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Trade References: Learn Everything You Need to Know [+Templates]

By Joe

Trade References

If you apply for a line of credit for your business, there’s a chance that you’ll need to share a trade reference with the lender. Or, if you’re a vendor, you might be asked permission to be listed as a trade reference for one of your business customers. Even more, if you extend a line of credit to one of your business customers, you may want to ask them to provide you with a trade reference. So, what are trade references and what all do they entail? 

If you’re clueless on the subject or just need a bit more information, we’re here to help. Let’s explore the fundamentals of trade references so you can gain a clear picture. Here’s what we’ll cover.  

  • What are Trade References?
    • What is an Example of a Trade Reference?
    • How are Trade References Used?
      • How Can You Report Trade References to Dun and Bradstreet?
  • Trade Reference Templates
  • Final Thoughts

Now, let’s get to it!

What are Trade References? 

Trade references meaning

A trade reference or credit reference is a professional testimonial from a vendor or supplier on behalf of a business customer to vouch for that business’s reliability. In most cases, trade references are required or recommended on business financing applications as a form of documentation of the company’s ability to pay debts on-time, as agreed.  A positive trade reference can make all the difference in a successful financing application. 

And, a trade reference request is a solicitation for a trade reference from a vendor. For example, a supplier that has received on-time payments from a business customer each month might be asked by that customer to provide a trade reference that outlines the company’s payment history. The business customer could then use the reference on an application for a term loan, line of credit, or credit card. 

A trade reference is comprised of seven parts: 

  1. Business Contact Information – Legal business names, addresses, and phone numbers for the vendor and the client/customer involved. 
  2. Reporting date – AKA “as of date,” the reporting date is the date that the reference is collected.  
  3. Manner of payment – Details whether payment was made via cash, check, debit, or credit card. 
  4. Rolling, 12-month high credit – Indicates the highest amount of credit used in the past 12 months when applicable. 
  5. Current total amount owing – Denotes the amount owed to the vendor ass of the reporting date. 
  6. Current total past due – Identifies when an amount owed is unpaid past the agreed-upon date of payment. 
  7. Selling terms – Outlines the payment agreement including payment amount, due date, and net terms. 
  8. Date of last sale – Reveals the last time a service was rendered or order placed. 

Business credit bureaus want to see everything above 

What is an Example of a Trade Reference? 

You might think of companies that you pay monthly utilities to as decent references for your creditworthiness. However, when it comes to business financing, you’ll get more klout from vendors and creditors within your industry. For example, if there is a company that supplies your business with funding, operating materials, or services, they might make a good trade reference — even better if they allow you to “buy now and pay later.” 

You can get trade references from any company that allows your business to pay for supplies or services at some point after delivery. By doing busines with these vendors and paying as agreed, you can collect references that help you establish your credit. 

Some net 30 vendors, suppliers that offer 30-day net payment terms on business orders regularly report payments to business credit bureaus under certain conditions. We’ve reviewed some of them, including how to get the most out of their offers: Summa Office SuppliesCrown Office SuppliesHome Depot Business AccountAmazon Corporate Credit Line

How are Trade References Used? 

On a credit application, a trade reference can help showcase a borrower’s reliability when no business credit score has been established. In this case, a trade reference can be attached to the original application. 

Another way to use trade references is to manually request them from vendors and report to D&B and other business credit bureaus. This helps establish a high business credit score, accessible by any lender who looks at your profile. 

How Can You Report Trade References to Dun and Bradstreet? 

Dun and Bradstreet (D&B) is the leading business credit bureau. To build your business credit score, you will need to first request a DUNS number. After your business credit profile has been established (or claimed), you can work to build credit and increase your business credit score. 

One step you can take to improve your score is to manually submit trade reference letters from vendors that you do business with. There are some companies that you can not manually submit trade reference letters from: 

  • Companies that already report to D&B (most major lenders and some 30-day net vendors)
  • Companies without a D&B credit profile
  • Companies that have been prohibited by D&B for untrustworthy activity
  • Companies outside the US
  • Companies with legal ties to your business
  • Companies with internal rules against D&B reporting 

Before you manually submit a trade reference, you will need to send a trade reference request to your vendor. Include a trade reference template that asks for all of the required information for quicker reciept. 

After you have a reference to submit, you will need to upgrade your D&B account to a paid CreditBuilder™ account. With this account level access, you can submit trade reference letters online or through your account concierge. 

Note that a paid D&B account is NOT necessary to build business credit. There are many things you can do to build business credit fast, without paying for expensive subscriptions from credit bureaus or monitoring services. This is exacly what we teach in our Business Credit Workshop. 

Trade Reference Templates 

When you need to request a trade reference from a vendor, you’ll need a trade reference request letter and a trade reference template that the vendor can fill out. Feel free to alter these for your needs: 

  • Trade reference request letter.pdf
  • Trade reference template.pdf

Final Thoughts

A trade reference provides potential lenders and credit bureaus with more information than they are able to find via algorithms and search engines. These references can be invaluable for a business that is just starting its credit-building journey. If you want to learn how to get $100K in business credit in 30 days, join Business Credit Workshop today. 

Here’s How to [Actually] Get Business Credit With Just an EIN +More Options

By Joe

Business Credit With Just EIN

Lately, I’ve found quite a bit of online content that pertains to getting business credit with just your EIN, and I’ve seen some pretty good information. But, I haven’t found a thorough answer to the core question, which is, “How can you get business credit using your EIN and not your SSN?”

First of all, if you’re not up-to-date with the lingo, what you’re essentially looking for here is business credit without a “personal guarantee.” Luckily, there are lenders that do not require a personal guarantee for business financing, but most of the good options are not common nor easy to find. So, let’s explore everything you need to know. 

