Building Business Credit

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Building Business Credit
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Business Credit

• Business Credit is credit that is obtained in a
  Business Name
• With business credit the Business builds its own
  credit profile and credit score
• With an established credit profile and score, the
  business will then qualify for greater credit

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Business Credit

• This credit is in the business name and based on
  the businesss ability to pay, not the business
  owners
• Since the business qualifies for the credit, in
  some cases there is no personal credit check
  required from the business owner

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Business Credit

• The business can use its credit to qualify for
  revolving store credit cards like Staples, Lowes,
  Sams Club, Costco, BP, Wal-Mart, even
  MasterCard, Visa, and AMEX
• The business can also qualify for credit lines
  and loans

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Business Credit Benefits

• A credit profile can be built for a business that
  is completely separate from the business owners
  personal credit profile
• This gives business owners DOUBLE the borrowing
  power as they have both Personal and Business
  credit profiles built

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Business Credit Benefits

• Business credit scores are based only on whether
  the business pays its bills on time
• A business owner can obtain credit much faster
  using their business credit profile versus their
  personal credit profile.

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Business Credit Benefits

• When done correctly Business Credit can be built
  without a personal credit check
• Some sources will approve business owners without
  the owner taking on personal liability

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The Steps to Building Business Credit
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Business Credit Building

• A business starts building a brand new credit
  profile much the same as a consumer does
• The business starts with no credit profile
• The business gets approved for new credit that
  reports to the business credit reporting agencies
• The business uses the credit and pays the bill
  timely
• A positive business credit profile is established
• As the business continues using the credit and
  pays bills timely it will qualify for more credit

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Step 1- Build Business Credibility

• The perception lenders, vendors, and creditors
  have of your business is critical to your ability
  to build strong business credit.
• Before applying for business credit a business
  must insure it meets or exceeds all lender
  credibility standards
• There are over 20 credibility points that are
  necessary for a business to have a strong,
  credible foundation

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Business Name

• It is very important that you use your exact
  business legal name
• Your full business name should include any
  recorded DBA filing you will be using
• Insure your business name is exactly the same on
  your corporation papers, licenses, and bank
  statements

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Corporate Entities

• You can build business credit with almost any
  corporate entity type
• If you truly want to separate business credit
  from personal credit your business must be a
  separate legal entity not a sole proprietor or
  partnership
• Unless you have a separate business entity
  (Corporation or LLC) you might be "doing
  business" but you are not truly "a business
• You need to be a Corporation or an LLC in order
  to separate personal from business credit

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EIN

• Whether you have employees or not, your business
  entity must have a Federal Tax ID number (EIN)
• Just like you have a Social Security Number, your
  business has an EIN
• Your Tax ID number is used to open your bank
  account and to build your business credit profile
• Take the time to verify that all agencies, banks,
  and trade credit vendors have your business
  listed with the same Tax ID number

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Business Address

• Business Address
• Must be a real brick-and-mortar building
• Deliverable physical address
• Cannot be a home address
• Cannot be a PO Box
• Cannot be a UPS address
• Some lenders will not approve and fund unless
  this criteria is met

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Business Address

• Business Address Solutions
• Address Only - Receive mail and packages at your
  dedicated business address.
• Virtual Office - Professional business address,
  dedicated phone and fax numbers, receptionist
  services, and part-time use of fully furnished
  offices and meeting rooms.
• True Office - Your own full-time private office
  with receptionist services, dedicated phone and
  fax, internet, full furnishings, meeting rooms,
  and more.

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411

• You must have a dedicated business phone number
  that is listed with 411 directory assistance,
  under the business name
• Lenders, vendors, creditors, and even insurance
  providers will verify that your business is
  listed with 411
• A toll-free number will give your business
  credibility, but you must have a LOCAL business
  number for the listing with 411 directory
  assistance

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Phone Number

• Lenders perceive 800 Number or toll-free phone
  numbers as a sign of business credibility
• Even if you're a single owner with a home-based
  business, a toll-free number provides the
  perception that you are an even bigger company
• It's incredibly easy and inexpensive to set-up a
  virtual local phone number or a toll free 800
  number

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Phone Number

• A cell or home phone number as your main business
  line could get you "flagged" as an un-established
  business that is too high of a risk.
• DON'T give a personal cell phone or residential
  phone as the business phone number
• You can forward a virtual number to any cell or
  land-line phone number

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Fax Number

• Lenders perceive a credible business as one with
  a fax number
• As a business you will need a fax number to
  receive important documents, you will also need
  it to fax in some of your credit applications
• You can setup an e-fax that goes directly to your
  email

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Website

• Credit providers will research your company on
  the internet
• It is best if they learned everything directly
  from your company website.
• Not having a company website will severely hurt
  their chances of obtaining business credit
• There are many places online that offer
  affordable business websites so you can have an
  internet presence that displays an overview of
  your company's services and contact information.

