business credit tutorials

Sole Proprietorship VS LLC: How to Choose Your Entity Wisely

Here, we teach people how to build business credit. And, establishing your entity is a super important step in the process — early on, the two most common choices are sole proprietor or LLC.

If you’re running a business as a sole proprietor, and considering an upgrade to LLC, you might already know that you can get some business credit even without registering as an LLC or corporation…But if you’re looking to take your business to the next level and secure larger no-doc business lines of credit (think 25k, 50k, 100k), you might find it challenging without a registered corporate entity.

Banks and lenders tend to prefer working with LLCs or corporations because they offer more protection and credibility. So, I highly recommend considering forming an LLC over a sole proprietorship if you’re serious about obtaining substantial business credit.

Don’t get me wrong — you can still apply for business credit cards as a sole proprietor. But, a registered LLC or corporation can make it easier to secure other types of financing and help you build a stronger credit profile for your business.

In this article, we’ll dive deeper into the differences between sole proprietorship and LLC, and explore their pros and cons, especially when it comes to business credit and financing options.

Here’s what we’ll cover:

Are You Sure You Only Want to Look at Two Options?
Sole Proprietorship vs Single-Member LLC
Here’s How Sole Proprietorships & LLCs Pay Taxes
- Comparison of Tax Rates & Deductions
- Can an LLC Be Used to Reduce Taxes?
How to Choose Between a Sole Proprietorship and an LLC
How to Register Your Business
Frequently Asked Questions
Conclusion: Which Structure is Best for You?

Now, let’s get going!

Are You Sure You Only Want to Look at Two Options?

Before we get too deep into the pros and cons of LLCs vs sole proprietorships, let’s take a quick look at some more entity types — I want to cover it all and give you everything you need to know. After all, it’s crucial to choose the right structure for your needs.

Sole Proprietorship

A sole proprietorship is the simplest type of business structure and is owned by one person. The owner has complete control over the business and is personally liable for its debts and legal issues. Sole proprietorships are not taxed as separate entities from the owner, meaning that the owner reports the business income on their individual tax returns.

Limited Liability Company (LLC)

A limited liability company (LLC) is a type of business entity that gives the owners (“members”) “limited liability protection.” This is a swanky way to say that the member’s personal assets are separate from the company’s assets, and their personal liability is limited to the amount of money they’ve invested in the company.

LLCs can have one (“single-member”) or more (“multi-member”) members, and they can be taxed as either a sole proprietorship, partnership, S corporation, or C corporation, depending on how the members choose to be taxed.

S Corporation

An S corporation is another type of entity that you may want to consider — it’s a type of corporation that is taxed differently than a traditional corporation (C corporation). An S corporation’s profits and losses are “passed through” to its shareholders, who report the income on their individual tax returns.

This means that S corporations avoid double taxation. To qualify as an S corporation, a business must meet certain requirements set by the IRS.

C Corporation

Next, you have a C corporation — a traditional corporation that is taxed as a separate entity from its owners (“shareholders”); this means that the corporation pays taxes on its profits, and the shareholders pay taxes on the dividends they receive from the corporation.

C corporations offer limited liability protection for their shareholders, but they are subject to double taxation.

Partnership Options

At this stage, it’s also important to look at the two types of partnerships:

General partnerships are a type of business entity where two or more people share the management and ownership and management of the company. The partners share the profits and losses of the business and are personally liable for any debts or legal issues that the business incurs.

A general partnership is typically not taxed as a separate entity from the partners, meaning that the partners report the business income on their individual tax returns.

Limited partnerships are similar to general partnerships but with two types of partners: general and limited partners. General partners have control over the day-to-day business operations and are personally liable for any business debts and legal issues. Limited partners, on the other hand, have limited liability and are not involved in the management of the business.

Limited partnerships are typically taxed as pass-through entities.

Sole Proprietorship vs Single-Member LLC

A single-member LLC is not the same as a sole proprietorship. In terms of liability protection, taxation, ease of formation and maintenance, and flexibility in management, there are considerable differences between sole proprietorships and limited liability companies (LLCs):

First of all, sole proprietorships provide no liability protection for their owners — basically, he owner’s personal assets are at risk if the business is sued or incurs debt. In contrast, LLCs offer “limited liability protection” to their owners (their personal assets are generally protected from the company’s debts and legal judgments).

Next, sole proprietorships are typically taxed as pass-through entities, which means that the business’s profits and losses are reported on the owner’s personal tax return. LLCs can also be taxed as pass-through entities, but they provide the option to be taxed as a corporation (this can be advantageous for LLCs that want to cash in on lower corporate tax rates or retain earnings in the business without paying personal income taxes on them).

And, sole proprietorships are the easiest and cheapest business entities to set up…in most states, they require no formal paperwork or registration. Now, while LLCs require more paperwork and filing fees to establish, they offer formal structure and protection. Both types of businesses require ongoing maintenance, such as keeping accurate financial records and filing tax returns, but LLCs typically have more stringent compliance requirements.

Finally, sole proprietors have complete control over the management of their businesses…but (big but), this also means that they have full responsibility for all aspects of the business. LLCs are more flexible in terms of management structure — they can be managed either by the members or by outside “managers.” LLCs can also have varying degrees of ownership and voting rights among members, which allows for more customized ownership structures.

While both sole proprietorships and LLCs offer benefits and drawbacks, LLCs typically offer more liability protection, tax flexibility, and management structure options, but require more paperwork and ongoing maintenance.

Here’s How Sole Proprietorships & LLCs Pay Taxes

Sole proprietors report their business income and expenses on their personal tax returns using Schedule C (Form 1040). The net income from the business is then subject to self-employment taxes, which include Social Security and Medicare taxes. Self-employment taxes are calculated on Schedule SE (Form 1040) and are owed in addition to income tax.

→ Sole proprietors are also responsible for paying estimated taxes quarterly throughout the year.

LLCs have more flexibility in how they pay taxes — by default, single-member LLCs are taxed as sole proprietorships and report their business income and expenses on the same Schedule C as a sole proprietor (Form 1040).

Multi-member LLCs are taxed as partnerships and file Form 1065 to report their business income and expenses annually. But, LLCs can also choose to be taxed as S corporations or C corporations by filing Form 8832 or Form 2553, respectively.

Comparison of Tax Rates & Deductions

Sole proprietors and LLCs taxed as sole proprietorships pay income tax at their individual tax rates, which range from 10% to 37% depending on their taxable income. They are also subject to self-employment tax, which is currently 15.3%.

LLCs taxed as partnerships, S corporations, or C corporations are not subject to self-employment tax — Instead, the owners or shareholders pay income tax only on their share of the profits.

Both LLCs and sole proprietors can deduct typical business expenses, such as rent, supplies, and equipment, to reduce their taxable income.

Can an LLC Be Used to Reduce Taxes?

You can use an LLC to reduce taxes in a couple of ways:

Elect to be taxed as an S corporation — this allows the owners to pay themselves a reasonable salary and take the remaining profits as distributions. This can reduce self-employment tax, as only the salary is subject to Social Security and Medicare taxes.
Take advantage of deductions and credits — LLCs can deduct business expenses, such as rent, supplies, and equipment, as well as contributions to retirement plans and health insurance premiums. They may also be eligible for tax credits, such as the Research Tax Credit or the Small Business Health Care Tax Credit.

Note that sole proprietorships are eligible for many of the same write-offs and credits as LLCs. So, how can you choose between them?

How to Choose Between a Sole Proprietorship and an LLC

Here are some factors to consider when deciding whether to choose a sole proprietorship or an LLC:

Sole Proprietorship:

Simple to set up and maintain — A sole proprietorship requires minimal paperwork and legal formalities, making it easy and affordable to start and operate.
Complete control — As a sole proprietor, you have complete control over your business decisions and operations.
Tax benefits — As a sole proprietor, you report your business income and expenses on your personal tax return, which can simplify tax preparation and potentially lower your tax burden.

Limited Liability Company (LLC):

Limited liability protection — An LLC provides limited liability protection to its owners, meaning that the owners are not personally responsible for the company’s debts and liabilities.
Credibility and professionalism — An LLC is often seen as a more credible and professional business entity than a sole proprietorship, which can be an advantage when dealing with customers, vendors, and investors.
Flexibility in taxation — LLCs have the option to be taxed as a partnership, an S corporation, or a C corporation, providing flexibility in tax planning and potentially reducing overall tax liability.

In general, if you’re a small business owner with low risk and relatively simple operations, a sole proprietorship can be a decent choice. However, if you are concerned about personal liability or are looking to grow your business and establish credibility, an LLC may be a better option. It’s always a good idea to consult with a lawyer or accountant to determine the best business structure for your specific needs and circumstances.