Here’s what’s in store: 

  • In Business Credit, What is a Personal Guarantee?
  • What if You Aren’t Eligible for an SSN?
  • What if You Have Bad Personal Credit?
  • How Can You Use Your EIN Instead of Your SSN to Get Business Credit and Loans?
  • Lenders That Offer Financing With No Personal Guarantee
    • Business Credit Cards
    • Corporate Credit Cards
    • Business Loans
    • Alternative Financing [Proceed With Caution]
  • Final Thoughts

In Business Credit, What is a Personal Guarantee? 

When a business takes out an unsecured loan or line of credit, most lenders want assurance that the funds will be paid back. A personal guarantee is a promise that, should the business fail to repay, the individual will be responsible for the debt. This responsibility typically falls on a company executive or business owner.  

With a business loan or line of credit for which you are the personal guarantor, the lender has a legal right to your individual assets if your business does not repay the debt as agreed. In order to legally collect the funds in this case, the lender needs your social security number (SSN). 

Your SSN often serves a second purpose, which is to see if you have shown responsible credit behavior with your personal finances. Really, lenders just want to make sure you are responsible even when your business is obviously financially healthy.   

💡 Does Your EIN Have a Credit Score? Your business has it’s own public credit score, separate from your private personal FICO score. To learn more about the oldest and most-used business credit bureau, see Everything You Need to Know About a DUNS Number & Why Should You Care. 

What if You Aren’t Eligible for an SSN? 

If the reason you want a business credit card is that you don’t have a social security number — perhaps you’re a nonresident of the United States doing business here — you can take another route to bypass the SSN section of a credit card or loan application. In this case, you need to file for an Individual Taxpayer Identification Number (ITIN) through the IRS. 

Several credit lenders allow you to apply for funding using an ITIN instead of an SSN. I recently did a write-up on one of them and you can find more about it (and competitors) here: Chase Ink Business Preferred Credit Card: A Deep Dive. 

To apply for an ITIN, use IRS form W-7. Consult with a CPA licensed in the state where you do business to find out more as it applies to your situation. 

Apply for an ITIN

What if You Have Bad Personal Credit? 

Another reason you might want to apply for business credit using your EIN and not your SSN is that you have a low FICO score. If you’re in this boat, there are steps you can take to remedy the predicament. These steps will vary based on your situation. 

In all cases, the first step will be to learn about the common errors often reported by consumer credit bureaus and leverage them to your advantage. For example, you might learn how to best deal with vehicle repossessions and defaulted loans or what can be disputed in a credit file and how to do so.  

Recommended: Credit Secrets Book Review: Can You Erase Bad Credit History? 

How Can You Use Your EIN Instead of Your SSN to Get Business Credit and Loans?

If you want to get a line of credit for your EIN and withhold your SSN, as you probably guessed, you need to find a lender that does not require a personal guarantee. Then, you will need to meet the credit and income requirements of that lender. Finally, you’ll need to apply. 

Lenders That Offer Financing With No Personal Guarantee

As I’ve already said, lenders that do not require a personal guarantee are uncommon. But, they’re not impossible to find. Here’s a list of a some lenders who may not require an SSN or an ITIN to apply for a line of credit or a loan. 

Business Credit Cards 

These business credit cards are fairly easy for companies of all sizes, including freelancers and individual contractors, to qualify for and require no personal guarantee. 

  1. Sam’s Club Business Credit Card
  2. Office Depot OfficeMax Business Credit Account
  3. Shell Small Business Gas Card
  4. SuperAmerica Fleet Credit Card 

Recommended: How to Use Business Gas Cards to Build Your Business Credit

Corporate Credit Cards 

Rather than base your credit limit on your FICO score, you may be able to meet revenue requirements for one of these corporate cards with no personal guarantee. You may need an actual S or C corporation to qualify (in some cases, an LLC might suffice). 

  1. Brex Rewards Card 
  2. Stripe Corporate Card – see our full write-up here. 
  3. ScaleFactor Visa Charge Card
  4. Bremer Bank Business Card
  5. American Express Corporate Cards
  6. Capital One Corporate Cards
  7. Citibank Corporate Cards
  8. JP Morgan Chase Corporate Cards
  9. Wells Fargo Corporate Cards

Business Loans

While you may be required to share your SSN during the initial application process to ensure that you meet minimum credit requirements, these lenders have funding options that require no personal guarantee. 

  1. Kabbage
  2. Fundbox
  3. StreetShares – requires no personal guarantee for government contractors and subcontractors to Fortune 500 companies. 

Alternative Financing [Proceed With Caution]

First, when you don’t qualify for a business loan or line of credit, you can try for a personal loan or credit card instead. In fact, many companies are funded with personal capital. But, personal credit is typically more limited as far as funding amount and rewards than business credit. 

Next, if you have a friend or family member willing to extend a loan to your business, you may be able to request a private contract without using your SSN and with no personal guarantee. Most people avoid this to protect perfectly healthy relationships rather than muddy them with potentially disastrous business affairs. 

Then, depending on your type of and stage in business, you may also find VC or Angel investors willing to extend funding, which typically requires formal pitching and a detailed plan that outlines how you will use the money to increase company profits. In nearly all cases, investors also require a certain level of control over business management and a share of the revenue. So, if you want to maintain your operations as is (and keep your profits for yourself), this isn’t a great option.  

Finally — and I hesitate here — it may be worth mentioning that other options include working capital financing or merchant cash advances. In rudimentary terms, you can take out an equity loan on accounts payable.  However, I do not recommend these channels. Repayment on these types of loans is overly-expensive akin to personal payday loans. 

