BUSINESS CREDIT SUCCESS STEP BY STEP GUIDE TO SETTING UP YOUR BUSINESS CREDIT How to get set up with all three National Business Credit Reporting agencies without paying hundreds of dollars to do so. Direct link email address/ phone number to lenders to set up business credit lines on business EIN number How to get your first business bank loan that reports to the business credit agencies . How to build business credit without using your social security number as personal guarantee. y Travel Cards y Vehicle Leasing y Postage y Advertising Accounts and more‌..
ACKNOWLEDGMENTS Dear Lord I want to thank you for the strength, wisdom and encouragement you gave me while compiling this information. I ask that you continue to cleanse my mind of any confusion and negative thoughts as instructed in your word, and allow this to be a blessing to all those in need, frustrated, and living in financial fear or doubt. Lord you are my strong tower, and by faith we can move all mountains in our path. Lord I commit my works to you, knowing you will establish it for good. I thank you and praise you in Jesus name - A men. Commit your works to the LORD, and your thoughts will be established. Proverbs 16:3
Our goal is to relieve you of having to personally guarantee every level of your business funding. • • • • • • • • •
Your business is already in operation. All the information that provided is 100% accurate and correct. Your business has not already generated negative credit. You do not default on any pre-existing business credit. This includes, but is not limited to late payments. You use starter credit accounts that are established for your business You acknowledge that a minimum of 30 to 45 days is needed to build your company's initial credit report, which is then used to establish credit. You follow and adhere to all of our step by step process. You follow up on manuals specific instructions. Program term is 6-9 months long in length, if you do not obtain an 80 Paydex score
.
What is a Good Business Credit Score? The Paydex Score ranges from 0 to 100, with 90-100 as excellent scores; 80 and below as good; and 70 and below as bad scores. For obvious reason, higher scores indicates better payment performance.
If you don't know the answer to any of the questions below, you are among thousands of business owners who are lost in the maze of how to build business credit. We can provide you the answers to the mystery.
Who are the two largest business credit bureaus? What rights does a business owner have for incorrect information on a credit report? What are the business credit scores? What do business lenders look at? Where do you find companies that grant credit? How do you get a company to grant credit? Which companies report to the business credit bureaus? What credit card companies do not require personal guarantees? Advantages of Having A Business Credit Profile Just by building a business credit profile you will be able to limit the use of your personal guarantee and build business credit regardless of your personal credit history. You will have more cash for the business. Convenience in purchasing. Protection of your personal assets from that of the business. Limit your personal liability from the business. No need for personal credit checks. Purchase vehicles with no personal guarantees. Purchase equipment, computers and more with your business credit. Preparing your business for future lending needs Separating You From Your Business You can separate your personal liability and protect your personal assets from that of the business just by incorporating. It is possible to build a business credit profile for a sole proprietorship or partnership however you are still responsible for all the debts of the company. We recommend building your business credit as a corporation or limited liability company. Other advantages of a corporation are: Separates you from your business. Limited liability of the owners and officers. Lower tax liability. 100% tax deductible insurance. Reimburse 100% of medical expenses. Corporate image. Raise capital and build credit faster. Lower your audit risk as a small corporation. Stock ownership - easier to transfer assets. Protect Your Personal Assets
Biggest Advantage of Having Business Credit The biggest advantage of having a good business credit profile is saving money. By obtaining a more favorable credit score you will lower the interest you pay on loans and leases. For example: Average or No Credit Score
Good Credit Score
Loan Amount
$50,000
$50,000
Length of Loan Interest Rate
10 years 11%
10 years 8%
Payment Total Paid
$689.34 $82,720.80
$606.64 $72,796.80
Total Savings For Having Good Credit $9,924.00 Business Credit Agencies There are two main business credit reporting agencies in the United States that lenders and financial institutions rely on for information to grant credit. The two credit agencies are D&B®* and Experian Business.