With that said, I know that you can get business credit with a sole prop but you can get serious no-doc business lines of credit (25k, 50k, 100k) without a real entity. so I recommend getting an LLC. You can get business credit cards but banks want to see an LLC or corporation to extend business lines of credit.

How to Register Your Business

Here are the basic steps to file the necessary paperwork for forming an LLC and registering as a sole proprietor.

Of course! Here are some more conversational explanations of the steps to form an LLC and register as a sole proprietor:

How to form an LLC:

Pick a name for your LLC that’s not already taken in your state and meets your state’s requirements.
File an Articles of Organization form with your state’s Secretary of State office. This form typically asks for basic information about your LLC, like its name, address, and the name and address of your registered agent.
Draft an operating agreement for your LLC. This outlines how your LLC is run and who owns it. Some states don’t require an operating agreement, but it’s still a good idea to have one.
Get any necessary licenses and permits for your business. Depending on where you live and what you do, you might need specific licenses or permits to operate your LLC.
Apply for an EIN from the IRS if you plan on hiring employees or opening a bank account for your LLC.

How to register as a sole proprietor:

Decide on a name for your business, whether it’s your own name or something else.
Get any licenses or permits you need to legally run your business in your area.
File a “Doing Business As” (DBA) form with your state’s business registration office to register your business name.
Apply for an EIN from the IRS if you plan on hiring employees or opening a business bank account.

Remember, the specific rules and requirements for forming an LLC or registering as a sole proprietor vary by state and local municipality, so be sure to do your research and follow the guidelines for your location. For example, in Oregon, you can legally run a business after filing an “Assumed Business Name” alone, but may still need local business licenses.

Frequently Asked Questions

What are the disadvantages of an LLC vs a sole proprietorship?

LLCs can be more costly and require more paperwork than sole proprietorships, but they offer greater personal liability protection. Sole proprietorships are generally easier and cheaper to set up, but leave you personally responsible for any business debts or legal issues.

What is more risky, a sole proprietorship or an LLC? Why?

A sole proprietorship is generally riskier than an LLC, as sole proprietors are personally liable for any business debts or legal issues. Forming an LLC can offer greater personal liability protection, which can help shield the owner’s personal assets from business-related risks.

How do business owners pay themselves?

Business owners can pay themselves in different ways, including salary, dividends, or draws/distributions from business profits, depending on the business structure and personal financial needs. And, some companies pay the owner’s salary with a business credit card. It’s important to consult with a financial advisor or accountant to ensure compliance with legal and tax requirements.

Conclusion: Which Structure is Best for You?

Whether you should choose a sole proprietorship or an LLC is based on a number of factors. Do you want more ease or more protection? Do you have specific tax needs? By now, you should have an idea which is best for your operations.

However, if you want substantial lines of business credit, there is a clear choice: form an LLC…You can certainly obtain business credit cards as a sole proprietor, but to get those larger lines of credit in the tens and hundreds of thousands range, most banks will want to see a more formal business entity like an LLC or corporation.

To learn how to obtain up to $100K in business credit in as little as 30 days, join Business Credit Workshop today.

Is it Illegal to Use a Business Credit Card for Personal Use? +More Answers

By Joe Leave a Comment

Have you ever wondered whether you can use your business credit card for personal expenses?

It’s a common question among business owners, but the answer can be a bit tricky.

While we can’t give legal advice (if you need that, please talk to your attorney and your CPA), we’re here to provide you with helpful information that can guide you in making informed decisions for your business — One interesting thing we found out is that using your business credit card to pay yourself a salary as an employee of your own business can be considered a legitimate expense.

Pretty cool, huh?

We’ll delve into this and other commonly asked questions about business credit card use in this article, so keep reading to find out more!

Here’s what’s in store:

Scenario: Employee Uses Company Credit Card for Personal Use
- How to Prevent Personal Spending on Company Credit Cards
General Rules for Business Credit Cards
- What Can You Use Business Credit For?
  - Paying Yourself With Business Credit When
- Is It Illegal to Use Business Funds for Personal Use?
How Business Credit Affects Personal Credit
- Is it Better to Use Business Credit Card Points for Personal Things?
Conclusion: Is it Illegal?

Let’s rock and roll!

Scenario: Employee Uses Company Credit Card for Personal Use

While most of our content is targeted at business owners, you might be reading this because you’re wondering if you can add a pair of shoes to your business order, and still pay with your company’s corporate card. Here’s what I can tell you.

When an employee uses a company credit card for personal expenses, it can cause a lot of problems.

First off, it’s usually against company policy, which means the employee could face some serious consequences like getting in trouble with the boss or even losing their job. From a legal standpoint, this is risky for all parties because if the expenses are shady or illegal, both the employee and the company could face a run-in with the law.

Next, staff members that use a company’s card for non-business expenditures can complicate finances because it’s hard to keep track of personal expenses and separate them from business expenses — it could cause some major issues with taxes and budgets down the road.

Lastly, if personal spending exceeds the credit limit on the card, it can result in fees or penalties, which will hurt the company’s bottom line.

Can you use business credit card for personal use Reddit

_{Image source: Reddit}

So, if you accidentally used a company credit card when you didn’t intend to, or if you notice that an employee used your business credit card for something questionable, it’s best to act fast.

How to Prevent Personal Spending on Company Credit Cards

Q: Why does our Amazon business report show an order for a gold-plated toilet seat?

A: Someone wanted to feel like a VIP on the company’s dime.

In all seriousness, it’s crucial to make sure that employees use company credit cards responsibly and only for legitimate business expenses. Otherwise, the company could end up footing the bill for some pretty outrageous purchases!

Here are some actions you can take to avoid personal employee spending on your business credit cards:

Create clear policies — Make sure everyone knows the rules when it comes to using company credit cards. This means setting out clear policies on what expenses are allowed and what expenses are not allowed.
Set spending limits — Give your employees some guardrails by setting limits on how much they can spend with the company credit card. You can also set daily or weekly limits to help control spending.
Monitor transactions — Keep a close eye on credit card transactions to make sure there are no unauthorized or personal expenses. This means setting up alerts to notify you of any unusual transactions or spending patterns.
Require receipts — Make sure your employees know that they need to submit receipts for all credit card expenses. This helps ensure that all expenses are legitimate and for business purposes.
Provide training — Never assume that everyone just knows how to use a company credit card. Provide training that covers your company’s spending policies, guidelines, and best practices for managing credit card expenses.

By doing these things, you can help prevent personal employee spending on company credit cards…. and ensure that all credit card expenses are legitimate and for business purposes only.

General Rules for Business Credit Cards

First and foremost, you need to understand that business credit cards are intended for business expenses…legit ones! This means that you should only use the card to pay for things that are related to your business, like office supplies, travel expenses, and other business-related costs.

Next, it’s vital to keep your personal and business expenses separate (i.e. you should never use your business credit card to pay for personal expenses, like groceries, clothing, or personal entertainment).

On a similar note, you need to keep track of your spending. You should monitor your credit card statement regularly to ensure that all charges are legitimate and for business purposes. When issuing business credit cards or corporate cards, it’s also a good idea to set spending limits for yourself and your employees to prevent overspending.

Lastly, be sure to pay your credit card bill on time and in full every month — Late payments can devastate your business credit score and result in hefty late fees and interest charges (remember, you should credit card funds to invest in assets, not squander on liabilities).

Note, that business credit card policies vary between credit card companies and businesses have a right to set unique spending policies within legal guidelines in their jurisdiction.

By following these general rules, you can use your business credit card responsibly and avoid any potential issues down the road.

What Can You Use Business Credit For?

In a word, you need to use your business credit for business expenses.

However, in some industries, expenses that seem frivolous can be completely above board — for example, stylists in the beauty business need to look nice, so they can buy makeup, clothing, and haircare products. And, for businesses with dress codes, you might have a green light on that Armani suit you’ve been eyeballing.

So, what constitutes a business expense?

A business expense is any cost incurred as part of running your business, most commonly:

Rent for your office space
Equipment purchases
Employee salaries
Marketing expenses
Travel costs.

In addition to these more obvious expenses, there are also many other items that can be considered legitimate business expenses, depending on your industry and specific needs. For example, as previously mentioned, in certain industries, expenses like clothing, makeup, and hair care products can be considered legitimate business expenses.

Other examples might include:

Home office expenses
Professional development courses or certifications
Certain meals and entertainment expenses (if they are related to business activities)

It’s important to note, however, that not all expenses will be considered legitimate business expenses. Any personal expenses, such as vacations or personal entertainment, should never be charged to your business credit card.

In general, it’s always a good idea to consult with a financial professional, like an accountant or tax advisor, to ensure that you are using your business credit card appropriately (and taking advantage of all eligible tax deductions).

Paying Yourself With Credit When You Own a Business

As a business owner, there are a few different ways you can pay yourself. One common method is to pay yourself a salary, which you can do using a number of different payment methods including checks, direct deposit, or even a credit card.

