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You are here: Home / Archives for how to business credit

How To Build Business Credit With Bad Personal Credit

September 1, 2009 By Marco Carbajo

Credit ReportAfter 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

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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 =>

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Submit Your Email and Receive ‘8 Steps to Building Ultimate Business Credit’ audio FREE ($597 Value)


Filed Under: Business Credit Tagged With: build business credit, build corporate credit, building business credit, business credit, business credit building, business credit help, business credit strategy, business credit without a personal guarantee, how to business credit, start business credit

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.  

Filed Under: Business Credit Tagged With: build business credit, building business credit, business credit, business credit builder, business credit building, how to build business credit, how to business credit, how to business credit building, start business credit

Top 4 Reasons Not to Use Personal Credit for Business

August 13, 2009 By Marco Carbajo

Business Credit Card picStatistics 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 others continue to use the owner’s personal credit cards for business transactions.

Using your personal credit, also known as you’re “Consumer Credit Profile,” instead of establishing Business Credit is a bad idea on many fronts.

 

Here are my ‘Top 4 Reasons Why You Should Not Use Personal Credit for Business.’

 

Reason 1

It impacts your personal debt to credit limit ratios, credit scores, and personal finance capacity for you and your family.

 

This reason alone has caused severe personal credit damage and liability to small business owners across the country who have lost their businesses due to the recession and have used personal credit and personal guarantees for all their business financing. Just ask Kirk Brown, owner of Buck’s Shoes in Fremont, who knows firsthand what using personal credit for business can do.

 

When you properly separate your personal credit from business credit the debt you accumulate for your business should only report to your business credit file not your personal credit file. More importantly you protect you and your family from personal liability when you get approved solely on your businesses’ credit file.

 
Reason 2

When you use your personal credit for the benefit or operation of the 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.

 

It’s always a good idea to build business credit rather than abandon it through the co-mingling of funds–and this includes the “co-mingling” of credit profiles.

 

Many entrepreneurs believe that a corporation protects them because corporations are viewed as separate legal entities but you can jeopardize that protection when you use personal credit for the benefit or operation of your corporation!

 

Reason 3

Another disadvantage of using your personal credit in place of proper business credit is the fact that the use of personal credit for the operation of a company can make your company appear improperly funded or operated, or may incorrectly establish that your business credit is unstable, unreliable, or overextended.

 

Reason 4

Last but not least what might be perfectly normal and acceptable for a business credit profile, such as submitting multiple applications for business credit, can have a serious negative impact on personal credit because of what’s called excessive inquiries.

 

Solution:

Start building business credit for your corporation separate from your personal credit and improve your company’s image, protect you and your family’s assets, credit capacity, and personal liability.

 

Remember – To be prepared is half the victory. ~ Miguel De Cervantes

 

To Your Success!

 Marco Carbajo

About the Author

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Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club.  Click here to visit his blog and signup free to get strategies, resources, and response-boosting tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.

Filed Under: Business Credit Tagged With: build business credit, build corporate credit, building corporate credit, business credit, business credit card, business credit help, business credit strategy, business finance, business finance articles, businesscreditnopersonalguarantee, businesscreditvspersonalcredit, corporate banks, corporate credit, corporate credit program, corporate visa, establish corporate credit, financecorporate, general business credit, get corporate credit, home finance business, homefinancebusiness, how to business credit, instant business credit, obtain business credit, personalcredit, start business credit

Business Loan Finance: How to Get Approved

June 17, 2009 By Marco Carbajo

Business CreditLending institutions want to lend money because it’s the way they make money. However, they only want to lend money to a borrower who is able to repay the loan on time and in full.

When lending small amounts of money under $50,000 typically the qualification depends solely on personal and business credit scores. Depending on the personal and business credit scores, they either will or will not approve the loan.

When deciding to extend credit to a business lenders use the ‘Four Factors for Lending Approval’:

Capacity

Collateral

Conditions

Character

Each of these areas helps the lender to determine the overall risk of the loan. While each of the C’s is reviewed, none of them on their own will prevent or guarantee access to financing. There are really no automatic formulas or guaranteed percentages that are used with the Five C’s. They are only a variety of factors lenders use to evaluate and decide how much of a risk the potential borrower is.

Let’s cover these 4 Factors in greater detail.

Capacity

This is an evaluation of your ability to repay the loan. Capacity is evaluated by several components including cash flow, payment history, and additional cash sources. The best way to show your capacity is with a strong business credit profile, a strong bank rating (typically a low 5), a well designed business plan and/or prior year(s) financials that show you can produce enough cash to repay the loan.

If your loan is under $50k most banks will grant an approval if you have a strong business credit rating, a favorable personal credit score, and a low 5 bank rating.

CLICK HERE for a free business plan course

Collateral

Heavy machinery, inventory, equipment, stocks and bonds, and other expensive business assets that can be sold if a borrower fails to repay the loan are considered collateral. One of the easiest ways to obtain a business loan for building business credit and bank credit is using the CD-Secured loan strategy.

*There are specific banks that do these types of loans that can allow you to grow your access to capital at a much faster rate.

Conditions

Be prepared to prove that the conditions are right for your business. Make sure there’s a market, an industry, positioning, competitiveness, and experience to back up your plan.

Character

Lenders have to believe that a business owner is a reliable individual who can be depended on to repay the loan. Some areas they look into include personal credit history, education, and work experience.

When applying for a small business loan, don’t forget the importance of personal relationships. Apply for a loan at a bank where you already have a positive business relationship. Also, make an attempt to meet with the person who will be evaluating your application, such as a bank’s lending officer, rather than the teller who handles your day-to-day banking transactions.

If you want to succeed in getting a loan, be sure to also check out Elements of a Successful Small Business Loan Application.

*Gain access to my private list of banks that do CD-Secured loans when you join our business credit building system.

Remember – To succeed in business, to reach the top, an individual must know all it is possible to know about that business. ~ J. Paul Getty

Looking to rebuild 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 business credit building audio seminar ($497 value) =>

To Your Success in Business and in Life!

Did This Blog Help You? If so, I would greatly appreciate if you like and shared this on Facebook and Twitter.

About the Author

 Marco Carbajo                                                                                                

Marco 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, Business.com, 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’.

Filed Under: Business Credit Tagged With: bank credit, bank history, bank loans, banking credit, build business credit, build corporate credit, business credit, business credit card, business credit loan, business credit strategy, business finance, business loan, cd secured loan, corporate credit, corporate finance, getting loans approved, how to business credit, how to business loan, micro loan, sba, small business administration, small business banking, small business finance, small business financing

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