DUN & BRAD Over 150 million businesses are registered with D&B®* The credit profile created by D&B®* uses information provided by the business owners and vendors of the business Grants a PAYDEX® score to businesses based on payment experiences of the business Issues a D-U-N-S® Rating based on the financial statements of the business Has a High Risk status for company's that will destroy a company's ability to obtain credit
EXPERIAN Over 14 million businesses are registered with Experian The credit profile created by Experian uses information provided by vendors only Grants an Intelliscore based on payment experiences Is one of the three largest personal credit bureaus
PAY DEX SCORE Score ranges from 0 to 100 A score of 75+ is good Based on payment experiences reported by vendors Need 5 trade references who report to D&B®*
INTELLISCORE Score ranges from 0 to 100 A score of 75+ is good Based on payment experiences reported by vendors Need 2 trade references who report to Experian
DUNN RATING Various rating schedules Based on employee size and financial statements Also takes into account payment history
Business Structures
The best structure for building business credit is one that will: Separate you from your business. Has it's own tax identification number. Separates the debts of the business from that of the owners/officers.
The business structures that will do this are: C Corporation Limited Liability Company (LLC) S Corporation
This is not to say that building business credit can not be accomplished with a sole proprietorship or partnership but in the end it will be limited
The benefits of a S corporation, C corporation or LLC: Limits personal liability of officers and owners. Ability to separate personal and business credit, leveraging both. Protection of personal assets from the business. Protection of corporate assets from the owners and officers. Build a separate business credit profile, with professional help fast. Easier to raise capital. Easier to solicit investors. Lower tax liability. Corporate Image.
Lower risk of IRS audit.
Can business credit enable me to qualify for an SBA loan?
Getting an actual SBA Loan with poor personal credit is very difficult, especially with today's economy. Most SBA Loans are being denied, even to those with good personal credit. But, there are many other resources available to tap into in order to receive creative financing and start or build your business. Trade and Business Credit can be utilized, by using our program, very quickly to obtain computers, leases, company credit cards, lines of credit from wholesalers, etc... There ARE several places to procure SBA micro (under $35k) and 7A loans and the new administration is boosting their efforts. This manual will help you in this process and having solid business credit IS basically a requirement. Others include a solid business plan and other factors banks look at including the SBFE (Small Business Financial Exchange)
D&B™ • • • • •
Over 70 million businesses are registered with D&B™. The credit profile created by D&B™ uses information provided by the business owners and vendors of the business . Grants a PAYDEX™ score to businesses based on payment experiences of the business. Issues a DUNS Rating™ based on the financial statements of the business. Has a High Risk status for companies that will destroy their ability to obtain credit if D&B™ finds information on a company they feel to be inconsistent with their model.
Experian Business™ • • • •
Over 14 million businesses are registered with Experian™. The credit profile created by Experian™ uses information provided by vendors only. Grants an Intelliscore™ based on payment experiences. They are one of the three largest personal credit bureaus.
BusinessCreditUSA™ • • • •
A division of InfoUSA™. Provides inexpensive business credit reports. Relies on information from the business owner. Verifies all information presented to them before placing on the report.
Equifax™ Business •
•
Scores are developed from: • Unique banking and lease payment performance information as provided by the Small Business Financial Exchange, Inc. • Trade payment histories • Public record data • Optional personal credit data on the business principal Available scores include: • Small Business Financial Account Acquisition Score™ • Small Business Financial Account Management Score™ • Small Business/Principal Score™ • Small Business Non-Financial Generic Risk Score™
ClientChecker™ • • • •
The only credit reporting agency dedicated to small businesses. The credit profile created by ClientChecker uses information provided by vendors only. Grants a PayQuo Score™ based on payment experiences. Enables vendors to report on all aspects of working with a business, for a more complete picture
FDInsight™ • • • • •
They are relatively new to the business credit market. Originally made its mark as a personal credit reporting agency for mortgage brokers. They are the second largest credit reporting company in the mortgage broker field. Information on businesses is provided by the business or a third party and then every piece of information is verified by the staff of FDInsight™. They arguably provide the most accurate business credit report in the industry. The company is listed on NASDAQ as FDCC.