Yes, you read that right – you can pay yourself a salary with a credit card!

Now, before you go swiping that plastic, it’s important to understand the pros and cons of each payment method.

For example, paying yourself with a credit card may be convenient, but it can also come with high interest rates and fees if you don’t pay off the balance each month…while other payment methods like checks and direct deposit may be more traditional, they might also require more effort and may not be as flexible.

Regardless of which payment method you choose, it’s important to manage your business finances wisely:

Create a budget
Keep track of expenses
Set aside money for taxes and emergencies.

By taking these steps, you can ensure that you are paying yourself in a sustainable way that supports both your personal and business financial goals.

So, is It Illegal to Use Business Funds for Personal Use?

In general, it can be illegal to use business funds for personal use, especially for employees whose companies prohibit it; this includes paying personal expenses and withdrawing cash from a business account to spend on personal items.

Is using a company credit card for personal use embezzlement?

How often people get caught doing this, I can’t begin to guess. And, the penalties would surely vary depending on the severity of the crime — which is why you should consult with an attorney or CPA to ensure legal compliance.

Using business funds for personal expenses can sometimes be considered embezzlement or fraud, and can result in serious legal consequences…It can also damage your business’s financial stability and reputation.

That being said, in my experience, there are some exceptions to this (like a business owner paying their own salary).

How Business Credit Affects Personal Credit

As a business owner, you need to understand the relationship between your personal and business credit. While they are technically separate, your personal credit can still impact your LLC in a few different ways.

If you have a poor personal credit score, it may be harder to get approved for business loans or credit cards…On the other hand, a strong personal credit score can make it easier to access funding and other resources for your business.

To manage both your personal and business credit effectively, there are a few key tips to keep in mind:

First, make sure to keep your personal and business finances separate as much as possible: open separate bank accounts and credit cards for your business and avoid using your personal credit to cover business expenses.

Next, be sure to monitor your credit scores regularly and address any errors or issues that arise promptly.

And, you need to maintain a good credit utilization ratio – that is, the amount of credit you are using compared to the amount you have available…Both personal and business credit scores are impacted by this ratio, so it’s important to keep your balances low and avoid maxing out your credit cards.

Is it Better to Use Business Credit Card Points for Personal Things?

While I wouldn’t encourage you to spend business credit on personal items, rewards redemption is another story.

Using your business credit card points for personal things can be a tempting proposition, especially if you’ve been racking up rewards points with your business purchases.

I’ve redeemed my Marriott Bonvoy rewards on more than one family vacation.

However, whether it’s better to use those points for personal use ultimately depends on your business’s financial situation and your personal financial goals.

Here are some things to consider:

If your business has a cash flow problem and you’re relying on credit card rewards to make ends meet, it’s probably not a good idea to use those points for personal purchases. Instead, you should focus on using your rewards to offset your business expenses.
On the other hand, if your business is doing well and you have plenty of cash on hand, using your rewards for personal purchases can be a great way to enjoy some extra perks. Just be sure to keep careful track of your expenses and make sure you’re not putting your business at risk by overspending.
If you have a specific personal financial goal, such as saving up for a down payment on a home or a car, using your business credit card rewards to help achieve that goal can be a smart move. Just be sure to weigh the potential benefits of using your rewards against any fees or interest charges associated with cashing them in.

The bottom line is that you should consider the financial health of your business and your personal financial goals before making a decision.

Conclusion: Is it Illegal?

I’ve already said this a few times, but I would rather sound like a broken record than steer you down the wrong path: when in doubt about business credit spending, consult an attorney or CPA.

The short answer is that business credit spending for personal use can be risky and it’s likely to complicate your business budget. Yet, there are plenty of totally above-water business credit spending categories you might not have considered (paying yourself a salary) — I tried to cover them here.

If you want to learn how to obtain up to $100K in business credit in as few as 30 days, join Business Credit Workshop today.

Ty Crandall’s Story: A Quick Look at the Mind Behind CreditSuite

By Joe

When it comes to building business credit, Ty Crandall’s name stands out. As the founder of Credit Suite, Ty has helped thousands of entrepreneurs obtain business credit that’s not linked to their personal social security numbers.

With nearly two decades of experience in the financial services industry, Ty has become an authority in business credit building, scoring, and financing…plus he’s been featured in publications like Forbes, Entrepreneur, and Inc.

So, are you curious about how Ty became the go-to guy for business credit or whether or not you can trust him? Keep reading to learn more about his story, his net worth, and his approach to business credit.

Here’s what’s in store:

Ty’s Career Story
Ty’s Approach to Business Credit
Final Takeaway

Now, let’s get to it!

Ty’s Career Story

Ty Crandall, a Tampa-based entrepreneur, founded Credit Suite (a company that helps entrepreneurs get business credit and financing) over 12 years ago. He is a business credit-building and business loan specialist and fundability expert. Before Credit Suite, Ty founded Elite Credit Inc. (a credit repair offer) and worked as a CEO for TLC Jumbo Mortgage Services for 7 years.

He served in the US Air Force for four years, from 1994 to 1998 before he studied Psychology at the University of South Florida. At this point, Ty has helped over 100,000 entrepreneurs build business credit and access financing with his extensive knowledge of the industry.

Ty’s experience, education, and dedication to helping entrepreneurs expand their business credit options show me that he’s legit.

Ty’s Approach to Business Credit

If you want to learn more about Ty’s approach to business credit, the best place to start is his content — he’s created a myriad of resources worth checking out.

Website: TyCrandall.com

TyCrandall.com is where Ty promotes his most up-to-date speaking, coaching, and retail offers (books). Here, you can get his up-to-date Multiple Uses Model for free, which is a marketing guide that spells out how you can create up to 20 brand assets from one piece of content.

He also promotes a coaching offer — for a very small group of elite entrepreneurs — where he guides business owners to scale their companies to $10K+ in revenue.

CreditSuite YouTube Channel

CreditSuite’s YouTube channel offers solutions for small businesses looking to improve their fundability, build business credit, and obtain loans and credit lines.

The channel emphasizes the importance of meeting lending guidelines and building credit in the business name with an EIN to avoid personal guaranteeing of finances. Credit Suite aims to give businesses the competitive advantage and capital they need to succeed and grow with confidence.

The Business Credit and Financing Show (Podcast)

A few years ago, I actually had the opportunity to meet Ty when he reached out and invited me to speak on his Podcast, The Business Credit & Financing Show — he was super knowledgeable (we could have chatted about this stuff all day). If you want to hear how that went, you can access the full episode here.

The Business Credit and Financing Show covers a wide range of topics related to obtaining business credit and financing for starting and expanding your business. We feature insightful discussions with prominent influencers and industry experts on marketing and growth strategies, aimed at assisting you in establishing and growing a successful business.

Consumer & Business Credit Books

Ty has written two bestselling books on consumer credit — Perfect Credit and Business Credit Decoded. And, he’s attributed to seven books, most recently business credit titles like Business Credit: The Complete Step-By-Step Guide (most popular) and Business Credit Decoded (newest).

Most of Ty’s books get rave reviews, though some of them didn’t get a ton of traction…all are available in paperback and most in Kindle formats.

Business Credit Course on Udemy

Ty’s Udemy course — How to Get Credit for Your EIN That’s Not Linked to Your SSN — aims to help students set up their business in a credible way to meet lender and credit issuer guidelines.

By the end of the course, students will be able to navigate their business credit reports, build initial business credit reports using vendor accounts, and obtain high-limit revolving store and fleet credit cards.

The course includes 1.5 hours of on-demand video, 1 downloadable resource, and a certificate of completion.

While the course content was good, it hasn’t been updated since 2016, and I can safely tell you that a lot has changed in the industry since then.

Media Appearances/Guest Contributions

You’ll find Ty’s contributions around the web on various business, finance, and even legal publications. For example, at one point, he was a regular contributor to Inc. Masters. His advice has been mentioned in Entrepreneur as well as Forbes.

And, if you do a quick search for articles by Ty Crandall, you’ll see that he’s been hard at work, over the years, making his rounds with hundreds of blogs and business websites.

Final Takeaway

And there you have it! That’s a quick look at the man behind CreditSuite, Ty Crandall. From his early career in finance to his success as an entrepreneur, Ty’s story is truly inspiring. His approach to business credit has helped countless entrepreneurs build and grow their businesses, and his legacy is one of innovation and success.

If you’re interested in learning more about Ty and his work, be sure to check out TyCrandall.com and the CreditSuite YouTube channel. You can also tune in to The Business Credit and Financing Show podcast or read any of Ty’s consumer and business credit books.

If there’s one thing to take away from Ty’s story, it’s that with hard work, determination, and the right tools and knowledge, you can achieve success. So, go out there, build your business, and make your mark on the world!

