Getting Starting With Business Credit

Sometimes getting started with business credit can be difficult. Business owners, when first building credit, sometimes feel forced to settle for business credit cards with less-than-desirable terms and then discover those credit cards aren’t even reporting to the business credit bureaus.

Perhaps this is why it is reported that as many as 41% of small businesses rely on their personal credit cards instead. But using personal credit isn't good for your business in the long run, so business owners should consider the other options available to them.

Twenty percent of small businesses rely on credit cards for one purpose or another. How can a business that is just getting started with business credit get off on the right foot with the right business credit card?

The best advice is often the most simple:

1. Build business credit. Use vendor credit as much as possible. Utilize other business credit building tools so that you'll be able to get approved for better credit terms as soon as possible.  THE KEY HERE IS TO MONITOR YOUR CREDIT AND ENSURE THE VENDORS YOU ARE USING ARE REPORTING YOUR POSITIVE PAYMENT HISTORY.

2. Plan for higher interest rates. Higher interest rates are not the end of the world, especially when you consider that the condition is only temporary!

It is not uncommon in the consumer credit market for a person with no credit to start out with a 20% or higher APR credit card. This is acceptable because it's temporary.

The same thing applies to business. With patience, time, and careful management of your business credit, you will eventually be approved for much better rates and much higher credit limits.

3. Don't shy away from offering a personal guarantee.

Again, offering a personal guarantee or using your personal credit to win credit approval for your business may not seem like the best case scenario. But it's a stepping stone; a building block. You've got to start somewhere, and this is a common place to start.

Remember that "A journey of a thousand miles begins with a single step." Your first steps into business credit are just that: first steps. The only way to get down the road towards the BEST business loans and credit cards is to take the steps that will eventually lead you in that direction. 




Please 'Like' our Facebook page and get more information on building business credit so your business can start qualifiying for much higher financing amounts and at better terms than using your personal credit.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Finance Suite as well as consumer credit restoration and optimization services. www.ExpertCreditConsultants.com.

Equifax Business Credit Scoring

Dun & Bradstreet is the primary company used to evaluate business credit and issue a credit score known as a Paydex score.

Equifax, one of the three major consumer credit rating bureaus, also provides business credit evaluations for over 22,000,000 small businesses and corporations to detect early signs of trouble by monitoring key customers, suppliers, and partners. Equifax’s model is designed for companies that provide goods and services to small businesses.

One of the main Equifax business credit scores is the Small Business Credit Risk score. The Small Business Credit Risk Score™ for Financial Services predicts the likelihood of a business incurring greater than 90 days severe delinquency or charge-off on financial services accounts within a 12-month period. This score is built using financial services and trade payment data, providing a higher degree of predictability. The score range is from 101 - 992 and it returns up to four reason codes.

The score utilizes unique bank loans, lease information, credit card and supplier data, utility credit history, public records, and firmographic data from their own Equifax Commercial Database. 

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Financing Suite as well as consumer credit restoration and optimization. www.ExpertCreditConsultants.com

10 Ways to Cut Costs for Your Business this Fall

The goal of every business is to be as profitable as possible.  One way to get there is by watching the bottom line closely. If an expense isn’t necessary, it should be eliminated from the budget.  Saving money is key to any business’ financial future.

Finding areas to “trim the fat” becomes easier with time.  By involving your employees in the budgeting process, you do two things. You raise awareness of the importance of eliminating waste which makes people more conscientious about their consumption. You also free up finances for programs and events that benefit your workers. 

Vice President Joe Biden said, “Don't tell me what you value, show me your budget, and I'll tell you what you value.”  He was on to something. You can learn a lot about a business by how much debt it is in and how much savings it has accumulated.

Here are 10 suggestions that will help you cut costs this fall:

1. Shop Back to School Sales.  Every small business needs its fair share of office supplies.  Rather than buy items at full price, wait for fall to stock up.  You’ll find everything from spiral notebooks and pens to glue and printer paper at a discount.  Inventory what you currently have on hand, anticipate your yearly needs, and purchase supplies accordingly.  You can even use this time to replace office furniture and equipment like computers, printers, and fax machines since there is likely to be significant savings involved by shopping the back to school sales.  

