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Business Credit

by MGarcon
15 replies
I was wondering if anyone knew of a comprehensive guide to establishing business credit. Resources are so limited on this topic it's as if they don't want everyone to have access to it. Anyway, I look forward to the responses and thanks in advance.
#business #credit
  • Profile picture of the author TeKn1qu3z
    #1 rule is to keep your customers and clients happy. When they're happy, they will spread word of mouth about your company.
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    • Profile picture of the author Dovakiin
      Banned
      OP, most people don't have experience with this and they'd rather not try to BS about it like most other aspects of IM.

      Originally Posted by TeKn1qu3z View Post

      #1 rule is to keep your customers and clients happy. When they're happy, they will spread word of mouth about your company.
      This guy ^^^^ just proved my point with his completely vague answer.
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      • Profile picture of the author Kay King
        It's not that info/resources are limited but that this is the same as any loan or financial guarantee - collateral or credit history is necessary.

        In the U.S., a new small business is usually guaranteed by the personal credit and/or collateral of the business owner until the business can establish itself in profit and build it's own credit history.

        Almost any big bank or lending institution that deals in business financing or issues business credit card accounts will have information about what is required to qualify for credit in the business name.

        The above is very basic - there are also investors and private loans....
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      • Profile picture of the author JNAssociates
        The op was referring to business credit not business credibility, Technique.

        Anyway - I believe you need to be running for at least 2 years in good financial standing before you can get any kind of business loan. I can't imagine how getting a business loan or establishing business credit would be much different from the way its obtained through personal credit. Keep your debt finance low, pay your vendors, creditors on time, apply for credit cards or get secured cards, maybe purchase some business trade lines, keep a good amount of money in your banking accounts at all times and keep your personal credit in order and I think that you should be good to go.
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  • Profile picture of the author XponentSYS
    Kay gave a good answer. I'm not a banker, nor am I a credit consultant. I do have experience with business "credit" though.

    You see, at first I didn't even know my business had a credit score. While leasing a car, I discovered that my business has it's own credit rating.

    While there are other "business credit" reporting agencies..... the one I learned had a score on my business was Dun & Bradstreet.

    How did my business get its own credit score?

    For one, my business is a corporation and only corporations are capable of aquiring a score independent of their founder because they, in fact, exist as an entity independent of their founder.

    If your business is some other kind of entity such as a sole proprietorship....... you wouldn't get a D&B score. It would instead rely upon YOUR PERSONAL credit rating.

    Also (from my experience) my business' D&B score was established in much the same way one might establish their own credit score. Items such as car leases, Amex cards, checking accounts and other things were established in the name of the business for tax reasons,

    Though I had to use MY OWN credit to establish these things in the beginning (as a guarantor), they resulted in my company's credit rating.

    Make sense?

    More info on the matter:

    Corporate Credit Score - Business Credit Ratings and Explanations
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  • Profile picture of the author DanielMeyers75
    MGarcon:

    Business credit is much like personal credit in terns of how to build it. Here is the method I have used on many of my past clients:

    1) Start a corporation (c corp, s corp, llc)
    2) Get physical business address, phone number (411 listed), website, bank account, merchant account
    3) Sign up with D&B, Experian Business, Equifax Business
    4) Start with getting Net 30 Accounts
    5) Buy things on credit and pay them off early
    6) Get more Net 30 accounts with larger credit limits
    7) Buy more stuff and pay off early
    8) Repeat steps 6 and 7 until you have the largest credit limits possible
    9) Get business credit cards (may have to PG them)

    10) For larger loan amounts, tax returns that are VERIFIABLE are required (4506T)
    11) Business loans with a PG
    12) Angel Investors
    13) PPM
    14) Go Public

    Hope this helps. This all there is too it. Don't let others tell you otherwise. I have 5+ years helping companies build credit and this is all that you have to do.
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    • Profile picture of the author robbdogg30
      Originally Posted by DanielMeyers75 View Post

      MGarcon:

      Business credit is much like personal credit in terns of how to build it. Here is the method I have used on many of my past clients:

      1) Start a corporation (c corp, s corp, llc)
      2) Get physical business address, phone number (411 listed), website, bank account, merchant account
      3) Sign up with D&B, Experian Business, Equifax Business
      4) Start with getting Net 30 Accounts
      5) Buy things on credit and pay them off early
      6) Get more Net 30 accounts with larger credit limits
      7) Buy more stuff and pay off early
      8) Repeat steps 6 and 7 until you have the largest credit limits possible
      9) Get business credit cards (may have to PG them)

      10) For larger loan amounts, tax returns that are VERIFIABLE are required (4506T)
      11) Business loans with a PG
      12) Angel Investors
      13) PPM
      14) Go Public

      Hope this helps. This all there is too it. Don't let others tell you otherwise. I have 5+ years helping companies build credit and this is all that you have to do.
      Very Valuable information, I couldn't agree with you more.
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      • Profile picture of the author Kay King
        When bumping an old thread with a one liner - at least make sure your signature link works....otherwise, what's the point?
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  • Profile picture of the author ronyoung
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    • Profile picture of the author iAmNameLess
      Originally Posted by ronyoung View Post

      The magic number is 24 months of stable profit and more then 200k in sales
      Nah, I've had business credit within a month, using net 30 accounts and different trade lines.

      Usually Quill, Uline and a few others are instant trade lines. I think my Quill line is now 5K and uline is 3,500. I have a few other trade lines ranging from 500-3000.

      Your trade lines are what will allow you to get more credit. It doesn't matter if you're in business for 1 month or 10 years, if you're not building business credit your situation is the same.

      You usually don't want to PG any credit cards. Gas cards are usually the easiest to get with no PG, and then you can later move on up to higher quality cards.

      For banks to give you business loans with no PG you need 24 months history but the rest of the credit building process can be done immediately.
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  • Profile picture of the author MGarcon
    Thanks a bunch guys! I REALLY appreciate it.

    @DanielMeyers75 Which NET 30 accounts should I go for? and when?
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  • Profile picture of the author MGarcon
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  • Profile picture of the author DanielMeyers75
    Uline, Quill are an excellent start. Before applying for any credit, your business must be set up first, with at least DnB. I did forget to mention the EIN, gotta get as soon as your Article of Incorporation/Organization are done and approved at the Sec of State. It is free to get so don't let anyone charge you for it.

    On the topic of time in business, the 2 year mark is normal for bank type loans where cash is involved. I would venture to say more like 5+ with tax returns is now the norm. For revenue, the 200k mark is not required if you have a consistant profit at 50k+. Always try to use smaller community banks for your loans or an SBA loan (those can be tricky). Save the "big banks" for credit cards and LOCs. Banks care about total revenue, but really, they care about the bottom line take home. It doesn't matter if you make 50million, if you spend all but 20k on bills, you only make 20k, which doesn't leave much for paying those loan payments.

    I will get you a list and a good order to use, though it make take a few days for me to find. This used to be my niche for quite some time.

    Daniel
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  • Profile picture of the author King Bruce
    I didn't read anyone else post but if you are in need of advice on how to setup business credit then you can contact me on skype I can explain and show you all you need to do so you can set it up. kingbruce4
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  • Profile picture of the author MGarcon
    @KingBruce I just added you on Skype. I look forward to hearing from you.
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    • Profile picture of the author mlpauling
      I am very surprised that this is the first time I have seen this subject mentioned on the WF. This is something that every aspiring IMer should be pursing.
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