LETS GET STARTED! STAGE 1 - FUNDAMENTAL STEPS
Below you will find step by step, do-it-yourself instruction’s on building your own credit file. Check to see if your business name conflicts with other established businesses or if it could potentially cause Trademark infringement. 1. Dun and Bradstreet -Credit Name Search Check to see if any businesses with the same or very similar names are listed with Dun and Bradstreet (D&B). To use D&B's Find a Company search Click Here. Be sure you select "Nationwide" on the "Select a State" drop-down. Your business name should not already be listed with D&B and needs to be unique. The reason for that is you do not want your business always having to explain "why it is not that other business with the same name". 2. Knowx.com -National Name Search Check to make sure that your business name does not conflict with other businesses nationwide. To do that you can use www.Knowx.com. They charge $65 for a national search but it is well worth it. If you would rather not pay the $65 you can run a business name search yourself on each Secretary of State's web site. 3. Trademark -Infringement Name Search Check with the U.S. Trademark office to make sure that your business name will not cause Trademark infringement. To do that for free please Click Here, then click on Search under "Get a Trademark Registration..." From there, select New User Form Search to submit a query. You want to find that your business name is free and clear. Doing this search on your own is a little complicated, please be sure to read all the Trademark Office instructions. If you want to insure that this important search is done correctly we recommend that you use a professional service ..
1. Have a Legal Business "Entity" In order to create and build a "business credit profile" that is separate from your personal credit, you must have a business entity. There is no such thing as a "business loan" to a sole proprietor. That is a personal loan. Without a business entity there is nothing for an investor to invest in or for a lender to lend to. You must separate the business as an entity apart from the personal owners and the only way to do this is setting up a legal business entity such as a corporation, LLC, etc. If you do not have a business entity, SET ONE UP NOW! If you need help establishing your business entity go to and review your online options. Establishing your business as a separate legal entity is where you begin to build a business credit profile that is separate from your own personal credit profile.
2. Business Listing Confirmation Your next step is to confirm that every agency and trade credit vendor has your business listed the exact same way, with the same address and phone number. For example, one might have you listed as "ABC, Inc.", while another has you as "AB Consultants", and yet another as "AB Consultants, Inc.". Take the time to verify that all your accounts (State, IRS, Bank, 411 Directory, power bill, phone bill, landlord, etc.) have your business listed the same way and with your "exact legal name". Also take the time to verify that all agencies, banks, and trade credit vendors have your business listed with the SAME Tax ID number.
3. Physical Location Your business must be real and not just and an attempt to build personal credit by using a business entity. If that is what you are doing STOP HERE! This process will not work for you. Your business must have a physical office space, even if it is at your home. It is at this physical location that your business should receive regular mail, not at a mailbox store , post office box or virtual office. 4. Phone Service and Directory Assistance Your business needs a separate phone line and fax line. The business phone number must be listed with directory assistance. Call 411 and make sure anyone can find your business under the exact business name. If your business is not listed in 411 directory assistance than dial 0 for your service operator and make sure that they get your business listed correctly with 411. You can list your business for free on the yellow pages. You should also avoid voice over IP options like Vonage or Skype.
Check online at: y
www.listyourself.net
y www.superpages.com 5. Email and Web Address Your business should have its own email address and business web site with your business domain name. This is done by going to http://www.godaddy.com and registering a domain name. For example, if your business is "MY COMPANY“, ." you would try to register WWW.MYCOMPANY.COM. You can also use domains that end in .net, .biz, .us, etc.
6. Licenses You must obtain a business license and, if applicable, a tax resale license in the State and possibly County or City where you are conducting business. Following the proper regulator guidelines for operating your business is critical to building a favorable business credit profile.