If you’re interested in learning how to get up to $100K in business credit in as few as 30 days, join Business Credit Workshop today.

The Ultimate Business Credit Deep Dive: 130+ Statistics & FAQs (2023)

By Joe

We work one-on-one with thousands of business owners (and interact with tens of thousands online) to help people build business credit and improve their credit scores so they can obtain substantial lines of credit to grow their companies.

Over the years, we’ve answered and kept records of the top questions people ask when embarking on their business credit-building journey. Today, we’ve decided to share our exclusive insights here, so anyone can access them.

First, we will share the most interesting takeaways from 3,988 surveyed business owners, and explain how we respond to their queries. We’ll answer the top questions entrepreneurs have about business credit. Keep in mind, we always recommend that you consult with an attorney and a CPA before making legal or financial decisions regarding your business.

Here’s your in-depth exploration into the realm of business credit:

What Motivates People to Seek Out Business Credit Education?
Final Takeaway

Now, let’s dive in!

What Motivates People to Seek Out Business Credit Education?

The top 8 motivators to learn about business credit are credit score issues, lack of knowledge, funding offers, leisure/expertise, specific funding types, business challenges, increasing credit lines, and credit piggybacking

Credit is a crucial factor that lenders, suppliers, and other businesses consider when evaluating a company’s creditworthiness and financial stability. A strong business credit score can help a small business or larger company secure favorable loan terms, negotiate better payment terms with suppliers, and potentially even attract new customers. On the other hand, a poor credit score can make it difficult for a business to secure the funding it needs to operate and grow.

While each situation is unique, business owners have various reasons for seeking business credit education that I’ve broken down into eight categories: credit scores, general business credit knowledge, interest in current offers, curiosity, information about specific funding types, business-related challenges, increasing existing credit lines, and even selling credit.

Here, we examine the top questions people have about business credit, then read answers to those queries.

1. Most Business Owners Need Help With Their Credit Scores

The most common credit score issues business owners face are low credit score, too few or no accounts reporting, no idea how to manage their business credit score, and a lack of no-PG funding options.

The top reason people come to us is for help with their credit scores. Sometimes this pertains to business credit, while other times there are issues with personal FICO scores. 34.4% of business owners need help with their credit scores when they begin their business credit-building journey. Whether it’s personal or business credit that people need to build or repair, credit score queries are our number one issue. This topic is where we exert most of our energy.

First of all, there are things you can do to improve your credit score:

Pay your bills on time to prevent negative marks on your report
Keep your credit utilization below 30% to optimize your credit score
Don’t open too many new accounts at one time to minimize the negative impact of credit inquiries
Monitor your credit score so you can catch and dispute errors right away
Focus on one area at a time, so as not to overwhelm yourself (sometimes, patience is key)

Here are answers to common questions about general credit score issues:

What is the fastest way to fix your credit score?

The quickest way to fix your credit score is to pay off any outstanding debts right away, to make sure that all of your accounts are current. Moreover, you can try to dispute any errors or inaccuracies on your credit report, as these can negatively impact your credit score. I recommend the Credit Secrets system to anyone with a low credit score.

Who can I talk to to help me with my credit score?

For help with your credit score, you can talk to a financial advisor, credit counselor, or credit coach for help with improving your credit score. They can provide you with advice and resources to help you pay off your debts and manage your finances in a way that will positively impact your score. In some circumstances, you may also be able to find free or low-cost credit counseling services through non-profit organizations or your local government.

Can I pay someone to clean up my credit report?

I generally advise against paying someone to “clean up” your credit report. The truth is, companies that offer services like this are generally expensive while the industry is flooded with scammers. If you do decide to pay for a service like this, check with the Better Business Bureau, read company reviews, and do your due diligence before you proceed, as paid credit clean-up is a high-risk solution for poor credit.

Is it easier to qualify for a business credit card?

A business credit card is not easier to qualify for than a personal credit card because it requires that the applicant submit business financial documents, sometimes in addition to personal credit information. However, if they take the right steps, a business may be able to build credit faster than an individual.

Relative to general credit score challenges, a number of people we interact with have problems specifically related to business credit. Of those that need help with their business credit scores, ⅓ of them have an existing, low business credit score or negative items on their report that they want to clean up. These issues need to be handled on a case-by-case basis since there are so many possibilities, and what works for someone with too many inquiries won’t work for someone whose utilization is too high.

In many ways, business credit is similar to personal credit, and some of the same strategies that help boost an individual’s FICO score can help increase a company’s Paydex score and other business credit scores.

Let’s look at the usual queries people have about business credit problems:

How can I fix my business credit score?

To fix your business credit, you can start by paying all bills and debts on time, as agreed. Next, keep your balances low on credit cards and lines of credit. Furthermore, you should regularly review your credit reports for errors. In some cases, it can also be helpful to build a positive credit history by taking out small loans or credit cards and using them responsibly.

How do I remove negative items from my business credit?

To remove negative items from your business credit, you can try disputing the errors with the credit bureaus or negotiating with the creditor to have the item removed in exchange for payment. It is also a good idea to regularly review your credit reports and address any errors or issues as soon as possible. You may also try a goodwill request for the deletion of valid negative marks on your report.

What is a goodwill request for deletion?

A goodwill request for deletion is a letter or email that you can send to a creditor (not a credit bureau), asking them to remove a negative item from your credit report as a gesture of “goodwill.” These requests are typically made when the negative item on your credit report is the result of a one-time mistake or misunderstanding, and you have an otherwise good credit history.

Do goodwill deletion letters work?

Yes, goodwill deletion letters can work to mitigate accurate, negative marks on a credit report, though usually only when the individual or entity making the request has a history of otherwise positive records.

Much of the time, credit score problems are based on a scarce number of accounts on a business credit report. 26.1% of the businesses with credit score issues report too few or no accounts listed on their business credit report. This can occur when the company utilizes tradelines that don’t report to D&B, a new credit line hasn’t been reported yet, or when the business hasn’t applied for credit. Again, these problems need to be resolved on a case-by-case basis.

Having a limited credit history can make it difficult for businesses to establish a strong credit score, which is based on a variety of factors, including payment history, credit utilization, and the length of credit history. If a business has a limited credit history, it is impossible for any credit scoring algorithm to accurately assess a business’s creditworthiness and financial stability.

Here’s what business owners want to know about a limited number of accounts on a business credit report:

How many business credit accounts should I have?

Prior to applying for business funding, you should establish tradeline accounts to establish credit. You first need to set up your business so that it’s optimized for obtaining business credit. To build credit fast, you need a minimum of three tradelines reporting to business credit bureaus, before your score is adequate for lenders; A perfect score requires more.

Can I self-report business credit?

As an individual or entity, you cannot simply report your payments to business credit bureaus. However, there are steps you can take to have certain bills reported. For example, eCredable has options to link utility payments to users’ accounts to have them reported. And, you can apply for certain types of funding that report on-time payments to business credit bureaus.

Why does my business credit card not show on my credit report?

Many business credit cards report on the cardholders’ personal credit reports, not the business credit reports. In a case where you know that your business credit card should be reporting, you may have to wait, as it takes some lenders longer to report than others.

How long does it take business credit to report?

The length of time it takes lenders to send payment activity to business credit bureaus varies from bank to bank. In many cases, it can take over 30 days before payment history shows on a report. Some lenders do not report until after the second billing cycle.

Does Amex report to Dun & Bradstreet?

As a rule, Amex reports all business credit history to the Small Business Financial Exchange (SBFE). Only negative payment activity is reported by Amex to Dun & Bradstreet.

Does Chase report to Dun & Bradstreet?

Yes. Chase does report business credit payment history to Dun & Bradstreet.

In the segment of those whose credit score motivates them to seek more information, 26.1% of business owners express that their personal credit prohibits them from obtaining business credit. From this, I gather that these people are in need of personal credit repair. When a FICO score requires a lot of work, it can take a while to repair it. In the meantime, these individuals might not be quite ready to build business credit.

Nonetheless, we are here to answer everyone’s questions, and try to help them get where they need to be to obtain substantial lines of business credit. Personal credit, after all, can have an impact on business creditworthiness.

See the answers to the most frequently asked questions people have when their personal credit holds them back from obtaining business credit:

Can personal credit affect business credit?

Yes. For most lenders, personal guarantees are required for business loans and business credit cards. This means that your personal credit will usually be considered when you apply for business credit.

Does personal credit affect LLC credit?

Personal credit may impact an LLC’s credit score. On the contrary, an LLC’s credit score will not impact the owner’s personal credit score.

What is the minimum credit score for a small business loan?

Underwriting terms for all banks vary. This means that each bank looks at personal credit scores differently. Still, to obtain business credit, the owner should have a FICO score of at least 640 as a rule.

