9 Devastating Financial Mistakes Small Business Owners Make

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

Why You Should Have A Business Credit Card

A lot of small to medium-sized business owners use credit cards in the course of business. The problem is, many make the mistake of using their personal credit cards. There are a couple of major problems with this:

First, if you use your personal credit cards for your business you are blurring the line between business and personal finances. The better separation you can achieve between your business finances and personal finances, the better off you will be. For this reason, a business credit card in your business name is the best route.

Second, using your personal credit cards for your business puts your personal credit at risk. If the debt belongs to the business, shouldn’t it be on the business’s credit?

Most people don’t think this is a big deal until they run into problems and no longer have their personal credit to fall back on.

In one example, a couple in business together racked up over $100,000 of unsecured debt on their personal credit for their business. When the business’ income dropped, even though the business was at first able to stay afloat, the couple was forced to file for bankruptcy. With their personal credit destroyed, they could no longer get credit to support the business—or their own personal lifestyle. The couple is now divorced, no doubt in part due to the stress from those difficult times.

Might things be different if they had depended on business credit rather than their personal credit? Maybe you’re thinking that your business won’t struggle, or that you don’t use credit cards much anyway. What’s the point, then?

Using a business credit card in your business does have some real advantages aside from the two big ones above. For example:

1.      Streamline operations and automate expense tracking. Paying expenses can be much easier to manage with a business credit card, and reports can be generated monthly or annually in many cases to help categorize and analyze expenses.

2.      Business cards have “rewards” programs too! If you have a lot of regular monthly expenses for your business that can be paid with a rewards card, you could easily get $500 to $1000 per year (or more) in cash rewards, or even free airline tickets if you use a travel rewards card.

3.      Manage employee spending. Business credit cards can be set up to have spending limits for employees, which can aid in managing expenses for in-the-field employees.

4.      Using business credit cards correctly helps you build credit for your BUSINESS, which is of utmost importance in today’s economy. VERY IMPORTANT: in order to build business credit, your business credit cards MUST be reporting your GOOD payment history to the major business credit bureaus.

5.      With strong BUSINESS credit established, you will be able to obtain business credit cards with no personal guarantee.

As you can see, there are several big advantages to using an actual business credit card for your business. A helpful hint for those wishing to establish business credit:  Try to get approved based on your business’s creditworthiness rather than your personal creditworthiness.

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.

Secured Versus Unsecured Funding

Secured or Unsecured, that is the question. Our funding suite offers over 30 core funding products. Some of them are secured, and some are unsecured. Due to our vast array of funding products, our clients commonly ask which is better for them, secured or unsecured funding.

Secured funding is easier to be approved for. Even if you have credit issues, you can still obtain many types of secured funding. This is because secured funding is using something as collateral for the funding you are receiving. When you own a business, there are many business assets you can use as collateral to obtain funding. Equipment financing for example leverages your equipment as collateral for the debt. Purchase order financing uses your purchase orders as collateral, while account receivable factoring uses your receivables as collateral. You can also use real estate, revenue, and other types of business assets to qualify for specialized funding vehicles to help you get money fast. And since these financing options are using an element of your business as security, your personal or business credit doesn’t have to be great to qualify.

If you do have good credit with a score of 650 or higher, then you should qualify for some unsecured funding options also. Unsecured funding is where the bank will lend you money or approve you for a credit line with no security required. This means you will not need to leverage any aspect of your business as collateral. The lender will base the lending decision on the quality of your business credit profile. If you have no business credit profile, they will use your personal credit history. So either your personal or business credit profiles can be used to get you approved.  And with a good business credit profile built you can also qualify for larger amounts of business funding.

Through our business funding suite you have access to credit lines up to $150,000 that are unsecured and require NO financials to qualify. You also have access to credit lines up to $250,000 if you do want to supply financials. These are unsecured credit lines using no business assets as collateral to qualify. Interest rates on unsecured debts are obviously higher than secured debts as the lender’s risk is higher. Still, you can obtain good working capital loans and credit lines at very reasonable interest rates and payments.

Whether you are interested in secured or unsecured funding, we have the answer for you. Give us a call today to learn more about the funding you qualify for now.

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.

 

Denied Business Credit?

According to recent reports, as many as one third of applications for business loans are denied. If you find yourself as part of that group, there are some things you can do to help the situation.

The first thing you need to do is try to determine where the problem is. Possible areas of concern may include:

- Your payment histories and business credit profile. Obviously, how you are paying your existing obligations will play a role in your approval or denial for credit. If you’ve been denied business credit recently, check your Paydex and other payment performance data and make adjustments as necessary.

Most payment experience data is only reported for 2 to 3 years (depending on the credit bureau), so if you’ve made a mistake or hit a bump or two in the road, don’t let it worry you. Just keep the positive payment history building, and make sure what is being reported to date is accurate.

- Your bank ratings. If your business bank account balances are habitually low, this can actually rule you out for certain types of business credit. Try to maintain $10,000 or more in your business bank accounts to avoid trouble.

The bottom line, if you’ve been denied credit, is that there is something about your business that makes it appear to be a bad risk.

- Your business profits. Does your business have a healthy profit margin? Improving your profits by reducing and trimming down the operational excess and unnecessary business spending can help improve profits and boost your chances of getting approved.  Are you depositing more than withdrawing in your business checking account?

- Your business assets and liabilities. If your balance sheet is out of whack, most lenders will run the other way. If your business is already heavy on debt, then this will be an area of concern that you’ll want to address.

You’ll need to analyze and understand your business credit report and business finances, determine where the problem is, and take the necessary steps to correct your course.

Sometimes the lack of history or data on your business will be a key factor in a credit denial. This is something that can be easily remedied by taking careful steps to shape your business’s financial picture and credit profile.

We specialize in preparing you and your business for financing. We tell you exactly what lenders are looking for – before you apply.  We look for compliance issues, and then we work with you to get them resolved.

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.