7. Financials The business should have two years of financial statements. Don't panic or stop here if you haven't been in business for two years. Begin building your financial statements from the day you started the business and keep going with this process. How do you have two years of financials with a business entity that was just set up? If you have been in business as a sole proprietor or partnership prior to forming your business entity, you can use those financials. Ideally, the financials include a balance sheet and income statement for each of the last two years. For credibility I highly recommend that you use a CPA to prepare your financial statements.
8. Tax ID NUMBER Your business entity must have a Tax ID number (EIN), just like you have a Social Security Number. Your Tax ID number is used to open your bank account and to build your business credit profile. Every corporate entity must file a SS-4 form with the IRS to obtain a tax identification number. This number is vital to successfully building your business credit profile. Make sure you have properly established both your Federal and State business tax ID numbers under the exact business entity name. You can get it online at http://www.irs.gov/
9. Bank References Your business entity must have a minimum of one bank reference. It would be great if your business bank account was at least two years old, but more importantly to place your business in a good lending position it should have an average daily balance of at least $7,000 for the last three months. Your business banking reflects how you manage your cash flow. Funding sources want to know that your cash flow is capable of handling the business debt and expenses on a consistent basis.
Accounts that show NSF returned checks can be deal breakers! If a funding request amount requires a $2,000 a month payment, funding sources will want to see at least a "Low 5" bank rating. Your "Bank Rating" is based on your average daily minimum balance over the last 3 months. Here is how "Bank Rating" works. It is based on your average daily balance over the past three (3) months, so your rating would be: I hope you see the pattern here. Having the $7,000 balance gets you rated at a "High 4". Not having it will not stop the
process of building a favorable business credit profile, but it will slow it down. If you
don't have the $7,000, borrow it from family or friends and don't use it, just let it act as your base line in the business account so that your balance never drops below that amount. Even better if it is $10,000, because your rating would be a "Low 5" and that really changes things. Average Bank Balance $1,000 - $3,999 $4,000 - $6,999 $7,000 - $9,999 $10,000 - $39,999 $40,000 - $69,999 $70,000 - $99,999 $100,000 - $399,999
Make sure that your business bank account is reported exactly as your legal business entity name and at the same physical address as your business, not a Mail or P.O. Box. Establish a minimum 'low 5' bank rating - know what your banks are looking for. 10. 2 major Business Credit Reporting Agencies y Experian - Experian reports are developed only from information that is provided by your trade references. ( they will make you subscribe to get a copy of report. www.experian.com y Dun & Bradstreet -D&B provides businesses with a separate credit file number that is used to track and rate your business credit profile. This is called a "D&B number" or "DUNS number". Obtaining a Dun and Bradstreet Number (D-U-N-S #) begins the process of building your business credit history (profile). Monitor your business file! A no brinier and a good habit to adopt for your personal files as well. Don't expect to establish business credit by skipping these key fundamental steps!
STAGE 2 - GET YOUR DUNS NUMBER Getting your "DUNS NUMBER " is FREE! All we are doing here is getting your D-U-N-S "number". This number is how lenders access your business credit profile and it is used to determine the creditworthiness of your
business as a stand alone entity. D&B has a free form to apply for a new D&B number only. This option does not establish a business credit profile. You can apply for your D&B number online at http://www.dnb.com. THE EASIEST WAY TO GET YOUR NUMBER IS TO CALL 1 866 705 -5711. It takes about three weeks to receive your business D&B number and on the pages that follow I will be showing you the steps to build your own profile, absolutely free. BUILDING A POSITIVE BUSINESS CREDIT PROFILE The process of obtaining a D&B number is free and takes about two weeks to receive your number. (DO NOT PAY THIS FEE) D&B also has the Express Service for $499, where they will post your most recent financials and will call your trade references for an initial report. There is no need to pay the $499 that D&B wants to set up your "business credit file". ***The first time a vendor or lender asks for the file, D&B will set up your business credit file for FREE. Potential creditors that ask for your D&B number will send a request to D&B asking for a credit profile on the corporation. If a profile is not already available, D&B will compile one from information D&B will request from your corporation. Then D&B will ask you for financial statements, tax returns, and the trade and bank references listed above. Finally D&B will check the status of the corporation and business licenses along with any existing credit amounts and payment histories from your trade references. All of these items will be reflected in the profile You can check your duns file at http:// www.dnb.com/eupdate for FREE.