2. Use Apps like Walmart’s Savings Catcher and Target’s Cartwheel to Get the Best Deals.  By entering your receipt, Walmart’s app automatically compares its prices with those of top retailers in your area. Target’s app provides discount savings in the form of coupons on items that you buy regularly. If you have a smartphone, make good use of it by downloading these apps and checking them regularly. 

3. Sell Your Empty Printer and Toner Cartridges to Offset the Cost of Buying New Ink.  TonerBuyer.com offers up to $22 for your empty printer cartridges.  They also offer money for new and used printer, copier, and fax toner and supplies.  If you’ve recently made the switch to different equipment and aren’t sure what to do with the leftover ink or toner, sell it.  Use that money to offset the costs of buying new ink for your printers at work.

4. Barter Services with Other Businesses in the Area. You don’t know what you can get until you ask.  See if businesses in your city would be willing to barter for good and services rather than take cash payments for them.  Before you agree to anything, however, get it in writing.  Treat the transaction as you would with any other vendor.  

5. Go Paperless if You Can.  Use a service like Dropbox or Google Docs to share information.  Scan items and post them to the cloud for others to read and follow up on.  Use electronic invoices and inventory spreadsheets.  You’d be amazed at how much paper is wasted by businesses on a yearly basis. According to Keep America Beautiful, “In 2010, Americans trashed enough paper to cover 26,700 football fields or 17,800 soccer fields in paper three feet deep.”

6. Switch Banks.  Look for a bank that doesn’t have fees like ATM surcharges, overdrafts, and debit card fees.  Many financial institutions offer sign up bonuses as well.  Take advantage of these types of incentives and use the free money to further your business efforts.

7. Use Payroll Debit Cards.  Think about how much money it costs to print checks. There’s also a greater risk of fraud. Adopting a payroll debit card system makes it easier to access funds, eliminate fraudulent activity, and give employees purchasing freedom.  If you haven’t looked into payroll debit cards, now’s the time to do so.

8. Bundle Services.  Many companies offer bundled services.  If you’re paying separate bills for phone service, cable, internet, fax, and web hosting, you shouldn’t.  See what types of savings you can incur by bundling two or more services.  You could potentially save hundreds of dollars each year in unnecessary costs.

9. Download and Use Free Forms. A website like Formnet provides dozens of free forms that you can download and utilize for free.  If you’re a paperless office, you can use these items on the cloud.

10. See Which Suppliers Offer Discounts for Paying Early. Make it your mission to pay invoices quickly.  A number of suppliers offer discounts when you pay early.  See who does and make sure that you get those payments in on time.

If saving money is your mission, you’re bound to find plenty of ways to do just that this fall. Reevaluate your business needs and cut back on unnecessary expenses. Be willing to open your mind and close your pocketbook.  You’ll be surprised at how much money you free up by simply changing your perspective about things.

About the Author:

Diana Mackie is the Chief Content Officer at Funding Gates, the CRM for receivables management that helps small businesses collect on their open invoices.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Financing Suite as well as consumer credit restoration and optimization. www.ExpertCreditConsultants.com

What is Business Credit?

Business Credit, sometimes referred to as Trade Credit, is credit that is established under a business's name instead of the owner's name.

Business credit permits a business owner to use their business credit profile and score for financing - NOT their personal credit scores.

All too many small to medium sized business owners know nothing about business credit so they end up funding their business using their personal credit until they can’t obtain any more personal financing. Then they are in serious trouble, their personal credit is shot, they lose their personal assets, even file personal bankruptcies, all to get rid of business debt. With business credit, this doesn’t need to happen as the business owner them self isn’t liable for the business debts, only the business is.

Having business credit will provide any business owner with some major advantages.

For one, the business can obtain A LOT more money in approvals. The Small Business Administration states

that business credit approvals are typically 10-100 times higher than consumer credit approvals.

There are also many sources that require no personal credit check. So, even business owners with challenged credit can be approved for thousands of dollars of credit for their businesses.