Do all banks check personal credit for business credit funding?

No. While banks that do not require a personal guarantee for business credit funding are rare, they do exist. With that said, most corporate cards do not require a personal guarantee since they are backed by a business’ revenue as opposed to its credit score.

Of those that come to us with credit score issues, 14.8% of business owners just want to learn how to manage their business credit score. Some business owners need to clean up their personal credit reports, while others want to know how to find and manage their DUNS number or find a business credit monitoring solution.

For these people, we offer education about the major business credit bureaus, credit scores, and credit monitoring tools. While there are a plethora of business credit services out there, we only recommend those that we have vetted and that we know will impact credit decisions from legitimate lenders.

Here are answers to the business credit score management questions we hear most:

What credit bureau is used for business loans?

There are three major business credit bureaus that we recommend business owners keep an eye on: Dun & Bradstreet, Experian Business, Equifax Small Business. CreditSafe, LexisNexis Risk Solutions, and other specialty bureaus are also used by some lenders to determine a company’s creditworthiness.

Where can I check my business credit score?

There are tons of credit monitoring tools available to business owners, the most trusted being Nav. The platform is free to use and helps businesses manage and get more from their financial data.

How do I access my company DUNS number?

Any business can look up their DUNS number by visiting Dun & Bradstreet’s website and searching for their business. For established businesses, the owner can claim an existing profile to access their DUNS number. In some cases, a business owner may need to add their business to the directory to establish a profile.

Is a DUNS number the same as an EIN?

No, a DUNS number is not an EIN. A DUNS number is assigned by Dun & Bradstreet, which is a business credit bureau. An EIN is assigned by the United States Internal Revenue Service (IRS) and is designated for tax purposes.

What is a DUNS number used for?

A DUNS number distinguishes businesses from one another and is used by lenders to look up a company’s PAYDEX score (D&B business credit score). The PAYDEX score is used by lenders to determine a company’s creditworthiness.

Does my LLC have a credit score?

If you have established business credit through tradelines, business loans, or business lines of credit that are reported to business credit bureaus, your LLC likely has a credit score. But, if you have no business credit, your company may not have an established profile with any bureaus.

Relative to personal credit scores, 12.5% of business owners sought funding that requires no personal guarantee (No PG). While such funding is scarce, it does exist. We do our best to help people understand that this type of funding is rare, but that it does exist (and how to get it if they so choose).

It’s very possible — though not always ideal — to obtain loans and credit cards without sharing a social security number. On our blog and in our workshops, we’ve explained how to get business credit with no personal guarantee, which is essentially what this group wants to know.

Most often, people who want to know about “no PG” funding have the following queries:

Can I get a business loan without using my personal credit?

Most business credit is backed by a personal guarantee, which requires you to use your social security number to obtain funding. There are some lenders and loans that do not require personal guarantees, the most common type of funding being merchant cash advances (these usually come with excessively high interest rates).

Can I use my EIN to get a credit card?

In most cases, business credit cards and lines of credit require a personal guarantee, which means that, even if you apply using an EIN, your social security number is also required. With that said, yes, there are ways that you can obtain credit with just an EIN.

Can I use my EIN to get a loan?

As with credit cards, most lenders require a personal guarantee. In this case, even with an EIN, you will still need to share your social security number. But, in limited scenarios, you can get a loan with just an EIN.

2. Many People Have a General Lack of Business Credit Knowledge

People want to brush up on their business credit knowledge to learn the first steps of the process, learn where to start, discover why they get rejections, or to find out more so they can help others.

After those with credit score issues, the next most common reason people come to us is that they simply don’t have a strong understanding of business credit. We help people who want to move into the first phase of building business credit, those who have no idea what they need, others who want to know why they’re getting rejections, and even some who want to learn so they can help others.

31.6% of business people have a general lack of business credit knowledge that drives their decision to learn about the subject. In a nutshell, our core offer is business credit education. Those with a lack of understanding are in the right place when they stumble onto our materials. Some of them want to know why they keep getting denied, how to qualify for substantial credit lines, or just want to learn as much as they can so they can help others.

We have a five-step process that is especially helpful for this group:

Form your company in a way that optimizes your business credit potential
Take the steps to get your company “business credit-ready”
Network with local banks to understand underwriting requirements
Set up your business credit profiles with the three main bureaus
Build your first, small tradelines (lines of credit) to officially establish your credit score

Our advanced process is available to business credit workshop coaching students.

From this segment, here are the top questions we’ve been asked:

How do I obtain business credit as a beginner?

The very first step you must take to obtain business credit is to establish a business in a way that it is likely to be worthy of business credit: Choose a neutral name and business category. The same company name over a long period shows dependability. You can get your articles of organization from your Secretary of State.

How do you explain business credit?

Business credit is your company’s ability to borrow from banks and other lenders. In most cases, your business credit score is central to a bank’s perception of your company’s creditworthiness.

What can I use business credit for?

You can use business credit for almost anything you need to grow and scale your company. Business credit can be used to replace or repair equipment, make investments, and pay vendors or utilities. You can even use business credit to pay rent.

Does my EIN have a credit score?

In a word, no. An EIN assignment does not automatically establish a business in any credit bureau databases. However, there are credit scores attached to EINs separately from SSNs.

Why is my business credit card on my personal credit report?

If your SSN was used to obtain a credit card, then it will report to consumer credit bureaus. The same credit card may or may not report to business credit bureaus.

Will a business credit card build my credit score?

With responsible payment history, a business credit card can serve to boost a business credit score. However, aside from secured credit accounts, most business credit cards require some sort of credit history before a company is considered creditworthy.

Should I pay off my business credit card in full?

Paying off your business credit card in full each billing cycle will help you avoid interest accrual. In most cases, yes, this would be beneficial and the cost of using the card would be less.

Most of those who with a lack of business credit knowledge just want to know where to start. 44.4% of business owners with a lack of knowledge specifically seek how to establish business credit or want to know the first steps of the process. Once they get the early training, many of them are surprised that the way they establish their business itself plays a major role in obtaining business credit. Sometimes, people need to make changes to their business structure through their state or establish a new business.

In a nutshell, you need to incorporate your business, establish an EIN, register with the right state and local government agencies, and open a business bank account before you can move on to what people tend to think of as the early steps.

For those who want to learn how to navigate the early stage of establishing business credit, here are the most common questions we answer:

How long do you have to have an LLC to get business credit?

Banks look at your time in business to determine creditworthiness, but not all banks are the same. Since some lenders will extend credit to new businesses when they can show a certain amount of revenue. To determine your odds of qualifying for credit, check the bank’s underwriter for the time in business requirements.

Do you need an EIN to build business credit?

Yes. To obtain business credit that is based on your business credit score, your company must have an EIN.

What is an EIN?

An EIN is a nine-digit employer identification number, assigned by the IRS that acts as a tax ID for a business. An EIN is required to establish a business bank account.

How do I find my EIN?

Your business is not automatically assigned an EIN when it is established. You need to apply for an EIN with the IRS. Note: if you accidentally apply for a state tax ID instead of an EIN, and you do not have employees, your state may send undue tax invoices throughout the year. So, be sure to apply for your EIN on the IRS website.

Of those who lack business credit knowledge, many of them are clueless when they begin. 32% of individuals don’t know where to begin or what they’re looking for. For this group, I lay out the basics of building credit. Again, this involves establishing your business the right way. Before we explore that, this group requires a more fundamental understanding.

In general, these people are asking broad questions, which usually requires that we start asking questions about their business so that we can steer them in the right direction. For the most part, this group is the most eager to learn.

Here are the questions we hear most from those who don’t know where to begin:

How do small business owners build credit?

First, small business owners looking to build credit should establish their business in such a way that their company is likely to be considered creditworthy. They then need to network with local banks to learn about business credit requirements and establish an EIN and a business bank account. Finally, they must establish their first tradelines or net 30 accounts.

What is the minimum business credit score?

Business credit scores range from 0 to 100. Most business credit lenders require a minimum business credit score of 70 to deem a company creditworthy.

What should I look for when building business credit?

Depending on whether or not your business is properly established to obtain business credit, you may need to look at your business structure and whether or not your company name and category are neutral. Next, you should research the underwriting requirements of the banks you would like to obtain funding from.

From the group with little business credit understanding, some of them need to understand what factors lead to business credit denials from banks. 16% of people who cite a lack of business credit knowledge have no idea why they get rejections from lenders. This fact reinforces the significance of learning as much as you can about business credit before applying for new credit lines.

There are a variety of reasons that a business might be denied credit. A lack of credit history, poor credit history, insufficient collateral or income, and excessive debt might lead to the inability to obtain business credit.

Here’s what this group tends to ask, and how we generally respond:

Why do I keep getting denied business credit?