STAGE 3 SET UP YOUR TRADES Trade References Remember, our goal is to relieve you of having to personally guarantee every level of your business funding. To do that we must reach a PayDex Score of at least 80.
***MAKE SURE YOU HAVE COMPLETED ALL TEN (10) STEPS ABOVE BEFORE THIS STEP. Your business entity is going to need five (5) to (10) trade references that have given you a credit account and report a favorable credit history to the credit reporting agencies. This can be one of the most difficult steps in the credit building process. Net 30 account vendor list 1st TIER: Net-30 Vendors that report - Uline (www.uline.com) - Quill (www.quill.com) - Seton (www.seton.com) -Tech depot (www.techdepot.com) - Frankin Covey (www.franklincovey.com) - Rapid Forms (www.rapidforms.com) - Gemplers ( www.gemplers.com) - National pens( www.pens.com) - Reliable office supplies (www.reliable.com) - Fedex (www.fedex.com) - Mapsco (www.mapsco.com) - Lab saftey (www.labsafety.com)
2nd TEIR Vendors: - Staples (www.staples.com) - May have to fax your business phone bill - Office depot (www.officedepot.com) - Shell (https://www.citibank.com/us/cards/shell/index.jsp) - Officemax (www.officemax.com) - Home depot (www.homedepot.com - Chevron - Capital one business credit builder credit card
A word of caution, if you skip the order and apply for bigger accounts before you have smaller ones set up, your application will be declined. After you've started with the above companies, start working for a few more. Remember the goal is to charge...and pay off...over and over so that you can build yourself a good business credit score.
Accurate Office Supply (800) 325-2551 Requirements: PG: No Paydex: No Net 30, revolving account, 3 trades and 1 bank trade. Call to have application faxed to you. Reports to D&B, but does not report to Experian.
Best Buy (800) 811-7276 Requirements: PG: No Paydex: Yes 65+ At least 2 years in business. Hold off a bit on this one...Best Buy is one of the tougher companies for approval. Chevron (888) 243-8358 Requirements: PG: Yes Paydex: No At least 2 years in business, DNB check revolving acct net 30. Apply on-line. Reports to D&B and Experian. Conoco, Inc. (800) 764-9500 Requirements: PG: No Paydex: No Net 30-full balance, apply on-line located in 23 states, ask for locations. Reports to D&B and Experian. Diners Club (800) 234-6377 Requirements: PG: Yes Paydex: No Corporation accounts (minimum 5 cards) 3 years in business, $200,000 net worth, each card holder gives personal guaranty. Call to apply. Does not report to D&B or Experian. Exxon Fuel (800) 438-3996 Requirements: PG: Yes Paydex: No Net 30-full balance, 1 year secured or 3 years in business. Apply on-line. Does not report to D&B. Reports to Experian. Fry s Electronics (714) 688-3000 Requirements: PG: No Paydex: No 3 trades, 1 bank trade, net 30-full balance. Must submit financials and balance sheet before approval. Does not report to D&B or Experian Home Depot (800) 685-6691 Requirements: PG: No Paydex: No
2 years in business. Revolving account and/or net 30. Apply on-line. Reports to D&B and Experian. JC Pennys (407) 788-4022 Requirements: PG: No Paydex: Yes At least 6 months in business and paydex score required with no delinquencies. Call to apply. Does not report to D&B or Experian. Kinko (800) 488-3705 Requirements: PG: No Paydex: No Revolving account net 30, apply online, will check D&B number and verify business address. Reports to D&B only when requested by D&B. Does not report to Experian. Lowes (800) 445-6937 Requirements: PG: No Paydex: No Revolving account or net 30. 3 years in business. Reports to D&B only. Macys (800) 933-6229 Requirements: PG: No Paydex: No 2 years in business and some credit history. Call to have application faxed to you. Reports to D&B and Experian. Mobil Gas (877) 959-1007 Requirements: PG: Yes Paydex: No Net 30-full balance, 1 year secured account or 3 years in business. Apply on-line. Reports to D&B and Experia n. Neiman Marcus (800) 685-6695 Requirements: PG: Yes Paydex: No Must be in business 2 years and signer on account gives personal guaranty, call to have application mailed to you. Does not report to D&B, but does report to Experian. Nordstroms (800) 964-1800