Final Thoughts

Business lenders that provide practical funding solutions you can apply for using only an EIN are unicorns in the financial universe. But, if you’ve made it here, you should know everything you need to find one. If you’ve tried, but still can’t seem to qualify for financing, there’s plenty you can do to transform your situation. 

And, if you know of other lenders who require no personal guarantee, I’d love to hear about them. For now, I recommend you learn how to build business credit so that you can access high-limit loans and credit cards with the best possible rates. If you want to learn how to obtain $100K in business credit in 30 days, I invite you to join Business Credit Workshop today. 

This is How to Build Business Credit Fast [Step-by-Step Guide]

By Joe

How to Build Business Credit

Here on our blog, you’ll find how to get business credit. Furthermore, we’ve shared a ton of articles about various funding options, lender reviews, and other relevant advice. What we haven’t revealed (publicly) is how to build your business properly to obtain credit, which is the core of our mission — the skills that Business Credit Workshop members master. 

A high business credit score can help you increase funding options beyond the limitations of personal credit and even lower insurance rates.  

Now, I’m going to lift the curtain and share the bricks you need to lay (and how to lay them) if you want to build business credit in 30 days. Here’s what’s in store:

  • Intro: Business Credit FAQs
  • 5 Steps to Build Business Credit
    • Step 1: Form Your Business
    • Step 2: Get Your Company “Business Credit Ready”
    • Step 3: Network With Local Banks
    • Step 4: Setup Business Credit Profiles
    • Step 5: Build Small Trade Lines of Credit
  • Final Takeaway

I assume you are tempted to skip around, but I recommend you read the entire article. Each section contains little gems of wisdom to not only tell you what to do, but show you how to do it right. 

If you’re ready, let’s go! 

Intro: Business Credit FAQs

Before we explore the steps to take, I want to use this space to quickly answer some of the top questions I hear all the time about building businesss credit. 

Can I use my EIN to apply for credit?

Yes, if you have an EIN assigned by the IRS, you can use it to apply for business credit. 

Is it hard to get a business credit card?

No, it is not hard to get a business credit card, as long as you have a high business credit score. 

Do business credit cards pull personal credit?

Some business credit cards do a soft or hard pull to your personal credit and some do not – the latter is rare.  

Can an LLC have a credit score?

An LLC can have an employer identification number (EIN) and a DUNS number from Dun & Bradstreet. These identification numbers represent entities that can have credit scores separate from personal credit scores. 

Can an LLC get a loan?

Yes, a business entity like an LLC or other corporation can apply for and get a loan. 

Can I open a credit card for my LLC?

Yes, you can open a credit card for your LLC if it has a high business credit score. 

Can I buy a house with business credit or can an LLC buy a house?

Yes, you can use business credit to purchase real estate on behalf of an LLC. 

How long does it take to build business credit?

You can build business credit in as few as 30 days. 

What are the easiest business credit cards to get approved for?

The business credit cards with the lowest credit requirements are typically store cards with net 30 payment terms. 

Can you build business credit with bad personal credit?

Yes, you can build business credit with any personal credit score. However, many lenders require a personal guarantee, some require a hard or soft pull to your personal credit score, and poor personal credit limits your business credit options. 

However, a low personal credit score isn’t a death sentence. Check out this Credit Secrets book review.

Now, how do you build business credit fast? 

5 Steps to Build Business Credit

Since I started teaching owners how to get business credit, I’ve honed the process into a fully-sharpened, seven-step system. And, the first five steps of the proceess relate to business credit building; this is the first time I’ve shared them with non-members. 

Before you get your hands dirty, here’s a quick tip: Business credit is a lot like personal credit — the fundamental rule is that you must pay your debts as agreed to maintain a good score. With that in mind, let’s dive in. 

Step 1: Form Your Business 

1. Form Your Legal Business Entity

In construction, the first steps of building are to prep the site and lay a foundation. Likewise, your business needs a strong foundation: proper entity formation. Here are a few considerations. 

First, your business name should be neutral. If you call your company Legacy Real Estate, your entity will be limited to funding options available to real estate companies. However, a company name like Legacy Management keeps you open to more generic funding options.

On a similar note, your business category should be neutral. Business Management is a safe category for most companies. And, you can always establish multiple brands under one legal entity. 

Next, once you establish your business name, don’t change it. Lenders will want to see proof that your company is dependable and using the same business name over a long period will ensure this. 

Finally, how do you want to establish your business entity? Would you like to hire an attorney to do it for you, use an online service like Legal Zoom, or do so manually through your local Secretary of State? 

Step 2: Get Your Company “Business Credit Ready” 

2. Get "Business Credit Ready"

Think of getting “business credit ready” as adding a rough frame to a structure. Business credit readiness involves several steps.

  1. Establish your physical address (don’t use a P.O. box) – As a rule, a P.O. box doesn’t seem professional in lenders’ eyes. 
  2. Get business insurance if you need it – Forbes lists 13 types of insurance that small businesses might need.  
  3. Obtain the required business licenses – You will need to file your business with your local Secretary of State Office. Some towns require licensing for certain types of businesses. Check with your city or county to see what additional licenses you might need. 
  4. Create an online presence –  At minimum, your business needs a website and branded domain name. The name and address should be the same as what’s listed in your legal business entity records. 
  5. List your business in relevant directories – You’ll want your business listed in relevant directories online and offline directories, including 411. Each of these directories should include the same information about your business (name, address, phone number, etc.). This will help your business appear more trustworthy and legitimate to lenders when you start the application process. 

To accompany the above steps, you will also need a phone number and a business bank account. Here are a couple of tips. 