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Email

• It is important to get a company email address
  for your business.
• It's not only professional, but greatly helps
  your chances of getting the thumbs up from a
  credit provider.
• Setting up a business email address is just too
  easy and inexpensive to neglect

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Email

• Avoid using free email services like Yahoo and
  Hotmail
• There is nothing worse than credit providers
  seeing an email address like partychic2009_at_yahoo.c
  om
• The Email address should be _at_yourcompany.com
• A great example is an email like
  support_at_yourcompany.com or john.smith_at_yourcompany.
  com

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Bank Account

• Your business banking history is vital to your
  future success of being able to secure larger
  business loans
• The date you open your business bank account is
  the day that lender's consider your business to
  have started
• So if you incorporated your business 10 years
  ago, but you just opened the business bank
  account yesterday, then your business started
  yesterday
• The longer your business banking history, the
  better your borrowing potential will be

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Licensing

• One of the most common mistakes when building
  credit for your company is non-matching business
  addresses on your business licenses
• Even worse is not having the "required" licenses
  for your type of business to operate legally
• You will need to contact the State, County, and
  City Government offices to see if there are any
  required licenses and permits to operate your
  type of business

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Licensing

• State business filings listed correctly
• County license and/or permit filings listed
  correctly
• City license and/or permit filings listed
  correctly
• IRS filings listed correctly

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Business Listings

• Take the time to verify that main agencies
  (State, IRS, Bank, and 411 national directory)
  have your business listed the same way and with
  your Exact Legal Name.
• Also take the time to ensure every bill you get
  (power bill, phone bill, landlord, etc.) has the
  business name listed correctly and comes to the
  business address.

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Step 2- Business Credit Reports

• Business Credit reports are offered by Experian,
  Dun Bradstreet, and Equifax
• You will first want to get a copy of your
  business credit reports to see what is being
  reported

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Experian

• Visit http//www.smartbusinessreports.com/ for a
  copy of your Smart Business report
• 49-99 for Smart Business Report
• Find out how many trade lines are reporting, see
  if you have a business credit score assigned, see
  if you have an active Experian Business Profile,
  and check on recent inquries

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Equifax

• You can purchase a copy of your Equifax Small
  Business Credit Report here http//www.equifax.com
  /small-business/credit-report/en_sb
• It typically takes more time to create a file
  with Equifax Small Business than DB and Experian
• This is why it's important to apply with the
  credit providers who report to Equifax
• 99.95 for a full report

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Dun Bradstreet DUNS Number

• Obtaining a Dun and Bradstreet number (D-U-N-S )
  begins the process of building your business
  credit profile with them
• Your D-U-N-S will also play an important role
  in enabling your business to borrow without a
  personal guarantor.
• http//www.dnb.com/
• 299- 699 per DUNS Number

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Dun Bradstreet

• You can also enroll for the DNBi SelfMonitor to
  monitor your credit during the building process
• A subscription for DB Self Monitoring is 39-99
  per month
• Activate your DUNS and get your file a DB
  Rating
• DB Rating can cost between 299-899

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Step 3- Building Business Credit

• A business credit report can be started much the
  same as a consumer report commonly is, with small
  credit cards
• The business can be approved for small credit
  cards to help them build an initial credit
  profile
• These types of initial cards in the business
  world are commonly referred to as vendor credit

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Vendor Accounts

• A vendor line of credit is when a company
  (vendor) extends a line of credit to your
  business on "Net 15, 30, 60 or 90" day terms.
• This means that you can purchase their products
  or services up to a maximum dollar amount and you
  have 15, 30, 60 or 90 days to pay the bill in
  full.
• So if you're set-up on Net 30 terms and were to
  purchase 300 worth of goods today, then that
  300 is due within the next 30 days.

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Vendor Accounts

• You can get products and services for your
  business needs and defer the payment on those for
  30 days, thereby easing cash flow
• And some vendors will approve your company for
  Net 30 payment terms upon verification of as
  little as an EIN number and a 411 listing

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Vendor Accounts

• Always apply first without using your SSN.
• Some vendors will request it and some will even
  tell you on the phone they need to have it, but
  submit first without it.
• When your first Net 30 account reports your
  "tradeline" to Dun Bradstreet, the DUNS system
  will automatically activate your file if it isn't
  already. This is also true for Experian and
  Equifax.

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Vendor Accounts

• You need to have a total of at least five (5) Net
  30 day pay accounts reporting.
• Some vendors require an initial prepaid order
  before they can approve your business for terms.
• Your vendors do not necessarily have to serve
  100 of your business needs.

