Business Credit Building Step 4: Getting Revolving Credit

After 5 trade lines are established using vendor accounts, obtaining revolving accounts is the next step. Revolving accounts are cards a business owner can use and not be required to pay the full balance owed each month. Revolving account approvals will begin coming from stores. Store revolving credit must be obtained before the business owner starts getting Visa, MC, Amex, type cards. Most stores will NOT approve a business owner for business credit unless the owner has an established credit profile and score, just like in the consumer world. Vendor accounts must be used first to establish a profile and score, then store credit can be obtained. It usually takes only 90 days or less to establish a score and profile with trade lines. Most major retail stores offer business credit accounts, although they don’t promote that they do. Major retailers including Walmart, Target, Best Buy, Amazon, Sam’s Club, Costco, Staples, Office De...

Business Credit Building Step 2: Getting Your 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 before you start your business credit building. You can visit www.creditsuite.com/reports to access your business credit reports with Experian, Equifax, and Dun & Bradstreet. You won’t need to get reports with all three, but you should at least have monitoring setup with Dun & Bradstreet, and possibly Experian. Smart Business credit reports from Experian cost $37-175. With these reports you can 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 inquiries.

It typically takes more time to create a file with Equifax Small Business than D&B and Experian. This is because not a lot of vendors and creditors actually report to Equif...

Business Credit Building Step 1: Building Your Business Credibility

The perception lenders, vendors, and creditors have of your business are critical to your ability to build strong business credit. Before applying for business credit a business must ensure 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. 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. Ensure your business name is exactly the same on your corporation papers, licenses, and bank statements. 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 yo...

Business Credit is a 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 credit. This credit is in the business name and based on the business’s 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. There are a ton of benefits that business credit provide including that a credit profile can be built for a business that is completely separate from the business owner’s personal credit profile. This gives business owners DOUBLE the borrowing power as they have both Personal and Business credit profiles built. 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. Approval lim...

Today we’re continuing our look at some of the most frequently asked questions that we’ve received over the years, by answering an inquiry that comes up many times throughout the day: “What do I need for a business loan?”

What the Banks Require for a Business Loan

If you apply for a business loan from your bank -- which is certainly your choice if you decide that’s the right decision for you -- then you should be prepared to submit many official documents, including: 

• P/L statements for at least the last two years (though in some cases longer will be required).
• Your personal and business credit scores, which will need to be very high and virtually flawless -- any dings, even if they occurred years ago, will likely lead to your application being rejected.
• Your strategic business plan, which must be include comprehensive financial projections, marketplace and competitor analysis, and so on.
• A detailed, up-to-date resume for every key staff member in your business.
• A detailed per...

With equity financing, you exchange a percentage of ownership in your business for financing, much like on the TV show Shark Tank. Personal credit is NOT an issue, but equity investors are looking for a tested and proven concept and sales really help approval. You might find some investors to invest in a concept only or invention. But most will want to see that you have an operating business that’s earning money and making profits.

And expect that they’re going to want a large piece of the equity. For it to be worth their time to invest, they might want 10-60% ownership of your business. That means they’ll be taking a large part of your future earnings, something you want to consider before recruiting an investor. There are lots of websites in which you can obtain crowdfunding for your business. This type of funding gathers money from a “crowd”, or a lot of people instead of one big investor. If the crowd likes your idea, they may donate money to your project. Much of crowdfunding doe...

Business credit is a great way to get money as approvals are not based on personal credit. Business credit reports usually get started with a few vendor accounts who will initially offer credit. Initial accounts create tradelines and a credit profile and score are established. The company’s new profile and score are used to get credit. Newly obtained credit is based on the company’s credit per the EIN, not the owner’s credit based on the SSN. Personal credit doesn’t matter as the credit linked to the EIN is used for approval. When you use vendors to build your initial credit, you can then leave your SSN off of the application and can apply for business credit based solely on your EIN at most retail stores. Plus, you can get cash credit also, like high-limit cards with MasterCard and Visa. But building business credit all starts with vendor accounts. Without them, you won’t be able to start your credit profile initially, and that profile being established is the key to getting cash and ...

Collateral based lending lends you money based on the strength of your collateral. Since your collateral offsets the lender’s risk, you can be approved with bad credit and still get REALLY good terms. Common BUSINESS collateral might include account receivables, inventory, and equipment. 

With account receivable financing you can secure up to 80% of receivables within 24 hours of approval. You must be in business for at least one year and receivables must be from another business. Rates are commonly 1.25-5%. You can also use your inventory as collateral for financing and secure inventory financing. The minimum inventory loan amount is $150,000 and the general loan to value (cost) is 50%; thus, inventory value would have to be $300,000 to qualify. Rates are normally 2% monthly on the outstanding loan balance. An example is a factory or retail store. With equipment financing lenders will undervalue equipment by possibly up to 50% and work with major equipment only. Lender won’t combi...

Many businesses have already proven “concept” and have consistently increased sales. Their strength is that they have shown stability and that they can effectively run a growing business. The risk to the lender is less as they are established businesses that are growing. How are your sales? Sales are the difference between an untested concept or idea, and a real operating business. Will your idea be well received? Do YOU know how to operate a business? Sales answer these questions. If you have consistent sales, the next question is does the business have existing cash flow proven by bank statements? There are lending options available that only require a quick bank statement review for approval. They won’t even need to look at your tax returns, so even if your business shows a loss you’ll still be okay. The next question is does the business have over $60,000 annually received in credit card sales? Does the business have over $120,000 annually going through their bank account? If the a...

Most entrepreneurs think that because they have bad credit there is no chance of them getting a loan. But in reality, there are actually many different financing options that business owners have in which they can qualify, even with severe credit challenges. As you already know, banks REQUIRE good credit to get approved for business financing. But still, most people only go to their bank when they need money, because it’s the only place they know to go to. But the most common business bank loan, SBA loans, only account for 1.1% of all business loans (Department of Revenue 2013).The reality is that the big banks are NOT the suppliers of most business loans. And even though they require good credit to qualify, many sources don’t. The big banks are very conservative, as most know. Due to this they commonly won’t lend to businesses in which the business owner has challenged credit. But businesses can succeed even if the owner doesn’t have perfect credit. And many business loans make really...