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How to Establish Business Credit with a Reporting Bank Loan

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Establish Business Credit with Bank LoanEstablish Business Credit with a Bank Loan

 

When you build business credit nothing looks more powerful on your business credit file than a business loan. The reason behind this is because lenders and creditors know how difficult it can be and the level of scrutiny your business undergoes in order to get a bank loan approval.

While the majority banks are declining loan applications you’re probably wondering how you can possibly get approved for a business loan.

Well I have good news for you because there is a sure fire way to establish business credit with a reporting bank loan even if you are Startup Company with less than perfect credit.

So what is this sure fire bank loan strategy?

It’s called the CD secured bank loan and provides a powerful way to establish corporate credit and bank credit for your business.

So how does it work?

Basically you are securing a loan with a certificate of deposit at the bank willing to offer this type of business loan. You make a deposit into a CD account at a bank that’s SBA approved and your business loan will match 100% of the value of the CD.

When you apply for these loans make sure the exact name of your company is on the application along with your Federal Tax ID. Banks will report your payment history on this loan to Small Business Equifax and Corporate Experian.

Now keep in mind not all banks offer these types of loans and the ones that do will require a minimum loan amount which is typically $5,000. When you have a bank loan that reports on your business credit files you can establish business credit scores and profiles that will enable your business to obtain the cash financing it needs.

Not too long ago I covered how to build a strong business credit file by having the right blend of credit. By adding a reporting bank loan along with vendor credit lines and revolving credit you can imagine how this will look in the eyes of lenders and creditors when they view your file.

Adding a bank loan on your file also helps categorize your file with other businesses with bank loans as well. This will help when creditors and lenders purchase lists from the business credit bureaus for marketing pre solicited credit offers.

This strategy works as long as your personal credit scores are in the mid 600 range. If your scores are low then you may want to consider speaking with a local banker or even use the transfer of ownership strategy.

Once you secure the $5,000 or more you can always deposit the money from the loan and use it exclusively to re-pay itself. Remember your money is in a CD earning interest so it’s best to keep making your loan payments for at least 12 months before paying it in full. If you pay your loan off in a couple of months you will not build enough payment history with the bank and your credit file.

This strategy will help your business establish corporate credit and qualify for offers like pre approved no pg business credit cards.

To access banking contacts that provide CD secured loans consider joining my Business Credit Insiders Circle and add a bank loan to your business credit file today!

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.  

Need to Establish a Business Credit Account for your Non-Profit?

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Establish Business CreditEstablish Business Credit

As a non-profit organization there are many opportunities for you to get business credit? For example, Wal-Mart offers a Community Business Credit Account specifically designed for non-profit organizations such as charities, hospitals, schools or religious organizations.

When you apply for the account you will need to provide the legal name of your organization, your tax exempt 501 (c)(3) number and DUNs number.

You will also need to determine how many authorized buyer cards you want with the maximum set at 99. I also suggest that you consider selecting the purchase order option.

Now on this new business credit account you are required to furnish your social security number but I would suggest leaving it blank if you have a strong Dun & Bradstreet file with an 80 paydex score and at least five or more trade accounts with decent credit limits.

You can complete the new business credit application online but you will need to print it out and fax it upon completion.

Now keep in mind you can build business credit with this account and receive larger extensions of business credit but each month you will have to pay the balance in full because it’s a net 30 account.

The Wal-Mart Community Account Application is specifically designed for non-profits so if you’re company is a for-profit business then you will need to check out Wal-Mart’s Business Credit Account.

As a non-profit I encourage you to establish business credit with companies like Wal-Mart that are willing to provide business credit cards or corporate accounts that cater to non-profit community organizations.

To your Business Credit Success!

Business Credit Resources

» Business Credit Seminar

» 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 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’.

Are Business Charge Cards A Better Alternative to Business Credit Cards?

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Business Charge Card 

Business Charge Card

 

Even though business credit cards allow you to make purchases and carry a balance from one billing cycle to the next the disadvantage of having to pay interest on that balance can become pretty costly.

 Another kind of credit card for your business that may be a better alternative is the business charge card.

 A business charge card is a specific kind of credit card that has all the convenience of a credit card without the costly interest. The balance on a charge card account must be paid in full when the statement is received and cannot be rolled over from one billing cycle to the next like a credit card. Because you can’t carry a balance, a charge card doesn’t have a periodic or annual percentage rate, so there is no rate for a charge card issuer to disclose.

 The specific impact to your business credit bureau is significant because charge cards will not allow you to incur a revolving debt like a credit card will. The larger the balances you carry on your business credit cards the more harm it can cause in your overall debt to credit utilization.

 Here is a list of several business charge cards available in the marketplace:

  • OPEN from American Express offers business card members the OPEN Savings program designed for companies with 100 or fewer employees. Some perks include 5 percent to 20 percent discounts on shipping, travel and business services.
  • Diners Club International has been a leading charge card for business travelers since the 1950s. Features include club rewards, cash access, airport lounge program, a 24-hour emergency travel hotline and a rental-car insurance program.
  • Universal Air Travel Plan is accepted by over 250 airlines and thousands of travel agencies for air travel, service fees and management fees. It’s best for companies that want to restrict charging to airline-related expenses.
  • The American Express Corporate Meeting Card allows all event-related expenses to be charged centrally, so hotel rooms, meals, transportation, and so on, all go on a single bill.

 While using a business charge card makes much more sense than a business credit card there several other important things to consider.

First, a business charge card should only report your payment experience to the business credit bureaus and not your personal credit files. This prevents you from putting your personal credit scores at risk every time your company makes a purchase using your company charge card.

Secondly, some charge cards like Diners Club International will self contain your payment experience and will only report to the business credit bureaus if your account becomes delinquent. While this is good for protecting your personal credit scores it does not help your business credit file because they do not report your positive payment history.

Keep this in mind if you decide to start shopping around for a new business charge card that does not impact your personal credit. Pay special attention to the fine print and don’t hesitate to call and ask questions pertaining to how your payment experience is reported.

One of my favorite types of charge cards is ones that base their approval solely on your business’s credit worthiness. This type of card is the best of both worlds! Once approved your payment history reports solely on your business credit and there is no personal guarantee keeping the liability strictly tied to your business.

I encourage you to be as proactive as possible by selecting business charge cards that report to the business credit bureaus. Don’t hesitate to inquire with vendors, suppliers, and leasing companies how they report your payment experience with them as well. Bottom line it’s smart business to use business charge cards in order to save thousands of dollars in interest and build business credit history.

 

To Your Success!

Marco Carbajo

About the Author

Marco Picture 2009 Super Small pic

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insiders Circle. Want to learn more about how you can start business credit? Become a member and gain access to Marco’s business credit secrets, sources, and information on how to obtain unlimited financing for your business without a personal guarantee? Claim his FREE ‘Eight Steps to Ultimate Business Credit without a Personal Guarantee’ audio seminar ($597 Value), for a limited time by submitting your name and email below =>

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