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

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! =>

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 Business Credit With Bad Personal Credit

September 1, 2009 By Marco Carbajo

Credit Report After presenting to REIA of Macomb last week it was clear to me that building business credit was a HOT topic for real estate investors. It was interesting to find that small business owners and real estate investors have similiar questions when it comes to business credit.

As a result of the economic downturn many find themselves being faced with less than perfect credit. While credit repair companies are springing up all over the country there are few like United Credit that can truly deliver.

But in the meantime can you start building business credit with bad personal credit?

Absolutely!

There are vendors, suppliers, leasing companies, and even cash credit issuers that will extend credit to your business solely based on your businesses credit rating. In order for you to obtain cash credit without a personal guarantee first requires you to start establishing strong business credit with vendors & suppliers.

The key is identifying which vendors & suppliers offer the following:

Credit with no personal credit checks
Credit with no personal guarantee
Credit for start ups (great for new entities)
Monthly payment reporting to business credit bureaus

If this part leaves you scratching your head don’t worry we have all this work already done for you if you’re interested. As long as you understand the fact that cash credit without a personal guarantee can only happen once you have established a strong business credit profile.

Here’s a quick comparison on personal credit vs. business credit.

Business Credit Comparison.png.jpg

As you can see there are HUGE differences and the one in particular that should get you really excited is the unlimited amount of business credit files you can establish!

For a complete list of our preferred business credit sources join my business credit community today!

Remember – Abundance is not something we acquire. It is something we tune into. ~ Wayne Dyer

To Your Success!

Marco Carbajo

About the Author

sp_image-435950341-1242740704.pjpeg

Start Business Credit: Business Line of Credit

August 29, 2009 By Marco Carbajo

A business line of credit is a financing tool offered by most business banks. In a nutshell it’s a source of capital that you can access at any time up to a certain amount agreed upon by you and the bank. Usually, there is no collateral required to get approved, and it’s an ideal tool for businesses that are at least 2 years old.

A business line of credit is typically revolving like a credit card and it has no fixed payment terms and is based on an adjustable market based interest rate. Some have a feature of only requiring monthly interest only payments to be made in order to keep the payments small while your business grows. In most cases you can elect to make the full monthly payment of both the principle and interest when you want to and can pay the full balance at any time without penalty prior to the maturity date.

The amount your business is able to receive from a business line of credit will depend on your business past gross annual revenues and projected annual cash flow.

HOT Tip: Most banks will not require business tax returns and profit and loss statements when you keep your credit line of request below $50k.

A good test to see if your business will qualify is to examine your business bank rating to determine if there has been a sufficient average daily balance to adequately support the line of credit repayment. Typically a low 5 bank rating can grant you an approval so be sure to establish a good rating prior to applying.

Here’s what you need to apply for a business line of credit

Business Information

•Business name

•Business address (physical address, no P.O. Boxes)

•Business phone number

•Business fax number

•Business Taxpayer Identification Number(s) (TIN) or Social Security Number(s) (SSN)

•Business Duns Number

•Date the business was established

•Ownership type

•Number of owners

•Gross Annual revenue or sales

•Business banking account number(s) and balance(s)

Business Owner Information

•Name

•Home address

•Home phone number

•Social Security Number(s)

•Country of Citizenship if not United States

•Date of Birth

•Percentage of ownership

•Annual household income

•Personal savings and/or checking account number(s) and balance(s)

Contact Information

•Primary contact (must be an owner of the business)

•Primary contact phone number

•Primary contact email address

One of my preferred banks for business lines of credit is Wells Fargo.

Other banks for business lines of credit that I recommend are:

Capital One

PNC

US Bank

For a complete list of our preferred lenders join my business credit community today!

Remember – Abundance is not something we acquire. It is something we tune into. ~ Wayne Dyer

To Your Success!

Marco Carbajo

About the Author

Top 10 Business Credit Building Mistakes

August 17, 2009 By Marco Carbajo

Building Business Credit Mistakes

Business Credit Building

While many small business owners realize the benefits of starting business credit there are many mistakes that are made in the business credit building process. I felt that compiling a list of the most common mistakes I’ve seen throughout the industry can serve as a helpful guide to you. Here they are…

Choosing the wrong entity structure

Selecting the right entity structure for your business is the most important step you can make. Not just from a business credit standpoint but also from a tax and asset protection standpoint as well. In addition there are state filing fees, franchise fees, licenses, resident agent service and a host of other important factors to consider.

Selecting the wrong SIC code

There are certain codes that the business credit bureaus and lenders tend to stay away from. These industries include real estate investing, car sales, adult entertainment, travel, lending, restaurants, and dry cleaners. When you classify your business be sure to stay away from these classifications.

Selecting the wrong NAICS code

If you plan on investing in real estate then you will want to make sure that the company you build credit on is not “real estate investing”. Most banks will automatically turn you down because this is a high risk category. You still will be able to invest in real estate but you may have to set up a business that does business development, business consulting, marketing & advertising, training and development, etc. and then operate your real estate investments from a separate division or company that does something else.

Using a home or cell phone number as a business phone number

There’s nothing wrong with using these phone numbers but when it comes to business credit building it does matter. Your number has to be listed in the 411 national directories and cell phones and VOIP as well as call forwarding numbers do not work.

Having inconsistent information on business documents

When you start business credit you must pay close attention to details. The information used to open your credit file must match the information you use on applications, documents, and filings.

Applying for credit with the wrong vendors

There are 500,000 vendors in the U.S. that extend credit to businesses but less than 6,000 report to the business credit bureaus. Too many make the mistake of believing that simply doing business with a vendor will result in establishing business credit. Not true!

Applying for credit with vendors that report slow

There are vendors who do report your payment history but only on a quarterly or even yearly basis. Time is of the essence so you have to make sure the vendor you apply with also reports to the business credit bureaus on a monthly basis!

Applying for personal credit cards disguised as business credit cards

Pay special attention to what a credit card application requires and what the terms and conditions are. A credit card that reports only to your personal credit is not a true business credit card

Applying for business credit cards that do not report to the business credit bureaus

There are over 500 business credit cards available in the marketplace but less than 70 report your payment history to the business credit bureaus.

Not establishing an effective bank rating

A minimum of a low 5 bank rating is a must if you plan to apply for a line of credit or loan. You can achieve a low 5 rating with a $10k balance in your account.

To access a complete step by step business credit building system with 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) =>

To Your Success!

Marco Carbajo

About the Author

Marco 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 corporate 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.

Are Credit Cards for Small Business on the Rise?

What has Business Credit done for you lately?

How To Build Business Credit With Bad Personal Credit

Start Business Credit: Business Line of Credit

Top 10 Business Credit Building Mistakes

Business Credit Building

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