  • Get a local, physical, landline number. Either call your local phone provider for this or use an online (VOIP) service. 
  • Establish a business checking account that you plan to use long-term. 

See Also: 3 Best Credit Unions for Small Business Banking

When the time comes to apply for credit, you may also need operating agreements and other business documents, so keep every record handy. 

Step 3: Network With Local Banks

3. Network With Local Banks

A network is crucial to success in anything. Buildings require electrical, plumbing, and HVAC systems while business credit involves a network of real people – bankers and other financial professionals. 

If you can, attend local Chamber of Commerce events. If you’re not able to, network online with locals that you can build rapport with. Through authentic relationships, these people can teach you to about the underwriting processes for establishing major lines of business credit.  

Note: When you drive around in your community, keep track of all of the small community banks and credit unions in you see. Then, research what financing programs they offer. 

We recommend a spreadsheet of all business credit cards, business lines of credit, business loans, and other offers for each bank near you so that you can see them side-by-side before you make a decision. Furthermore, you’ll want to know if these banks lend their own money. If they don’t, find out who their underwriter is so you can get a feel for what the requirements will be. 

Step 4: Setup Business Credit Profiles

4. Setup Business Credit Profiles

Setting up business credit profiles is like installing insulation in a building. This is the padding within the walls of your business that will make it so that banks are willing to lend to you. 

Your business will have a few business credit scores. The most important is your PAYDEX score from Dun & Bradstreet (D&B). Since businesses don’t automatically have a D&B profile, you will need to set yours up and establish a DUNS number. 

You can expedite the process of obtaining a DUNS number for $49 so that you don’t have to wait a month to receive it. 

See Also: Everything You Need to Know About a DUNS Number

You will also want to monitor your Equifax and Experian business credit scores, which can be done for free here: 

  • Equifax small business 
  • Experian small business

If you do see inaccuracies, now is the time to fix them. 

I recommend you monitor your business credit with Nav (essentially the CreditKarma for businesses). There are a ton of business credit monitoring services that cost anywhere from $4 to $30 per month. Stay away from them. You can get everything you need for free through Nav. 

The only time I recommend paying for full credit reports and scores is if something doesn’t look right and you need to dispute or correct an item on your report. 

Step 5: Build Small Trade Lines of Credit 

5. Build Small Trade Lines of Credit

To make a building habitable, you need to add drywall, flooring, siding, and roofing. And, in business credit, your small tradelines of credit are what actually seal the deal. Once you have established the proper number of tradelines and those tradelines have reported to the credit bureaus, you will have a perfect PAYDEX score. 

See Also:  30 Day Net Vendors That Report to D&B

I’ll say it one more time: the key to a high business credit score is that the trade lines you establish report your on-time payments to business credit bureaus, including D&B. You can also use gas cards and store cards. Just be sure to do your research and make sure your payments will be reported. 

While you might be able to qualify for some revolving lines of credit at this point, I recommend you always start with tradelines. Crawl before you walk if you want to remain stable. 

Final Takeaway

Establishing and building business credit is crucial for companies who want more freedom in the way they fund their operations. Once you’ve completed the steps above, all you need to do is optimize your credit score and apply for funding, which is like adding trim, fixtures, mirrors, and windows then taking a final walk through the home you’ve built. 

To dive deeper into the full, seven-step process, read exclusive business tips, learn exactly how to setup your credit profiles the right way, and ultimately learn how to obtain $100K in business credit in 30 days, sign up for Business Credit Workshop.

How Can Crown Office Supplies Help You Build Business Credit?

By Joe

Crown Office Supplies Reviews

When you start on your business credit building journey, shopping with net 30 vendors that report to D&B should be one of your first steps. While Crown Office Supplies isn’t your only option, purchasing from this brand using 30-day net terms is becoming a popular way for businesses to improve their credit scores. So, I want to share everything you need to know to decide if their short-term financing program is right for you. 

Here’s what you’ll find. 

  • A Full Crown Office Supplies Review
    • What is Net 30 and Why Should You Care?
      • How to Apply for Net 30 Payment Terms
      • Who does Crown Office Supplies Report to?
      • When Will On-Time Payments Be Reported?
    • Competitor Analysis
  • Final Thoughts

Keep reading to find out how Crown Office Supplies can help you on your path to obtaining higher business lines of credit. 

A Full Crown Office Supplies Review

As the name suggests, Crown Office Supplies sells stationery, writing utensils, filing cabinets, and other materials you might need to use in the workplace or in a classroom. So, they are an obvious choice for any business to shop with. 

Crown Office Supplies customer service

Another bonus perk of shopping with Crown Office Supplies is that they have a referral program. If you refer a friend or colleague to shop on their website, you can earn $15 in cash. 

But, how do they stack up against competitors for building business credit? And, what kind of impact can their trade line of credit have on your business credit score? 

Now, let’s examine the brand’s complete offering. 

What is Net 30 and Why Should You Care? 

If you’re not familiar with net 30 terms, basically this just means that you buy now and pay later. In the case of net 30 terms, you must pay in full within 30 days. In the case of net 45, you would need to pay in full within 45 days and so on. 

Crown Office Supplies enables businesses to apply for a net 30 account. While this is a convenient option for companies who might not have the immediate cash flow to pay for supplies, the true beauty is that on-time payments to a company that reports to business credit bureaus can result in a boost for your business credit score. Crown Office Supplies is one such company.

Recommended: Using 30 Day Net Vendors to Build Your Business Credit Score

Both established and new businesses can leverage net 30 terms from Crown Office Supplies. 

How to Apply for Net 30 Payment Terms

If you want to leverage net 30 terms from Crown Office Supplies, here’s what you need to do. Before you apply, you need to get a few items out of the way. 

