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Instant Business Credit: Is it a Risk you’re willing to take?

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Instant Business Credit

 

As business owners we always strive to make it as easy as possible for our customers to purchase our products or services. Other than accepting credit cards we find our businesses extending instant business credit to customers as a way to increase sales and build customer loyalty.

It’s the largest use of capital from business to business and remains the #1 alternative to personal and small business loans. The SBA even reports that businesses extending credit is the single largest source of small business lending in America today.

 While extending credit by as little as 30 or 60 day is just like offering instant business loans it’s a credit risk most of us are willing to take. We’re simply providing goods or services in return for a promise to pay.

 But as many business owners have learned during these tough economic times, promises are easily broken.

 Before you decide to extend instant business credit to your customer here is a checklist that you may find helpful:

Extending Credit Do’s

  • Do establish a credit policy that will determine who you will extend credit to, how much credit you will extend and how you will monitor that credit once it has been extended.
  • Do establish a thorough credit application including trade references, banking information, credit check authorization, terms and conditions, and disclaimers.
  • Do have the ability to pull a consumer credit report from one of the major credit reporting agencies in order to determine the creditworthiness of your customer.
  • Do have the ability to pull a business credit report from one of the major business credit bureaus in order to determine the creditworthiness of your business customer.
  • Do exchange payment data with consumer and business credit bureaus so you can reduce customer late payments, defaults, and improve collections.
  • Do offer several options for your customers to pay such as online bill pay, mail-in-payments, and pay by phone.

In addition be sure to look at the amount of business a particular customer gives you. Giving a customer a credit limit because they bring in large volumes of revenue for your business is a smart move. If they also have a long history of supporting your business, then they will be more likely to pay their invoices.

Extending Credit Do Not’s

  • Do not extend instant business credit without having your credit terms in writing.
  • Do not extend credit if your business does not have a significant amount of cash flow.
  • Do not extend credit until you become fully aware with the laws governing consumer credit.
  • Do not extend credit limits to customers greater than the risk your business is willing to take.
  • Do not extend credit to every customer that your business acquires.
  • Do not extend credit unless you have a collection policy in place that can manage and protect your accounts receivable.

The success of any business largely depends on the acquisition of customers. Once you have become established enough to generate solid cash flow you can begin to extend credit to some customers.

While cash is king providing credit like a commercial credit company can benefit your business in several ways including greater customer loyalty and increased sales by as much as fifty percent.  Before you make a decision you may also want to consider asking customers for additional requirements like down payments and personal guarantees. Despite the risks involved the benefits far outweigh the disadvantages.

Looking to access instant business credit sources, premium vendors and business credit cards? 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) =>

To Your Success!

About the Author

Marco Picture 2009 Super Small pic

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 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 The Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.  

Are You Getting Instant Business Credit?

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DollarIf you’re at the beginning stage of applying for business credit for your company than you have probably seen the numerous articles, books, and posts explaining the importance of first starting with vendor credit also known as trade credit.

 

However, one of the biggest mistakes made by small business owners during this stage is applying for the wrong vendor accounts that grant instant business credit.

 

While some may have a tendency to believe that the more the merrier is a sound strategy I tend to totally disagree. The reason is simply getting approved for vendor credit is one thing but what really matters is three critical factors that seem to never get mentioned which are:

 

Reporting

Frequency

High Credit

 

Reporting

There are over 500,000 vendors extending credit to businesses, but less than 6,000 of them report to the business credit bureaus! So part of any sound business credit building strategy should include careful selection of vendors that report to the business credit bureaus. It’s also important to note which business credit bureau they report to.

 

Frequency

In addition you will need to select vendors that not only report to the business credit bureaus but also report on a monthly basis.
Why is reporting on a monthly basis so important?

The reason is there are vendors who do report your payment history but only on a quarterly or even yearly basis. Time is of the essence so if your payment experience is not reporting until months later this can drastically impact the speed in which you plan to build a strong business credit file.

An example of an instant business credit vendor that reports on a monthly basis is a company like Quill.

Quill sells office supplies, cleaning supplies, packing and shipping supplies, school supplies, printing supplies, and more. From filing and storage to hand held computers, Quill has a wide range of discounted top name brand products.

Quill offers a net 30 account and reports to Dun and Bradstreet. Best of all they report your payment history every 30 days. For small orders you can get approved with a listing on the 411 directories and have a working website. New businesses can start out with smaller limits that will increase when you pay on time every month.

 

High Credit

Unfortunately there are vendors who report the balance owing as your high credit limit on your business credit file and not the true credit limit your business has been approved for.

For example, let’s say you’re approved for a $2,000 credit line with a vendor and you purchase an order of $50.

The incorrect reporting by this vendor shows:

High Credit ($) 50

Now Owes ($) 50

 

The correct reporting by the vendor should reflect:

High Credit ($) 2,000

Now Owes ($) 50

 

It’s always best to select vendors that report the true high credit limit that your business has been approved for and not just the balance owing.

 

This factor alone can impact the credit limit recommendation suggested for your business which is provided by the business credit bureaus in your profile report.

 

While you can obtain instant business credit for your business the process of building a strong business credit profile and score does take careful planning and a sound strategy. By revealing these three critical factors I hope to make the process easier and more effective for you.

 

As long as you select vendors that report, select vendors that report timely and select vendors that report true high credit limits than you are well on your way to business credit success!

