Credit

» Business Credit Insiders Circle

» Business Credit Blog

 

To access business credit insider secrets, premium vendors, leasing companies, business credit cards, 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 CarbajoMarco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insiders Circle. 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.  

Top 10 Myths about Building Business Credit- Part 1

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Business Credit Building MythsBuilding Business Credit Myths

 

Building business credit is one of the greatest opportunities for small business owners. It provides our business with the ability to obtain financing for unforeseen expenses, operations, expansion costs and investments.

There’s so much going on with building corporate credit that there are several different fields devoted to servicing it, including business credit cards, small business loans, accounts receivable factoring, merchant account cash advance, business lines of credit, equipment financing, secured/unsecured loans and many others.

These types of financing have been around for a long time, so you’d think that by now we would know all there is to know about building small business credit. After years of studying and applying every aspect of it, there are still many facets of business credit that remain secretive. And because building business credit is complex, we tend to simplify information about how it works in order to make it more understandable.

This has resulted in many myths about establishing business credit. Let’s look at the 10 myths that have been circulating about business credit, beginning with, of all things, its starting line.

10: Sole proprietorships can establish business credit

A sole proprietorship is not considered a separate legal structure. Instead, it is considered a personal extension of you so you don’t have any protection from them. So every time you apply for credit for your business you will need to supply your social security number as the number that identifies your business.

As a result you are responsible for all debts and agreements you enter into in the name of your business; you’re also on the hook for all of your partner’s actions in the name of your business as well.

9: Using personal credit for business has no effect on the corporate veil

When you use your personal credit for the benefit or operation of your company it can lead to an “alter-ego” decision by regulatory or a financial organization, and a piercing of the corporate veil. This would directly endanger the owner’s personal assets and make the owner or owners directly liable for the penalties or repayment of any debts incurred by the business or corporation.

8: Obtain unlimited business credit for real estate investing

There are certain industries like real estate investing that are flagged as a high risk with the business credit bureaus. If you plan on investing in real estate then you will want to make sure that the company you are building corporate credit for is not “real estate investing”. Most banks will automatically turn you down because your company is operating in a high risk industry. You still will be able to invest in real estate but you may have to set up a business that does business development, business management, business consulting, marketing & advertising, training and development, etc. and then operate your real estate investing from a separate division of the company.

7: Credit repair is illegal and cannot be done.

False.  Consumers have every right to repair their own credit in accordance with the Fair Credit Reporting Act. If you choose to use a credit repair company be sure to verify their track record with the BBB. Also, if you are paying for the service before its rendered be sure the company is in compliance with the Credit Repair Organizations Act (CROA). *Non Profits and Credit Union Service Organizations (CUSO) are exempt from CROA.

 

Read part 2 of the  Top 10 Myths about Business Credit

 

Business Credit Resources

» Start Business Credit

» Business Credit Builder

» Business Credit Blog

To access business credit insider secrets, premium vendors, leasing companies, business credit cards, and lenders that report to all the major business credit bureaus become a member of my Business Credit Insider’s Circle. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

Marco CarbajoMarco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insiders Circle. 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.  

Build Business Credit History on a Shoestring Budget

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Build Business Credit History

Build Business Credit History

 

Business credit builder companies believing it’s too difficult to build company credit on a shoestring budget are in for a pleasant surprise after reading this post. Every business regardless of how small the amount of money it can spend has mandatory expenses it cannot avoid.

These expenses in my book are opportunities for you to build business credit history. No matter what amount of money you’re spending right now to operate and grow your business you can benefit by having it reported on your company’s corporate credit file.

Here is a sample list of the typical expenses every business incurs that can be used to build business credit history:

  • Website development – some companies in the marketplace that develop web sites not only extend credit to start ups but also report your payment experience to the business credit bureaus. If you already have a working web site then make a note of the company that you paid to build it for you.
  • Internet services – are you paying a web hosting fee? If so why not have the monthly fee reported to your file? Are there companies that report web hosting fees to the bureaus? You bet!
  • Phone services – another expense that is so widely overlooked that your company should get credit for on its report.
  • Office supplies – many office supply companies offer vendor credit lines that you can use to purchase supplies your company needs. This is not only a great way to fund your short term needs but also an easy business credit builder.
  • Postage/Shipping – instead of going to the post office and using cash to ship products, letters or materials why not use a shipping company that reports your payment history.
  • Marketing – if you are using a printing company to create your brochures, business cards and marketing materials why isn’t your payment experiences with them being reported on your corporate credit file?

These are just a few of the items I review with my clients in my business credit practice. One of my members who own a home based business marketing children’s books had over twelve positive payment experiences added to her file after we did this exercise. Within two weeks after her profile was updated we got her approved for a $7,500 credit line with a marketing company which she is now using to expand her advertising reach.