  1. Form a legal business entity in your state.
  2. Apply for an employer identification number (EIN).
  3. Get a DUNS number.  

After that, you’ll visit the Crown Office Supplies website and navigate to the Net 30 Application. Then, fill out the application with your information and read the terms carefully before your submit. 

Crown Office Supplies will contact you via email to let you know whether or not you have been approved for financing. Once you are approved, you simply shop for supplies you need to run your business thend pay your balance in full each month. 

Who Does Crown Office Supplies Report to? 

At the very least, when utilizing net 30 terms to build business credit, you want to work with vendors who report to Dun & Bradstreet (D&B). D&B is the bureau that most banks and credit unions look to when deciding whether or not to extend credit to a business. Fortunately, Crown Office Supplies reports on-time payments to five business credit bureaus: 

  1. Dun & Bradstreet
  2. Experian Business
  3. Equifax Business
  4. CreditSafe
  5. National Association of Credit Management
Crown Office Supplies Reporting Agencies

So, you can rest assured that your payments will be reported to every possible business credit monitoring agency. This is excellent news. No matter which bureau your lender uses, they will be able to see your responsible credit behavior as soon as it’s reported. 

When Will On-Time Payments Be Reported? 

As with most net 30 vendors that report on-time payments to business credit bureaus, Crown Office Supplies will report on-time payments regularly. In this case, payment history will be reported every 30 days. So, in as little as a month, you could have a tradeline reporting on your credit reports. 

Competitor Analysis

It’s possible that you’ll find better pricing for office supplies at major retailers like Costco, Walmart, or Amazon, that’s not what we’re looking at here. Direct competitors report on-time payments on trade lines of credit to business credit bureaus. Crown Office Supplies’ key competitors are Quill and Summa Office Supplies. 

So, how do these three brands compare?

Net 30 Office Supply Retailers

Quill, Summa, and Crown Office Supplies offer net 30 terms. Plus, when you make on-time payments to these vendors, they will be reported to D&B as well as Experian and Equifax’s business monitoring bureaus. For building credit, one office supply vendor is not necessarily better than another. 

However, there are stipulations you must meet to leverage net 30 terms. 

  • Crown Office Supplies’ annual fee is $99 (which is also reported to business credit bureaus). 
  • Quill requires that you order $100 or more in products per month over a three-month period before you qualify. 
  • Summa Office Supplies has a minimum $75 order requirement the first month for eligibility. 

So, choose the vendor that meets your product and budget needs. 

Final Thoughts 

When establishing your first five trade lines of credit, Crown Office Supplies could be an excellent vendor to establish net 30 terms with. And, as long as you make on-time payments, this will have a positive impact on your credit score. If you’d like to learn exactly how to leverage vendors like this to boost your D&B score and to obtain up to $100K in business credit in 30 days, enroll in Business Credit Workshop today.

This is How to Leverage Business Credit to Transform Your Life

By Joe

You’re going to come across a lot of advice about why you should or shouldn’t acquire debt financing for your business. Without getting into that debate, yes, “bad debt” can have negative results in your personal and professional life. But, when you know how to leverage it properly, business credit can completely transform your company and your lifestyle in tremendous ways. It can also bring additional revenue and cash flow.

So, if you have a good business credit score (or you’re ready to learn how to get there), you know how to turn $1 invested in your business into $2, and now you want to learn how to take your business to the next level, this guide is for you. 

Here, you’ll find the following: 

  • My Experience With Business Credit
    • Where I Was Before I Discovered Business Credit
    • The Headline That Changed My Beliefs
    • How This New Discovery Shaped My World
  • Solving the Mysteries of Business Credit
    • Why You Need Working Capital to Scale Your Business
    • Business Lines of Credit vs Angel Investing or VC
    • The Basics of Business Credit for Absolute Beginners
    • The Greatest Business Credit Obstacles You’ll Face
    • The Key to Unlock Your Business Credit Potential
  • Final Summary

My Experience With Business Credit  

Before you dive into the nitty-gritty details, I want to share my story. Learn where I was before discovering business credit. Then, find out what caused the shift in my beliefs and understanding of business finance. After that, learn how business credit can completely transform your life. 

Where I Was Before I Discovered the Power of Business Credit

Before I discovered the immense value of business credit and how to leverage it to fuel a successful real estate investment company, I was working as a technical recruiter. My job was to place high-level IT professionals and contractors that made $100 to $300 per hour with big companies like Johnson & Johnson and Merck. 

My job came with a salary, a nice office, plenty of windows, and an overall pleasant environment. Plus, I was able to earn a commission when I placed someone at a position. It took a lot of work and a few dead-end jobs to get to this point but actually, I liked my job at the time. 

At that stage in my career, I had the potential to earn more than just a base salary, which was important to me, and I liked my co-workers. I knew that if I worked harder I could make more money and I found comfort in that. 

But, one Wednesday morning around 8:30 am, I was driving to work when I looked to the side of the road and noticed a couple of guys playing golf. And, I realized that I wanted the freedom to play golf in the middle of the day. It was at this moment, I first questioned the 9 to 5 lifestyle and I started to feel like a caged bird. 

Suddenly, I didn’t want to work from 9:00 to 5:00 every day and limit myself to two weeks of paid vacation each year for the rest of my life. Instead, I wanted to spend time with my family and have the freedom to travel whenever I wanted. I was in my 20’s. And, before that moment, I didn’t believe I could have that kind of life for another 40 years when I was ready to retire. 

But, at that moment, there was a shift in my beliefs. While I didn’t yet know I could attain the dream, I decided to try anyway. I made the leap and launched a real estate investment business while working a full-time job. 