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Vendor Accounts

• Pay your Net 30 vendor accounts in-full and
  on-time
• You must be patient and allow time for the
  vendors' reporting cycles to get into the
  reporting systems
• It typically takes 3 cycles of "Net" accounts
  reporting to build credit scores

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Vendors- Radio Shack

• Radio Shack is one of the nations most
  experienced and trusted consumer electronics
  specialty retailers providing Computers, Phones
  and Radio, Batteries, Cables and Connectors, Toys
  and Games, and much more.
• Reports To   DB and Experian
• They will pull a business credit report to see
  how your business had paid bills in the past
• If there isn't enough data on the business credit
  report, they will ask for bank and trade
  references
• You must be in business at least 2 years
• DB number required and credit references
• Payment Terms   Net 30
• Call 1-800-442-7221 to get an application. Fill
  it out and fax back it back to 817-415-3909

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Vendors- Laughlin Associates

• Laughlin Associates will make sure you business
  is in corporate compliance with all documents
  including Articles of Incorporation, Corporate
  Minutes, Corporate Resolutions, List of Officers.
  Keeping up-to-date corporate records is a legally
  required task that you must comply with every
  year you are in business. If you dont, youll be
  throwing away all the liability protection and
  other benefits you initially incorporated to
  receive. Laughlin Associates will simplify your
  workload, ensure your documents are correct,
  maintained, and in order, and provide peace of
  mind that can only come from 100 asset
  protection
• Laughlin Associates will approve any business
  that is listed in 411 and has a business bank
  account and EIN number
• They will report all payments to Experian
• It takes up to 30-60 days for you tradeline to
  show up on your credit report from the date of
  purchase
• Low monthly payment reports as Net 30

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Step 4- Revolving Accounts

• After you have established 5 tradelines you will
  be able to start getting approved for revolving
  business credit accounts
• A revolving credit account is one that allows you
  to pay a "minimum due" per month and not the full
  outstanding balance
• These accounts normally report to Experian, DB
  and sometimes Equifax
• Because of how they report, these accounts will
  help build your business credit on a larger scale
  than just the Net 30 day vendors alone

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Revolving Accounts

• Most Merchants and major retailers do offer
  business credit, they just dont advertise it
• There is no benefit to the merchant to promote
  credit with no personal liability if the business
  owner is willing to take on that liability
• So they dont promote their business credit cards
  and regularly ask for a SSN

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Revolving Accounts- Staples

• Staples is an office products mega-retailer that
  sells Office Supplies and Services, Business
  Machines, Computers and Related Products, and
  Office Furniture. Online shopping and ordering
  available or visit a store location.
• Reports To   DB and Experian
• Staples will verify 411 directory while your on
  hold
• EIN Required
• They will check that your business credit files
  are open with DB and Experian.
• They also check to see if your business name and
  address matches your 411 listing
• Payment Terms   Revolving

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Revolving Accounts- Dell

• Visit Dell to buy computers and accessories for
  your Home or Small, Medium Large Business. The
  Dell Business Credit Account is a revolving line
  of credit that provides an easy way to finance
  purchases of Dell equipment.
• Reports To   DB
• Dell regularly approves for 10k with Paydex of
  75 or above with DB
• You shouldnt apply unless you have been in
  business at least 6 months
• They will sometimes check personal credit Payment
  Terms   Revolving

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Continue Applying and Building

• For a strong credit profile insure you have 10
  accounts reporting
• Insure you get approved for at least one account
  with a 10,000 high limit
• With 10 reported accounts and a 10k high limit
  account you can continue building your business
  credit

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Lets Take a Look at the Business Credit Building
Process in Action
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Dashboard
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Dashboard
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Step 1- Credibility
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Application
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Application Requirements
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Step 2- Fundability
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Funding Program Pre-qualification
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Available Funding Programs

• Over 2,100 Lenders and 400 Direct Lenders
• Over 30 core funding programs
• More funding and business credit sources
  available than anywhere else

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Step 3- Business Credit Scores
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Step 4- Vendor Credit
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Vendors
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Step 5- Business Credit
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Business Credit Sources

• Staples
• Office Depot
• Shell
• Home Depot
• Wal-Mart
• Costco
• Amazon
• Dell
• Lowes Sears

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Business Credit Sources

• BP
• Chevron
• Speedway
• Sams Club
• Visa
• MasterCard's
• And More

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Step 6- Funding Revisited
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The Business Credit and Funding Suite

• More funding and business credit sources than
  anywhere else
• Only system which integrates directly with
  Equifax, Experian, and Dun Bradstreet
• Only system where clients can get a free DUNS
  number and Experian Smart Business report
• Only system with certified coaches for business
  credit and funding
• 50,000 Guarantee which guarantees clients will
  be approved for at least 50,000 in business
  credit or funding