It was much easier for her to get those items listed because she enrolled in the duns credit builder program offered at Dun & Bradstreet. This would be a good option if you already have companies that you work with that do not report to the bureaus. But if you’re just getting started then it makes sense to use companies that report so you don’t have to go through the additional work.

You may want to consider the Business Credit Insiders Circle  because we provide you with the companies that offer these services like web hosting, web development, marketing, office supplies and many more that all report to the business credit bureaus.

As you can see this is simply a business credit building strategy that takes what you are already spending to operate and grow your business and have it reported on your company’s credit file. When you showcase your company’s ability to manage its finances on its corporate credit file you can greatly increase the ability for your business to access the cash, credit and financing it may need in the near future.

To your business credit success!

 

To access business credit insider secrets, premium vendors, leasing companies, business credit cards, and lenders that report to all the major business credit bureaus become a member of my Business Credit Insider’s Circle. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

 

Marco CarbajoMarco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. 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.  

Building Business Credit: 20 Steps to No Personal Guarantee

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Building Business Credit

While obtaining business credit cards, small business loans and a business line of credit is the common objective for many small business owners the

Business Credit No Personal Guarantee

re is a growing demand for learning how to qualify without having to use personal credit or a personal guarantee.

I’m happy to see that more and more business owners are embracing the idea of completely separating your personal credit from business credit. Many of

our new members were never aware of the danger that co mingling the use of credit profiles for personal and business can jeopardize the protection of the corporate veil plus limit the amount of funding their business can obtain.

Here are twenty steps to building corporate credit without using a personal guarantee. Please note that I’ve used examples from my business credit building system.

  1. Incorporate your business and obtain a Federal Tax ID#- your Tax ID number will be the number that identifies your business and information. It’s just like how your social security number will identify who you are for personal credit.
  2. Complete corporate conformity (411 listing, verifications, business license, etc.) –vendors, lenders and banks will do their due diligence prior to extending credit to your company. Don’t expect to receive credit by skipping these key fundamental steps.
  3. Select the right business classification codes – avoid selecting codes that will trigger a red flag with the business credit bureaus and lenders. This can stop your business credit building efforts dead in its tracks.
  4. Set up a complete profile with Dun and Bradstreet – Simply obtaining a DUNs number doesn’t cut it you will need to furnish additional information on your profile to give creditors a complete picture of your business. Remember there are companies like First Equity that offer no personal guarantee business credit cards but by invitation only. They purchase targeted lists from the business credit bureaus which you want your company to be on.
  5. Add existing positive trade references – if you have existing trade references to add to your file then you may want to consider using DNB’s business credit builder program which allows you to add your own references but keep in mind there are certain references they will not accept.
  6. Apply for vendor lines of credit – obtaining vendor credit can be simple and some suppliers even specialize in extending credit to startup companies or businesses with no credit at all. The key though is applying for credit with vendors that report each month and report the true credit limits your approved for. Keep in mind that we provide these to you as a member of our Business Credit Insiders Circle.
  7. Pay invoices ahead of the due date – you can increase your paydex score to 90 or higher by simply paying your invoices 10-20 days ahead of the due date. A big plus on your files!
  8. Build solid payment history – while account types and trade lines are a factor keep in mind that a payment track record is the final ingredient. Don’t think that one paid invoice will make your business capable of acquiring no personal guarantee credit lines or credit cards.
  9. Monitor your business credit file – a no brainer and a good habit to adopt for your personal files as well.
  10. Get listed with multiple business credit bureaus –target specific business credit bureaus that cater to your industry on top of the big three.
  11. Set up a small business bank account –before selecting a financial institution for your banking make a list of the financial products you may need. Consider a credit union or community bank because they are much more flexible in today’s economic environment.
  12. Establish a minimum ‘low 5’ bank rating – establish bank credit with your small business bank account.
  13. Obtain secured business credit cards
  14. Open a small business credit line
  15. Establish a diversity of credit – build a strong business credit rating by obtaining different account types. This includes trade credit, revolving credit, loans and leases.
  16. Keep proper financials
  17. Establish a well written business plan – A business plan is your blueprint that outlines every necessary component for the success of your business. Enough said!
  18. Maintain personal credit scores at 680+ – when applying for no personal guarantee credit a lender or creditor may still require a personal credit check.
  19. Build large trade lines with multiple tiers of credit –you can request for a credit limit increase usually after six months of good payment history. Before applying for larger tiers of credit be sure to know what the requirements for approval are.
  20. Stay informed! – join forums, social networks, read articles, subscribe to blogs and consider joining memberships like the business credit insiders circle.

Following these steps will provide your business opportunities to establish business credit in the name of your business while protecting your personal credit and personal liability.

Ready to start building your 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, 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) =>

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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