At this time, I had to use personal capital — my own personal credit cards and cash to fund my business. Personal credit cards were helpful because they allowed me to operate as if I were a larger business. And, my goal was to get the results a larger company would get, use the revenue to pay off debt, then repeat the process. So, it was working. 

However, the more personal credit you use, the worse your score ends up because your utilization is too high. So, launching the business ended up messing up my personal credit. I was still hopeful, but there were some obvious problems.

The Headline That Changed My Beliefs

During the early stages of business, I was a sponge. I was trying to learn everything I could. So, I signed up for every email list that I thought might help me create the success I wanted, even if I would only get scraps from each of them.

One day, I got an email with a hook that said something like, “26-Year-Old-Kid Gets $100K in Funding in 100 Days.” While I didn’t believe it could be true, I was still intrigued. So, I clicked the link, watched the webinar, and I paid for the course. 

After that, I bought every course and book I could find about business credit. From these sources, I pulled out all of the best parts, let go of the useless or outdated information, and used my newfound knowledge to come up with a plan for my own business.

Then, the magic happened in 2007 when I decided to launch a direct mail marketing campaign. I wanted to send letters to homeowners that might have distressed properties because I was looking to invest in real estate. And, I thought this would be a great way to get off the ground. So, I applied for a business credit card to fund the campaign. 

When I got approved for a $25K business credit card with no reporting to my personal credit profile, I was amazed. At that time, the highest limit I had on my personal credit was $15K. I used the credit card to execute a successful campaign, got my company off the ground. 

So, I got a few more business credit cards, cleared $100K, and I invested heavily in my marketing. When I saw that the model worked, I went in and doubled down. Before this, I never would have been able to afford radio ads. But, once I had credit, I was able to leverage advertising channels that delivered substantial results. As a result, I started to see a very positive return on my investment. 

How This New Discovery Shaped My World

Soon after obtaining business credit, I was able to leave my job as a technical recruiter because I was making more money in real estate. And, it didn’t matter if I had high credit utilization on my business credit cards because nobody could really see it on my personal credit report. 

Now, I am able to see success a lot quicker because I have extra funding behind me. I have opportunities that didn’t exist before. I can do more marketing which opens up more revenue. I was able to get an office, hire employees, and founded a real company within 90 days of getting business credit.

Years later as a result, I have a real estate portfolio and I can play golf whenever the heck I want. My wife and I have been able to go to the places and see the things we want — we’ve been to 16 Caribbean islands and I’ve been to some really awesome places like Japan and Thailand. So, we did cross over to the lifestyle we had dreamed about. It really was possible.

There is one more, completely accidental transformation that has happened as a result of what I learned that is even more exciting. Shortly after realizing that business credit was the key to obtaining the capital I needed, I attended a seminar. And, while I was there, someone overheard me talking about my experience and stopped me.

The stranger asked me to repeat what I had just said. And, when I had told him that we can get all this funding for our business beyond personal credit, he asked a question that would change my life forever. 

We were on a lunch break and he suggested that I come up with five tips to secure business credit to share with the audience. Then, at the end of my presentation, ask, “Does anyone want to learn more?” If they did, we would ask them to walk to the back of the room and sign up for a workshop to learn how to implement these five tips to obtain new business funding over the next 30 days. 

At the time, I despised public speaking. I had said that standing up in front of a crowd to tell my story was something I would never do. But, I had a choice and I said, “yes.”

But, I didn’t have a course to sell. 

So, I grabbed an index card, came up with five bullet points, and presented them to the crowd, my heart pounding the entire time. And, at the end of my 15-minute speech, one-third of the group stood up and walked to the back of the room to sign up for my course where we were going to delve deeper into those five bullet points. I was like a happy puppy with all of the energy and excitement around this new discovery I had to share with these people. 

I thought back to all my recent training and reading materials. Then, I took what I liked from the best parts of all of it and left out the rest. And, when I launched my business credit coaching business in the back of the room at the seminar that day, I only hoped I could bring something more valuable to the marketplace. 

7 Secrets to Obtaining Business Credit Revealed PDF

The reason Business Credit Workshop’s name is so simple is that I only had a few minutes to come up with it. Now, I’ve coached over 1,800 individuals to obtain the credit they need to take their businesses to the next level. And, this doesn’t include all of our members who have taken advantage of the backend training we offer. 

Today, I have a database of bankers. And, I talk about the trade secrets that the “gurus” didn’t want to tell people. I talk about the top 50 lenders I like to use. I share the nitty-gritty details. 

My five bullet points are now a fully-sharpened, seven-step system for obtaining business credit. Because of what I learned, my business and personal life have improved tremendously, and I’ve been able to help thousands of other business owners make life-altering transformations within their companies. 

Solving the Mysteries of Business Credit  

Now, I want to tell you how you can take what I know and apply it to get funding for your business. Get ready to learn the fundamentals and the secrets of getting the working capital you need to grow your company and increase your revenue. 

Why You Need Working Capital to Scale Your Business

I really love the way one of my past coaching clients, Brendan Purnell put it when interviewed for a case study: “Personal credit is limited and cash flow is a gamble. Make sure you have adequate capital because, in the blink of an eye, you can go belly-up if you are under-capitalized.” 

40% Businesses Struggle to Pay Operating Expenses

According to the Federal Reserve, 40% of businesses struggle with their operating expenses, which is the top financial challenge business owners face. And, if you can’t get the capital you need to operate, you can’t keep your doors open, let alone grow and thrive. 

I recently spoke with someone who had a hair salon in Oregon back in 2009. She saw an opportunity to offer a professional-quality, organic haircare line and nobody in the US was doing it yet. In the beginning, she made the hair products available exclusively to her salon clients. When the product line was a hit, she decided to put the shampoos and conditioners online to see if there was enough interest to go national. 