Requirements for any type of credit vary from lender to lender. You might be denied business credit when you have a poor credit history or a low personal or business credit score, not enough collateral or revenue, a lack of time in business, or limited financial resources among other things.

How many times can you apply for business credit?

There is no set limit to the number of times you can apply for business credit. With that said, hard inquiries on your credit report can have a negative, albeit temporary impact on your personal and/or business credit score. So, too many applications in a short timeframe can damage your capacity to qualify for business credit.

How long after being refused business credit can I reapply?

There is no set limit to the time you should wait before reapplying for business credit. However, you should take enough time to find out why you were denied, assess your creditworthiness, and remedy any issues with your credit before you file a consecutive business credit application.

Does it hurt your business credit score if you are denied a line of credit?

A turndown for funding is not damaging to your business credit score, but a hard inquiry for business credit can lead to a slight, temporary decline in your credit score. Depending on which credit reports are pulled during the application process, applying can affect your personal and business credit scores.

What rights do you have when you are denied credit?

When you are denied a line of credit, you have the right to receive a notice of the action taken, to request a free copy of your credit report that was provided to the lender, to dispute incorrect information, and to file a complaint with the Consumer Financial Protection Bureau (CFPB).

Maybe the most intriguing statistic from these findings — for me anyway — is the fact that 7.4% of people seeking business credit knowledge want it so that they can help others. Some of them even cited spiritual reasons for learning more about the topic. While I have always genuinely been driven to help others by teaching business credit topics, before these instances I had never considered the opportunities might be considered sacred to some people.

The group that wants to learn so they can help people is highly inquisitive and asks questions all over the board. They tend to ask almost every query on this page, and we love it!

3. More Than One Out of Ten Want to Locate Business Credit Offers

People looking for specific business credit offers want to find the best banks and lenders, discover which vendors report to business credit bureaus, or learn how to spot a financial scam.

Many people want to stay in the loop about legitimate banks and lenders, tradelines that report to business credit bureaus, and weed out scammers. 11.3% of business leaders want to know more about the business credit offers that are currently available. Though not the majority, there are many people who come to me because they want to know more about banks and lenders that offer the right of financing for their needs. More than one out of ten people who come to Business Credit Workshop are interested in learning about specific business credit offers!

The most common general questions about business credit offers are below:

What is the best business credit card?

The “best” credit card for a business depends on the company’s financial status, its credit standing, and its funding goals. We don’t have a favorite business credit card, but the offer that we most often refer business owners to is Divvy.

What bank is best for a business account?

In general, for a business bank account, we recommend business owners research local community banks and credit unions to see what offers are available for business. This way, they can determine which is best suited to their needs. We continually review banks and business credit offers on our website and YouTube channel to try to keep people informed.

What is the best credit union for a small business?

We recommend that business owners first turn to their local community banks and credit unions when starting on the business credit-building journey. We do have a list of our favorite nationwide credit unions that we sometimes refer people to.

While anyone can do the research online to see relevant offers for their business, it’s not always easy to find, especially when you don’t know exactly what you’re looking for. Of the business leaders who want to find out about specific offers, 65.5% are looking to find out which lenders and banks offer the best funding options. We regularly cover the most popular business credit offers on our blog and our YouTube channel.

One-on-one, here are the top questions people ask us about banks and funding options:

What bank has the best business credit offers?

Of course, offers from Amex, Discover, Chase, and the like are legitimate. Most major banks have a plethora of business credit offers. However, we recommend a local community bank or credit union for the highest business credit limits and best interest rates — this is the core of what we teach.

Is it better for a business to bank with a credit union?

While it’s impossible to answer this question for every possible scenario, at Business Credit Workshop, we do typically recommend small community banks and credit unions over traditional, big banks for small business owners.

What is the safest bank to do business with?

Most banks in the United States are FDIC insured, which covers deposits, dollar-for-dollar, and any accrued interest. So, they’re pretty safe. One bank that comes up (a lot) as a servicer for some of our favorite business credit offers is Celtic Bank. And, we often recommend people look into offers from Navy Federal Credit Union.

Is Chase a good bank for a small business?

For business owners who want a traditional offer from a big bank, yes, Chase has a full suite of options for business owners. They provide robust online banking features, credit cards, loans, and lines of credit. But, our general advice is to check with local credit unions and community banks to learn what’s available for small businesses.

One of the early steps to building business credit is to establish tradelines that report on-time payments to business credit bureaus. Without net 30 vendors and gas cards, the path to a substantial business credit line is long and difficult. 27.6% of entrepreneurs in this group are seeking a list of vendors or tradelines to establish their reporting accounts. We cover tradelines all the time on our blog and YouTube channel and share a list of 30+ reporting vendors to Business Credit Workshop participants.

The following tradeline-related questions are commonplace:

What is the best tradeline for a small business building credit?

You should choose a tradeline that offers something you actually need and reports payment history to business credit bureaus. A couple of vendors that we often recommend are Summa Office Supplies and Crown Office Supplies, though many others also report.

How many tradelines do I need to build business credit?

After your business credit profiles are established, you should have a minimum of three tradelines reporting, and more for a perfect business credit score (which you need to obtain substantial credit lines).

Which net 30 vendors report to business credit bureaus?

Quill, Lowe’s, Uline, and SupplyWorks are just a few of the many net 30 vendors that report on-time payments to business credit vendors. Business fuel cards can also be a great option for business credit.

What is the easiest business gas card to get?

Business fuel cards are not difficult to get, because they typically have net terms (you pay in full as you spend). This means that a credit score is not required to obtain a card. Most recently, we reviewed AtoB’s gas card offer, and we pretty much love it.

With so many ads coming at us from all directions, it’s smart to be aware of fraud. I was not at all surprised to learn that fear of scammers kept 6.9% of these business owners from applying for business funding. People want to know that they’re not being scammed before they sign up for an offer, especially when it involves their business.

Here’s what people want to know about business funding scams:

How do you know if something is a financial scam?

Most of the time, if something seems too good to be true, it is. If a so-called business pressures you to make a decision quickly, this is a huge red flag. And, in most cases, a legitimate financial offer won’t require money upfront to apply. Before you sign up for any offer, do your due diligence: read reviews and make sure funding offers are upfront about the banks backing them.

Can you get money back from a fraudulent funding offer?

If you can catch the scammer, you may be able to get your money back. But, in most cases, fake funding offers are gone before you know what hit you. If you use your credit card or debit card to pay for any upfront fees, the bank may be able to help you recover what you’ve lost.

Is business credit a real thing?

Yes! Business credit is real, and it doesn’t impact your personal credit. In general, business lines of credit are typically larger than personal lines of credit, and you can build business credit in as few as 30 days.

4. Plenty of Entrepreneurs Simply Enjoy Honing Their Expertise

Those who learn for leisure usually report no pending business credit problems, and some want to make sure their understanding is up to date.

Of the thousands of people who came to us to learn about business credit education, hundreds were just learning for leisure or to sharpen their mastery. 10.2% of small business entrepreneurs reported that they enjoy brushing up on the subject of business credit. Some of the people who were casually learning are credit repair specialists (of course, not all of them told us so). Whether they had no problems or just wanted to make sure they were up-to-date, they signed on to find out just what we were teaching — their questions were mostly procedural and unrelated to what we teach.

Of the leisurely learners, 76.9% of people in this segment cited no problems with or questions about business credit. I gather that they were either just learning for leisure, or they were researching for a personal or professional project. As you might guess, they weren’t super inquisitive about the process.

However, they weren’t the only ones enjoying themselves while learning, and the other portion of this segment wasn’t so quiet. 23.1% of the business owners in this group admitted that they already knew about business credit, but were updating their understanding. And, they wanted to ask about …

Here are the queries we heard most from those who wanted the skinny on modern business credit concepts:

What’s the fastest way to build credit for an LLC?

The fastest tactic for building business credit, after your business is established in an optimal way, is to use tradelines and gas cards that report to business credit cards. Of course, you need to pay these accounts as agreed to avoid negative marks on your business credit report.

How can I get a business credit card for a new business?

The first step is to establish your business the right way. There are many factors that contribute to a company’s creditworthiness. Many people who obtained business credit on behalf a prior, established company don’t realize that, in the past, their tradelines reported to business credit bureaus, which boosted their business credit score.

Should I use my SSN for business credit?

Most business credit cards are backed by a personal guarantee (PG), so yes, it’s most likely that you will include your social security number in a business credit application. However, no PG business credit lines do exist.

What gas card can I get with a 600 credit score?

You can get most gas cards with a 600 credit score. In fact, fuel cards usually come with net terms, which means that you pay in full each billing cycle. So, most of these offers are not based on FICO scores at all.

What credit score do you need to get a gas card for your business?

You do not need a certain credit score to qualify for a gas card. Because most gas cards have net terms, you pay in full each billing cycle. The credit lines for a fuel card are based on income, not credit scores — increased spending limits are usually offered over time.