 

To Your Success!

Marco Carbajo

About the Author

sp_image-435950341-1242740704.pjpeg

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE  “Eight Steps To Ultimate Business Credit Without A Personal Guarantee Audio Seminar“($597 Value), available by simply submitting your email below=>

Top 4 Reasons Not to Use Personal Credit for Business

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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

 sp_image-435950341-1242740704.pjpeg

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.

Start Business Credit : Top 10 Reasons Why

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Corporation picEntrepreneurs 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 opportunity to start business credit by establishing a business credit profile that is completely separate from a personal credit profile. 

 

The main problem still facing today’s small business owner is fewer than 10 percent know about or truly understand how business credit is established and tracked-and how it affects their lives and businesses.

 

Statistics even 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.

 

Here’s what others are saying about the importance of starting business credit:

 

“The longer you delay establishing business credit,
the longer you delay taking advantage of business loans.”

~ Wells Fargo Bank

 

“You should differentiate your personal credit from your business credit.”

~ Entrepreneur Magazine

 

“Before you apply, you should examine your business credit reports.”

~ Inc Magazine

 

 

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 is the ‘Top 10 Reasons Why You Should Start Business Credit Now.’

 

  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. Improve the appearance of your businesses’ funding capacity and stability.
  8. Eliminate inquiries on personal credit when applying for business financing.
  9. Increase your businesses’ ability to obtain cash credit 10 to 100 times greater then you can obtain personally.
  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.

 

Some other benefits include:

 

  • Business credit cards have much higher limits than personal credit cards.
  • Having the larger cash lines available for unforeseen expenses like expansion, equipment, operations or fulfillment
  • Prevent the risk of damaging your personal credit
  • You can build business credit even if you have bad personal credit
  • Prevent the limits that lenders will impose on you for personal credit for you and your family’s needs
  • Reduce your tax burden and improve accounting

 

Still not convinced you need to start business credit?

 

CLICK HERE to listen to a free Business Credit Seminar ($597 Value)

 

Every business will at one point require an influx of cash in order to cover operating expenses, expansion costs, legal fees, inventory or a range of other items the business may require in order to operate. The worst mistake you can make is seeking funding when your business needs it most. Lenders extend cash credit lines to businesses that don’t need the capital. Start digging your well before your business gets thirsty!

 

If you ask any business owner how they financed their business start up the answers usually are:

  • Personal credit cards
  • Tapped into home equity line
  • Personal loan from the bank
  • Personal loan from family & friends
  • Private investors

One of the many risks that business owners face is using their personal assets as collateral or guarantee for business loans and financing. If the business owner defaults on a loan then, valuable items like a car, house, or bank account can be vulnerable to creditors’ claims.

 

Instead of jeopardizing your personal credit and assets every time your company requires financing, you can use the business’ credit rating to secure the financing you need with even more favorable terms and lower interest rates.

 

Start your business credit today!

 

To Your Success!

Marco Carbajo

About the Author

sp_image-435950341-1242740704.pjpegMarco 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 credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.

 

 

 

  

Instant Business Credit :Getting Started

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Instant Business Credit

 

Once you have an entity structure and obtained a Dun & Bradstreet number now it’s time to start building your business credit profile. One of the biggest mistakes made by entrepreneurs attempting to build instant business credit is applying for numerous vendor accounts.

While some may have a tendency to believe that the more the merrier is a sound strategy I tend to disagree. The reason is simply getting approved for vendor credit is one thing but what really matters is whether or not the vendor reports your payment history to the business credit bureaus.

There are over 500,000 vendors extending credit to businesses, but less than 6,000 of them report to the business credit bureaus! So to build your business credit you have to make sure you choose the right vendors to apply with.

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

Here are some examples of instant business credit resources:

Instant Business Credit Vendor

Quill

Quill sells office supplies, cleaning supplies, packing and shipping supplies, school supplies, printing supplies, and more. From filing and storage to hand held computers, Quill has a wide range of discounted top name brand products.

Quill offers a net 30 account and reports to Dun and Bradstreet.  Best of all they report your payment history every 30 days. For small orders you can get approved with a listing on 411 directory and have a working website. New businesses can start out with smaller limits that will increase when you pay on time every month.

Instant Business Credit Membership

Business Credit Insiders Circle

BCIC is a business credit building membership for small business owners providing a step by step business credit builder system including vendor credit lines, business credit cards, funding sources and payment reporting.

BCIC offers a monthly membership account and reports to Dun and Bradstreet. Best of all they report your payment history every 30 days.

Instant Business Credit Card 

Visa® Business Platinum Card

Capital One by far provides the fastest response for business credit approval.  (60 seconds) This card is perfect for new or established business owners who want to build business credit history.

Capital One Small Business offers a 0% introductory APR on purchases until 2010 as well as balance transfers. There’s no annual fee and credit line approvals can be up to $10k.

While you can obtain instant business credit for your business the process of building a business credit profile and score does take some time.  As long as you keep your credit lines active and maintain a solid payment history with minimal balances (less than 30%) you can expect to see your credit lines increase over time.

New credit line approvals for your business will also be larger due to favorable business credit scores and existing credit line capacity.

Looking to access instant business credit with a 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) =>

About the Author

sp_image-435950341-1242740704.pjpeg

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit building membership helping business owners in establishing 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. 

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