Requirements: PG: No Paydex: No Net 30-full balance, 3-4 trades, verify 2 (trades should be net 30 accounts as well) call for application. Reports to D&B and Experian. Office Depot (800) 729-7744 Requirements: PG: No Paydex: No Revolving account, net 30. Must be incorporated. Print on-line and fax. Reports to D&B and Experian. Office Max (877) 633-4236 Requirements: PG: No Paydex: No Must have some credit history. Apply on-line. Payment has to be made after invoice is received. Reports to D&B and Experian. Orchard Supply (408) 281-3500 Requirements: PG: No Paydex: No Net 30, 3 trades with at least 3 months activity and 1 bank trade. Call to get application. Does not report to D&B or Experian Phillips 66 Gas (800) 648-4199 Requirements: PG: No Paydex: Yes Duns report pulled, 3 trades, 1 bank trade needed. Reports to D&B and does not report to Experian. Radio Shack (888) 773-2435 Requirements: PG: No Paydex: No Revolving Account, net 30. Reports to D&B and Experian.
Sears (800) 917-7700 Requirements: PG: No Paydex: No 2 years in business, revolving acct, net 30, call to get application faxed to you. Reports to: D&B and Experian. Sinclair Oil Gas Card (800) 340-3466 Requirements: PG: Yes Paydex: No At least 4 trades, net 30-full balance, personal guaranteed required from each cardholder. Does not report to D&B or Experian. Speedway Super America Fleet Gas Card (800) 643-1948 Requirements: PG: No Paydex: No Net 30-full balance, at least 1 year in business. Staples (800) 669-5285 Requirements: PG: No Paydex: No Revolving account net 30. Reports to D&B and Experian. Texaco (800) 839-2267 Requirements: PG: No Paydex: No Need some credit history. Apply on-line. Reports to D&B and Experian. Union 76 (800) 944-7676 Requirements: PG: No Paydex: No
2-3 trade references, 1 bank reference, duns check done on large businesses. Does not report to D&B or Experian Wright Express Fleet Card (800) 395-0812 Requirements: PG: Yes Paydex: Yes
Postage Account - UPS Here is one lesser know vendor that reports: United States Postal Service(Post Office) reports to Dunn & Bradstreet. They have a "Postage meter account" that is mainly for larger mailings. An authorized meter manufacturer that work in conjunction with usps report, with certain credit accounts that they offer. Now if you want to obtain BIG BANK CREDIT CARDS for you business. You will need at least 15 of these accounts to stand on its own and 2 years in business . If you do not have 15 and been in business for 2 years, they will ask for your social security number with a personal score of 700 or better.
Continental Continental has a business credit account that pulls DnB and does not require a PG and he forwarded me the email and so on from the rep at the airline. A dedicated toll-free UATP Customer Service Desk at 1-866-324-UATP
Vehicle Leasing Ford Volvo through Ford as well as Mitsubishi. BMW also does business credit financing Mercedes and THEY PULL DUN AND BRADSTREET Mercedesbenzfinancial.com and choosing business. They actually ask for your DUNS number.
FACTS FOR YOUR INFORMATION Paydex Score PayDex is a "1 to 100" score calculated by using up to 875 payment "experiences" from your trade references reporting how your company pays its bills. Below is the PayDex Score Key, with a score of 75 or above being your goal.