5. Some Business Owners Want Help Obtaining Specific Types of Funding

Business owners looking for certain types of funding usually want cash flow to launch a new business. Some seek business loans or mortgages. Others are looking for standard business loans.

While they’re not the majority, there are quite a few people who ask us about funding for specific uses. 5.9% of business owners want to learn how to find and obtain a specific type of business credit or funding. They might ask about startup funds, real estate loans & mortgages, or business loans.

In general, here’s how we address this group’s top issues:

Can I get a business loan without business credit?

There are types of funding that business owners can get using their personal credit. And, there are income-based business lines of credit. Aside from corporate cards, however, business funding for a company with no credit score tends to come with high-interest rates.

What are the main types of credit businesses can get?

Businesses can obtain secured and unsecured credit cards, term loans, SBA loans, equipment loans, corporate cards, mortgages & real estate lines of credit, gas cards, as well as invoice factoring & merchant cash advances (not recommended).

Within this segment, most often, individuals seek startup funds. In most cases, they’re looking for a way to fund and launch a new business idea. In fact, 40% of individuals looking for a specific type of business funding want startup funds. Some of them are under the wrong impression — they tend to think that there might be a way to get funding with no revenue or positive credit history to back it. This group benefits tremendously from learning the fundamentals.

Here’s what they ask:

How much can I get for a startup business loan?

That number ranges from $0 to $500K but depends on what you have to prove your creditworthiness. In a nutshell, you need a credit score and some proof of your ability to repay the funds. We teach businesses how to obtain up to $100K in business credit, which they can use as startup funds or for any other business purpose.

How do I get startup credit for my business?

The first step is to incorporate your business. Next, you must apply for an EIN and set up business banking. You’ll need to get your business set up in such a way that it appears trustworthy to lenders and open a business credit file. Then, you need to establish a number of tradelines that report on-time payments to business credit bureaus.

What is your business credit score when you first start?

If you have not established any tradelines, your business credit score starts at zero.

Is business credit better than private funding?

Many people would say that they prefer business credit over VC and private equity funding because they do not want investors in control of their business operations. Others would prefer private capital because they are interested in expert guidance, and eventually exiting their business for a profit.

Of those who seek a specific type of funding, 33.3% want business real estate loans or mortgages. While we don’t focus a ton on mortgage options, we do share what we know — We share information about various commercial mortgages and the BRRRR method of real estate investing, as well as alternative options for purchasing homes and real estate.

These are the questions we most commonly answer:

What is a mortgage for a business called?

A business mortgage is called a commercial mortgage. Another type of funding that businesses can consider when purchasing property is a real estate investor line of credit. In some cases, business owners have paid for homes with credit cards or revolving lines of credit.

Can a business get a 30-year mortgage?

Business property loans typically have 7-20 year terms rather than 30. And, the amortization period for a commercial mortgage can last up to 30 years, which means that payments may still be required after the terms are up.

Are business mortgages cheaper?

As a rule, no. The APR is typically higher on a business mortgage than on a consumer mortgage. However, businesses have some funding options that are not available to individuals.

Of the group looking for a specific type of funding when they come to us, 26.6% want a business loan. These people are pretty quick to the gun, ready to do what they need to get funding.

Most often, here are their queries:

What do I need to get a business loan?

You’ll need a business that has been established properly, an EIN, good personal and business credit, a number of tradelines reporting on your business credit report, substantial business revenue (this will vary based on the credit line you want), and documentation to provide lenders.

What is the minimum income for a business loan?

There is no minimum income required for a business loan because offers vary from lender to lender. For a smaller line of credit, $5K or less monthly income may suffice. For larger business loans, there may be higher income requirements, but there are banks with underwriting requirements that are easier to meet.

What is the best loan for a business?

The best loan for a business can vary tremendously based on the company’s needs. We often share in-depth reviews for popular and recommended business loans and credit cards after learning more about an individual’s goals and requirements.

6. Numerous People Want Business Credit to Solve Work-Related Challenges

Most people who want to use commercial credit to solve business challenges don't feel they earn enough revenue. Others either don't have trackable income or think that their line of work holds them back.

Whether it’s their occupation or industry, the fact that they run a cash business, or a lack of revenue, 4.7% of business owners have a business-related challenge they need to learn how to overcome when they seek out business credit knowledge. Establishing business credit can give this group a way to access financing, secure loans, and get better terms on credit offers. The funds that they obtain can then help them grow their business.

In general, we answer the following for this segment:

How can I use credit to grow my business?

Once you establish a strong credit profile, you can obtain substantial credit lines. If you use your funding responsibly, you can make investments that improve your profitability.

How fast does business credit grow?

If you make all the right moves, you can have an established business credit profile with an excellent credit score in as little as one billing cycle, or as soon as your accounts are reported to business credit bureaus.

In the group with work-related challenges, 83.3% of business owners say that they don’t generate enough revenue. They might be looking for an income-generating investment: equipment, staff, advertising, you name it. And, those who are serious about implementing our training can find new ways to boost profits.

Here’s what they tend to ask us:

How do you use credit to generate income?

You can leverage your credit to make investments that are profitable. It’s as simple as that. Some people invest in inventory, real property, or business equipment. Others might opt for something less tangible like digital assets. Though, all investments come with some risk. If you do use your credit to generate income, always be sure that your profit is higher than your account interest and fees.

Can I use a credit card to invest?

Yes. Technically, you can use a credit card to invest in stocks or bonds. When you use credit for investing, it’s probably smarter to look at assets with less risk like business equipment, advertising, or retail inventory.

Does credit funding count as income?

No. Credit funding is debt. It does not count as income and can not be taxed as such.

Can you use a credit card to invest in Bitcoin?

Yes, some of the bigger crypto exchanges allow users to invest using credit cards. Though, we don’t generally advise beyond that on the crypto market or investments in general.

Another work-related problem is that 8.3% believe that their cash business is holding them back from obtaining business credit. It’s actually pretty common for a company to do business using cash. Luckily, this problem has a simple solution (as long as you’re not trying to hide your money from the mafia). Really, you just need to use your bank account.

This is what we most often address with this crowd:

Can I get a business credit card with a cash business?

Yes, you can obtain business credit, even if your income is cash. However, you will need to first make sure that your business is legally established and “credit-ready.” And, you will most likely need to have your money in a business bank account.

Can I get a business credit card with no money in the bank?

In most cases, no. You can not get a business credit card without traceable money. If you are going to apply for business credit, you will need money in a business bank account.

What business funding can I get with a cash-only business?

If you run a cash business, and you refuse to keep all of your money in a business bank account, your funding options will likely be limited to bootstrapping (owner-funding), private investing, and crowdfunding.

Akin to undocumented revenue, another 8.3% say that they believe their occupation or industry keeps them from being able to obtain credit. For example, freelancers and independent contractors have had a particularly hard time, and attribute their type of work to their inability to get funding. The truth is that any business can get funded — they just need to establish their company properly.

For the most part, here’s what this group is asking:

Can I get a business credit card with a 1099?

Yes, you can get a business credit card, even if all of your income is from contract work. To do so, you will need to establish your business properly and account for your financials in a way that makes you appear creditworthy to lenders.

Can I get a business credit card if I am self-employed?

Yes. Self-employed businesses are no less creditworthy than businesses with employees. As with all businesses, you will first need to establish your business properly and get it “credit ready” before you can obtain funding.

Can freelancers get business credit cards?

Yes. Freelancers are self-employed businesses. The thing is, you just need to have your ducks in a row before you apply: Incorporate your business and get it “credit ready.”

Can I get a loan being an independent contractor?

Yes. Independent contractors can get business credit, as long as they set the proper foundation. You will need to incorporate your business, get an EIN and business bank account, and establish your business profiles before anything else.

7. Those Who Want to Increase Their Existing Credit Lines Are a Minority

While not the smallest group, there are not many people who want to grow business credit lines that they’ve already obtained. Only 1.2% of business leaders who seek business credit education want to increase their existing credit lines. Looking at this, I think it’s safe to assume that most people who already have business lines of credit are not super likely to be actively learning about the topic. But, they do have some specific inquiries.

Here, you have the typical questions that this group asks:

How can I get my line of credit increased?

Credit card issuers ultimately want to earn profit from credit card interest. When a cardholder shows that they make payments on time, as agreed, this can lead to an increased credit line. However, making minimum monthly payments is usually insufficient. Paying an account in full while the card is still in regular use is sometimes the fastest way to show worthiness for a credit limit increase.

Why is it so hard to get a credit line increased?

The final determination for a credit limit increase, for any bank, is based on the profitability forecast for the account. Most banks have private underwriting terms, which makes it difficult for many people to determine what will make their account eligible for an increased spending limit.