And, within less than a month, she got an inquiry for a $20K order. But, she didn’t have the capital to fulfill it. So, after a lot of head-scratching, she decided to refer the customer to her supplier (the only other seller she knew of). Ultimately, she liquidated the business because she felt in over her head. 

Now, when you know about business credit, you can have an entirely different outcome. Here’s an example of a similar problem with a happier ending: 

One of my original coaching clients, that I met at the first speaking event, is a man named Greg Dashkin. Greg lives in New Jersey where I live and was running a marketing business when we met. He sold t-shirts, pens, and other swag to small and large companies. And, he was making money at his business. 

But, when he would get a $20K order, he couldn’t fulfill it due to lack of capital and he would have to refer sales to his competitors. He was missing out on a lot of potential revenue and was constantly stuck. Many times, this exact problem causes potentially profitable businesses to shut down. 

So, after hearing Greg’s problem, the event host told him to talk to me. He told him that I had something that could change his business. Greg and I  started working together and he got $100K in credit pretty quickly, which solved his problem. 

And, he was one of the most appreciative entrepreneurs I’ve ever worked with. To this day, we still talk, we still work together, and he still encourages me to keep spreading the message. 

Furthermore, you don’t have to be stuck to leverage business credit for growth. Some entrepreneurs just want to scale faster. 

For example, I work with an Amazon seller named Scott. When he first came to me for coaching, he was pretty successful, earning about $30K per month. In eCommerce, the margins are about 20%. And, once you know how to sell a 10-cent hat for $5, it’s easy to scale. 

But, if you rely on cash flow to invest back into your business, growth is slow. But, after Scott realized how to obtain credit for his business, his sales jumped from $30K to $130K. When you have the capital to invest in more products, you can cross the six-figure income threshold.

Business Lines of Credit vs Angel Investing or Venture Capital

In full disclosure, I’ve never worked with Angel Investors or Venture Capitalists to fund my business. But, I did work in a business incubator office. So, I networked and had friendships with local venture capitalists (VCs) in New Jersey. And, I really like their system. 

If you’ve ever watched Shark Tank, you’ve seen how innovative entrepreneurs try to pitch their ideas to highly successful business investors. That’s precisely how VC works. There’s nothing wrong with this system (plus, who wouldn’t want to work with Mark Cuban?). When you work with a VC, you have a mentor who builds you up and gives you funding. 

But, there’s a catch — you also have to give up equity in your business when you work with a VC or angel investor. Ultimately, an investor wants a portion of your profits. Plus, most of the time, they push you to sell in the end. And, that’s not what I have ever wanted. 

So, instead of giving up equity in your company, I like the idea of learning to obtain the same amount of funding and maintaining full control over your operations. 

And, there’s a myth that you can’t use credit everywhere. It’s actually extremely easy to convert credit cards into cash or a check. So, In place of Angel Investing or VC, I prefer business credit cards or business lines of credit. When I first started obtaining credit, I leveraged big banks like Chase and Bank of America. 

Then, I realized that I preferred to work with local community banks and credit unions. I elect for smaller banks because the underwriting for national banks is extremely strict. And, if you don’t fit inside a set box, it can be more difficult to obtain credit. 

On the other hand, when you work with a portfolio lender (which means the institution lends its own money) or a credit union, the underwriting is done in-house. So, the requirements are more flexible and, if you have someone at a bank who can vouch for you, people are more willing to work with you. 

Recommended Reading: 

  • Should You Open a Navy Federal Credit Union Business Account? 
  • PNC Bank Business Credit Card Review & Comparison

The Basics of Business Credit for Absolute Beginners

When I speak to business owners and I start talking to them about business credit, one of the first things I tell them is that they need to have a good business credit score. And, many of them don’t know that exists. Furthermore, some of them have existing business credit scores that they are unaware of. 

So, before you can implement any of the advice you read here, you need to understand your business credit profile. There are three bureaus that monitor business credit: 

  1. Experian Business 
  2. Equifax Business
  3. Dun and Bradstreet (D&B) 

So, as with your personal credit score, your business will have varying scores from different bureaus. The DUNS number from D&B is a little different from the scores Experian and Equifax Business use to classify business credit. And, one of the first action steps to take is to register for a business credit monitoring account. 

Nav Business Credit Monitoring

Nav is a business credit monitoring platform that packs a punch. There are three reasons you need to register for an account. 

  1. You can scan your report for inaccuracies and clean up anything negative. 
  2. The platform will give you feedback about the areas you need to improve to boost your score. You can use this feedback to stay informed as you build your credit profile. 
  3. For a monthly fee, you can upgrade your account and enroll in “Loan Builder,” where the company reports to credit bureaus that you are paying on-time each month. So, you get a better credit tracking service with helpful tools and simultaneously increase your business credit score. 

Having a good credit score is not the entire process, but it is a fundamental part of the system. Without this, the rest of what you learn here is useless. 

So, if you don’t already have one, go sign up for a Nav account right now. Then, read on to dive deeper. 

The Greatest Business Credit Obstacles You’ll Face

When you start at the bottom of the mountain learning about business credit, you can’t see every obstacle you’ll face before you’re able to stand at the peak and look down. But, if you’re told what to expect, you can better prepare yourself.

There are a couple of hurdles that arise at financial institutions every few months or once per quarter. 

  1. Financial programs change
  2. Bank employees leave 

First, for example, if you’ve been in business for a couple of years and you’re profitable, a bank might extend a “no-doc” business line of credit one quarter. With a no-doc, no financial statements are required. And, you may be able to get a no doc for up to $100K. But, if things change within the lending industry or the bank’s own financials, that program might not be offered later. 