Payment History 100 Early to 30 days 90 Early to 10 days 80 Paid As agreed 75 Slow to 8 days 70 Slow to 15 days 60 Slow to 22 days 50 Slow to 30 days 40 Slow to 60 days 30 Slow to 90 days 20 Slow to 120 days (its is better to pay early) If you pay late on a account that reports to Duns or Experian, it will count against you forever! There is not delete with business credit. If you already have a company with late payments reporting, YOU SHOULD START ALL THE WAY OVER IN BUILDING BUSINESS CREDIT FILE.
Don’t start adding business credit lines to your Duns number until you are sure you can make the payments on time.. y y y y y y y
Don’t use post office box or virtual mail drop location for your business address when starting to build business credit If working from home, check with the Business Credit Bureaus to see if a prior business was listed under your home address Make your business phone number different from that of your home Get being listed in 411 business directories .. Listing incorrect info in your 411 business listing or with the Business Credit Bureaus Have a secured bank credit card and/or at least $1k in a matured bank CD (certificate of deposit) Setting up trade lines without knowing if they really report to the Business Credit Bureaus
**REMEMBER - a paydex score will only take into account your payment history. Unlike personal credit, this is counted in days. For example, if you pay your invoices 14 days late, it will be reported as such. If you pay your account off before the statement or invoice comes, it will be reported as such. The bottom line: Pay your invoices on time, and you will get a better paydex score. You can not have more than 2 credit inquiries in a 30 day period when applying for business credit. Excessive inquiries are huge red flags to the creditors. Likewise, do not apply for a second line of credit if you have a previous credit application that is still pending. If you do so, you are likely to have both credit applications denied! Excessive updates to your credit profiles can also be red flags to creditors. Try to consolidate your updates and limit them to no more than one update in a 12 month period. Updates include a change in your business address or phone number. It is not uncommon for a business to relocate or obtain a new business phone number. However, when a business is doing this multiple times within a 12 month period, it may imply that they are running or hiding from someone.
Therefore, the creditors treat this a major red flag.
Get a bank rating of 5 before you apply for a no pg (personal guarantee) bank loan. As a business owner one of the important decisions you will need to make is deciding where to set up your small business bank accounts. Once you select the banks or financial institutions that fit the needs of your business than you should focus on establishing bank credit. Bank credit is different from business credit because the criteria are based on factors relating to your business bank accounts. This includes your balance rating, bank rating and NSF check history to name a few. Did you notice that selecting banks or financial institutions are pluralized? The reason is you should definitely consider establishing multiple banking relationships rather than sticking to just one bank account. Remember when banks deciding to reduce and in most cases cut the business lines of credit for thousands of small business owners across the country? The lesson to be learned was don’t depend on just one single bank or financial institution to build all your bank credit with. Would you rather have one business line of credit with one bank for $150k or would you be much better off and safer with three business lines of credit of $50k each at three separate banks or financial institutions? Now that we got that out of the way let’s go over what your overall bank credit consists of. Account Name
When you first open your small business bank account make sure all the information you supply match exactly with the business name and address that is listed on your Federal Tax ID paperwork, articles of incorporation and legal paperwork you have filed with the State. There must not be any discrepancies because this can also affect how your business information is reported to the business credit bureaus. Account Age When you open an account for your business keep it open and don’t jump around. This is why you should do your due diligence because the age of your bank account plays a big
role in the eyes of lenders. The longer you have a business account at a particular bank the greater the potential for obtaining larger loans or lines of credit. Now, this is just one component because the next one is far more powerful. Bank Rating In a nutshell your bank rating determines how your business manages its cash flow. When you apply for a loan or line of credit lenders use this to determine whether or not your business can handle the extra debt and expense. Bank ratings consist of main components which you should familiarize yourself with prior to applying for any type of business loan or small business line of credit. What are the main components? Each bank is different. Just call your personal banker and find out. While I won’t get into the actual numbers I suggest that you shoot for a low five rating and maintain it for at least three months prior to applying.