Business credit can be built quickly, much faster than consumer credit. It takes 6 months for an initial consumer credit score to even be established. Then, since the length of time you’ve had personal credit factors into the score, it could take years to have an excellent personal credit score. With business credit, it is very practical for a business to have an excellent business credit score within 90 days or less, then build that credit to a point where the business is getting $10,000 credit card approvals within 6 months or less.

When built the right way, the owners can commonly qualify with no personal guarantee (PG). No PG means business owners can access cash for their businesses without the personal liability. That means in case of default, the lender couldn’t pursue the personal assets of the business owner.  To qualify for most business credit sources with no PG, the business must have a positive business credit score established with the appropriate business credit reporting agencies. The two most commonly used business credit scores are the Paydex score from Dun and Bradstreet and the Intelliscore from Experian.  And, again, you will need credit with all the major business credit agencies, not just one.

Once a positive business credit score is established, many merchants will then approve the business owner for credit in the business's name. Thousands of major merchants offer business credit. But most don't promote their business credit programs, so they are difficult to locate. In addition, only approximately 10% of vendors report business payments to the business credit bureaus unless the owner is late or defaults, which is why the majority of small to medium sized businesses have either no business credit or bad business credit. Just a few of the merchants offering business credit that we can help you obtain for your business include Chevron, Dell, Staples, Best Buy, Apple, and Lowes. Once business credit is established and paid as agreed, the business credit limits will continue to increase and businesses can then be approved for even more credit as well as cash loans in the business name.

It is very practical to build your business credit to where you can obtain $10,000 limits with major credit card accounts within 6 months. Just pick up the phone to call us and get started.

Business credit is one of the strongest assets any business can have.

Don't be one of the 95% of small businesses that fail within the first five years because of lack of funding. Eventually you WILL need to borrow money for your business. Secure it BEFORE you need it.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Financing Suite as well as consumer credit restoration and optimization. www.ExpertCreditConsultants.com

What Credit Reports Are Used For

Most of us realize that our credit report is reviewed when we apply for a credit card, mortgage, or car loan. However, it is often forgotten that your credit report is also reviewed when you apply for utility services, car insurance, life insurance, or a cell phone. With bad credit, you will be required to leave large deposits with utility companies. Landlords often use credit reports to decide among rental applicants. A potential employer may even assess an applicant’s credit report before extending a job offer. Your personal credit score is often used when a creditor is deciding whether or not to extend your business credit.

These creditors will also report to the credit bureaus if you do not pay your bill on time. If you decide to change your cell phone company, cable tv provider, internet provider, change your insurance company, or move to a new apartment, make sure you pay your final bill in full. An unpaid bill will most likely get you a COLLECTION ACCOUNT ON YOUR CREDIT REPORT. Imagine what that looks like to a potential employer or to a lender. That’s why it is so important to remember the rules of the game. Even the small forgotten accounts (like unpaid electric bills) are considered fouls that can get you a penalty, and keep you from scoring!

As a side note on insurance...Most people are shocked when they hear that auto insurers use credit scores in the course of deciding whether to cover drivers and what premium they should be charged.

Why should you have to pay a higher rate for your car insurance because you had unpaid bills or some other financial problems? Some customers who had never had an accident or violation were faced with sharply raised premiums when their renewal notices arrived. In fact, auto insurers are passionate in their belief that credit scores are one of the best predictors of future claims. Statistics also show that most insurance fraud stems from individuals with credit/money problems. According to the American Insurance Association, here are some of the kinds of data from credit reports that are of most interest to insurers

1. Amount of outstanding debt

2. Payment history (any late payments?)

3. Bankruptcies

4. Collections

5. Credit history

6. New applications for credit (number of inquiries on your reports)

Offensive Tip: Remember it is a smart play to notify all creditors if you move. Make sure your creditors always have your most recent address so that you'll receive your billing statements promptly. Also fill out a change of address form at the post office. This will ensure you get your mail forwarded even if some of your creditors didn’t get your new address changed correctly. This also includes temporary address changes or PO Boxes.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using the exclusive Business Credit and Finance Suite as well as credit restoration and optimization. www.ExpertCreditConsultants.com.