So, this is not a ‘set it and forget it’ system. It’s a living, breathing organism. If you place a tent in the woods, you can’t just waltz back to the forest months later and expect it to be there — it could easily be taken or destroyed by weather or wildlife. Business lending is the same.  

Second, your contacts at the bank might leave. Sometimes they will tell you and sometimes they won’t. In some cases, these people move to other banks, and in others, you won’t know. So, once you have a rapport with someone, if you don’t keep their LinkedIn profile or personal cell phone number, you may end up needing to start a brand new relationship. 

So, keep your finger on the pulse to monitor the mood of the banks and maintain close relationships within them. That’s why our account managers are always networking with banks to find new programs and stay up-to-date with changing environments with hundreds of contacts. And, this is why some of our long-time clients come back every few years for more coaching. 

While these ever-changing ecosystems involve quite a bit of effort, take it from me, the view from the summit is glorious. 

The Key to Unlock Your Business Credit Potential 

Trade Secrets Financial Gurus Don't Want to Explain

When you want to overcome the challenges above, you need to have the right mindset. So, if you only ever listen to one piece of advice about business credit, let it be this: build rapport with the right people. 

While this sounds simple in theory, this tip needs to be taken seriously. Rapport and relationships are the trade secret that most financial gurus don’t want to explain to you.  This is probably because they always want to be the best. But, I don’t feel like I’m doing my job unless my clients and students can master the concepts I share. 

For example, after learning our approach to obtaining business credit, one of our coaching clients drove from New Jersey to upstate New York to Key Bank, which used to be called First Niagara. In just one day, he came home with a line of credit for each of his two businesses. He got $50K for each, totaling $100K. 

So, without my help, understanding the processes and techniques he had learned from Business Credit Workshop, and how to network and build rapport, he went out on his own and had successful results. He then shared his new contact with me. After that, we were able to help many future coaching clients obtain substantial lines of credit from Key Bank because we then had someone within the institution who knows us, likes us, and trusts us. 

Still, I have to do my job of filtering out businesses and placing them with the most well-matched banks and lenders. And, I help entrepreneurs become qualified before introducing them to our contacts. But, Greg’s situation was satisfying because I felt like he made it out of the workshop with mastery over the principles we teach.

And, anyone can do the same thing once they understand rapport in professional relationships. But, like in Greg’s case, some of them come back anyway because they know we have account managers dedicated to networking with banks to keep our database up-to-date — and they don’t always want to do the work on their own. 

To build rapport, one actionable takeaway is to call the bank or email even when you don’t need anything from them. You want to check-in from time to time to time and treat bankers like friends. Because when bankers or brokers know you, like you, and trust you, they will work with you and with underwriters to make things happen. 

An advanced hack (that I learned from my wife) is to keep track of what’s going on in peoples’ lives. Take notes. With modern technology, you can use a CRM or helpdesk platform to record information about people. But, as an individual or small business owner, you can simply write things down in your day planner. 

For example, if you know somebody is having a baby, write that down. Then, when you call back, you can ask them how the baby is doing. Of course, people love it when you listen to them and pay attention to what’s going on in their lives. And, while you may not have considered this important in the realm of credit, it most certainly is. 

Business Credit is a Lifelong Journey with a Bank or a Person

When I started my real estate investment business, I went to my local real estate investment club and made friends with the owner because he was successful. And, six months after I met him, I started asking questions to pick his brain. Try to think of the business credit journey as a lifelong professional relationship with a bank or a person. After that, other pieces of the puzzle fall into place. 

So, make friends with the person who gets the approvals at the bank. And, here’s how you can do that. 

  1. Network with the banks
  2. Build rapport with decision-makers 
  3. Ask what goes into an approval
  4. Listen to the answer  
  5. Implement your friend’s advice 

To get credit cards, your best friends don’t have to be bankers, but it will help if you get out to some Chamber of Commerce meetings and make meaningful connections. Yes, the meetings can be kinda boring, but everyone is there to network and build their own professional networks. Invite someone to dinner or a drink and try to establish a new friendship. 

Another great channel for networking, especially today with social distancing in place across the globe, is LinkedIn. Start learning how to leverage the platform to your advantage and see if there’s anything you can do to help someone that would be a beneficial professional connection to have, namely credit union or bank employees. 

This knowledge will come in handy especially in times like right now when we’re experiencing major economic change. Because of COVID-19 and the PPP program, business owners are scrambling to get their low-interest, forgivable loans to stay afloat. So, banks are working unprecedented hours to service their customers. 

Traditionally, bankers work from 9:00 to 5:00 Monday through Friday. Presently, they’re in the office after hours, weekends, and even on Easter to process 30K applications. Still, I’m getting personal emails and texts from bankers along the lines of, “Hey, Joe. PPP money may run out soon, so let’s get you taken care of.” It’s a small effort that brings a big result, in this case someone at the bank looking out for me. 

Final Summary

Now, if you are ready to take the next step to revamp your business and lifestyle, I have some homework for you to start today: 

  1. Sign up for an account with NAV.
  2. Check out your business credit score and create a plan to clean up anything that makes your business high risk for lenders.
  3. Join at least one new group where bankers hang out. 
  4. Introduce yourself to someone who works at a community bank or credit union in your area. 

And, if you want to keep learning and improving your situation, make sure you check out our recent client case study here.

How to Create a Business Credit “Entity”

By Joe Lawrence

Just created a new video tutorial called “Creating a Business Credit Entity – The right way!”. Check it out at Business Credit Tutorials –> How to Create a Business Credit “Entity”

createentity

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