A Example Bank Credit we will be looking at the following: y y y y
Bank Ratings -a strong business bank account rating indicates your ability to repay loans, we will look at how banks rate your accounts. Business Cash -These are some unique funding programs that can bring quick cash to your business. Personal Cash -Here we show you some creative programs for accessing personal cash that can then be used in your business. One Bank Loan -We will detail why your business needs a bank loan that reports to the business credit agencies and how to obtain it.
Quick start to setting up initial credit lines A Business Credit Profile is not required for you to receive funding for your business now, but it will open up more funding programs to you in the future and you may not have to personally guarantee every deal. When getting your initial vendors you want to go to Uline, Quill, and Seton. These are three companies that report that gives quick accounts. . After these you will want to go to Tech Depot and Majestic Advertising. This will give you a strong enough file to get into your revolving lines such as
office depot and staples. So you know that you need vendors. These vendors will give you an account without a DUNS number. In order to get your duns number quickly and for free, I have highlighted a method that myself and my clients use all these time. Once these companies have reported, a DUNS number will be automatically created. This method will not only give you your duns number, but you will also get your eupdate password for free and instantly. I was going to show you a method where you call a phone number to get the FREE Business Credit Builder from DnB. It turns out that you can get your Eupdate information right away from that same number. The number connects you with their people in india that take care of the updating and I guess that they give you the Eupdate information in order to reduce their load. Never the less, you can simply call 1-800-234-3867, then choose "option 1" then "option 4", and tell them that you will like to update some information on your business credit file and you will like to get your Eupdate information. They will verify some basic information, but this method is better than registering online because you never know who or when you will get it. Sometimes a Dun and Bradstreet sales rep will contact you about there "Business Credit Building Products" before they send you any Eupdate information. These are just a couple tricks that will be useful to speeding up the process to building strong business credit.
Sure Fire Bank Loan Strategy? Well I have good news for you because there is a sure fire way to establish business credit with a reporting bank loan even if you are Startup Company with less than perfect credit. So what is this sure fire bank loan strategy? It’s called the CD secured bank loan and provides a powerful way to establish corporate credit and bank credit for your business. So how does it work? Basically you are securing a loan with a certificate of deposit at the bank willing to offer this type of business loan. You make a deposit into a CD account at a bank that’s SBA approved and your business loan will match 100% of the value of the CD.
When you apply for these loans make sure the exact name of your company is on the application along with your Federal Tax ID. Banks will report your payment history on this loan to Small Business Equifax and Corporate Experian. Now keep in mind not all banks offer these types of loans and the ones that do will require a minimum loan amount which is typically $5,000. When you have a bank loan that reports on your business credit files you can establish business credit scores and profiles that will enable your business to obtain the cash financing it needs. Not too long ago I covered how to build a strong business credit file by having the right blend of credit. By adding a reporting bank loan along with vendor credit lines and revolving credit you can imagine how this will look in the eyes of lenders and creditors when they view your file. Adding a bank loan on your file also helps categorize your file with other businesses with bank loans as well. This will help when creditors and lenders purchase lists from the business credit bureaus for marketing pre solicited credit offers. This strategy works as long as your personal credit scores are in the mid 600 range. If your scores are low then you may want to consider speaking with a local banker or even use the transfer of ownership strategy. Once you secure the $5,000 or more you can always deposit the money from the loan and use it exclusively to re-pay itself. Remember your money is in a CD earning interest so it’s best to keep making your loan payments for at least 12 months before paying it in full. If you pay your loan off in a couple of months you will not build enough payment history with the bank and your credit file. This strategy will help your business establish corporate credit and qualify for offers like pre approved no pg business credit cards. First Equity offers no personal guarantee business credit cards but by invitation only.
Build large trade lines with multiple tiers of credit. You can request for a credit limit increase usually after six months of good payment history. Before applying for larger tiers be sure to know what the requirements for approval are.
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