Will requesting an increase in credit line harm my business credit?

Some banks may conduct a hard pull to your personal or business credit report when you request a credit limit increase. While a hard inquiry does impact your account, the impact is typically low and is always temporary.

When should you ask for a credit line increase?

The best time to request a credit line increase is when you actually need it. But, you should consider your payment history over the past few months, and be sure that your account usage is not nearing your existing credit limit when you do so.

What’s a good credit limit on a business loan?

We often see business term loans in the amount of $20K-100K. The best amount would be whatever you need to grow your business and ultimately improve profitability.

Does canceling a business credit card hurt your credit score?

If you cancel a business credit card, it would decrease your credit limit; this could increase your utilization. You should try to keep your total credit utilization below 30% to optimize your credit score.

8. A Handful of People Are Curious About “Credit Piggybacking”

When they first come to us, 0.7% of small business entrepreneurs are interested in learning how to earn money by allowing others to “piggyback” on their credit. This is the smallest group. And, honestly, I was taken aback when the first person came to us looking to sell business credit since this isn’t a service that we offer. Still, I take everyone’s interests into account. In fact, I reviewed one of the most highly-rated tradeline brokers some time back.

Note: I try not to censor anything I share with Business Credit Workshop readers and coaching students (even when it is controversial). While I don’t endorse tradeline brokering, I have several coaching students who partake in the practice, and I see even more in the online groups I’m part of. Tradeline brokerages can absolutely be legitimate businesses, and — although there are considerable risks — there is potential to earn money for those with an abundance of credit.

So, here’s the skinny on the credit piggybacking questions we most often hear:

Is piggybacking credit legal?

Yes, adding an authorized user to a credit account is legal. Though, it is meant for family and close associates who actually intend to share an account. Many lenders prohibit cardholders from adding strangers to their accounts or using tradeline brokers.

Does adding someone as an authorized user hurt my credit?

No, adding a new user to a credit account does not harm your credit score. However, if the authorized user uses the account irresponsibly, it can negatively impact your credit.

Can piggybacking hurt credit?

Yes, adding an authorized user to an account can hurt credit if the authorized user uses the credit card or line of credit irresponsibly. Simply adding multiple users has no negative impact on a credit score.

What are the disadvantages of credit piggybacking?

Credit piggybacking, as advertised through tradeline brokers may be prohibited by your lender. This means that if the lender found out that you participated, they might close your account. Another risk is that an authorized user who has access to your line of credit may spend irresponsibly, which has the potential to ruin your credit.

What is a tradeline broker?

A tradeline broker is a middleman between a credit account holder and a client who wants to “buy” (more appropriately, “rent”) an account, or be added as an authorized user. Clients are willing to pay for the chance to temporarily show an increased credit line prior to applying for a mortgage or other high-limit financing.

How much can I sell my tradeline for?

Depending on which tradeline broker you were to go with, you could earn from $50 to $2K per month to participate in credit piggybacking.

Final Takeaway

There are several motivations that drive people to seek out education on business credit. The most common reason is the need for help with their credit scores. Many people also have a general lack of knowledge about business credit, and more than one in ten are interested in locating specific business credit offers.

Moreover, some entrepreneurs enjoy learning more about various financial topics, while others want help obtaining specific types of funding or want to use business credit to solve business-related challenges. A small minority of business owners are interested in increasing their existing credit lines, and a handful of people are curious about “credit piggybacking.”

We have assisted thousands of business owners in building business credit and improving their credit scores, enabling them to obtain lines of credit to grow their companies. This post contains the top questions asked by entrepreneurs about business credit. These are our exclusive insights and responses to these queries based on our experiences working with these business owners.

Do you want to learn how to obtain up to $100K in business credit in as few as 30 days? If so, join Business Credit Workshop today.

Free, Printable Business Credit Application Template (Plus, How to Use it Correctly)

By Joe

Download Your Free, Business Credit Application Template

Download business credit application PDF — _{Get the PDF}

Download business credit application for word doc — _{Get the Doc}

Download business credit application for excel sheet — _{Get the sheet}

_{*This template is intended for informational purposes. All legal documents should be reviewed by an attorney before use, and terms should be defined to protect you in the event of default.}

Download your free, printable business credit application template so you can extend credit to your customers, or just find out what a business credit application looks like.

Business Credit Workshop coaching students get access to hundreds of actual business credit applications used by banks across the US.

Join Now

Most of the time, we focus on ways to improve credit profiles and obtain business credit. But, many of our readers, members, and students run B2B operations that serve other businesses. So, it’s crucial that we understand the ins and outs of extending credit to our business clients and customers… when the opportunity arises.

If you offer your business customers the chance to buy now and pay later, you open a portal to attract more high-ticket sales from those that might not otherwise be able to afford a product or service in a single payment. Plus, by extending lines of credit or private tradelines, you can increase total profits by way of interest and fees.

Or, if you’re just curious about what to expect when you start applying for business credit yourself, this information (and the downloads above) can be helpful.

Here, I provide a breakdown of the essential elements of a business credit application. Finally, I’ll answer some frequently asked questions and provide guidance for new creditors, including options to create online business credit application forms.

What is a Business Credit Application?
- Fundamentals of a Business Credit Application
Here’s How to Create an Online Credit Application Form
How Should You Ask a Customer to Fill Out a Credit Application?
Don’t Forget to Do These 3 Things When You Offer Credit to Your Customers
Summary

Now, let’s get cracking.

What is a Business Credit Application?

A business credit application is a form that enables a registered entity to apply for a line of credit, term loan, revolving tradeline, or a private net 30 account. It collects identifiable information about the business to determine its creditworthiness.

A business credit application serves dual purposes:

Gather personal, business, and financial data about the applicant
Serve as a contract between the applicant and creditor

A credit application is considered a legal document, as it should ask for the applicant’s signature. Hence, once signed, and if all terms and conditions are properly outlined in the document, it is legally binding.

Any company that extends credit to their customers needs an application form to weed out those who would not be eligible for any type of financing.

Fundamentals of a Business Credit Application

What do you write on a credit application? - Contact information, Company information, Bank references, Trade references, Financial information, Terms of the contract, Applicant authorization

To make an informed determination whether or not a company is worthy of business credit, you need specific identifying information.

Contact Information
- Full Name
- Professional Title
- % Ownership in Business (Most creditors require at least 50%)
- Company Name
- Tax ID or SSN
- Personal Address (Street, City, State, Zip)
- Business Phone Number
- Business Email Address
Company Information
- Type of Business
- Years in Operation or Business Start Date
- Business Address (Street, City, State, Zip)
- Legal Entity Type (Proprietorship, Partnership, LLC, Corporation)
- State Registered in
- If DBA or Subsidiary, Parent Company Name & Business Start Date
- Name of Principal Responsible
- Principal’s Address (Street, City, State, Zip) & Phone Number
- Name of any Co-Principal Responsible (optional)
- Co-Principal’s Address (Street, City, State, Zip) & Phone Number
Bank References
- Checking Account (Bank Name, Account No., Contact Info)
- Savings Account (Bank Name, Account No., Contact Info)
- Credit Line (Bank Name, Revolving/Term, Account No., Contact Info)
Trade References (Most creditors ask for at least three)
- Company Name
- Contact Name
- Company Address
- Company Phone Number
- Account Age or Account Open Since
- Credit Limit
- Current Balance
Financial Information
- Amount of Credit Requested
- Total Business Assets
- Total Business Liabilities
- Annual Net Income
- Yes or No: Have Any Officers Filed a Bankruptcy Petition?
- Yes or No: Is Your Company Subject to Any Litigation? (+Explanation)
Contract Terms
- Terms of use
- Interest and Fees
- Penalties for Noncompliance
- Additional Forms Required (Articles of Organization, etc.)
- Disclosure of Credit Pull
Applicant Authorization
- Applicant Full Name
- Legal Business Name
- Applicant Signature & Date Signed

(and/or)

Company Seal & Date Stamped

Once the applicant has submitted their app– assuming it appears they have what it takes, and that you would extend them credit — you’ll need to verify their information and move through the rest of the process.

Here’s How to Create an Online Credit Application Form

In place of or in addition to a paper, pdf, spreadsheet, or doc application, you might want to offer your customers the option to fill out an online credit application form(this is super helpful, especially when applicants are not local).

So, here’s the scoop. There are multiple ways to create online forms, but here’s what I recommend.

i. Use Google Forms

Google Forms has a straightforward user interface and simple design. While it’s not super customizable, it will get the job done, and it’s free for Google Workspace users — both free, personal accounts and business accounts.

ii. Use Jotform

Jotform is another option — super easy to use — that is free for up to 5 forms and 100 monthly submissions. It’s more customizable than Google forms, with integrations with other platforms you might use like PayPal, Google Sheets, Adobe Sign, and HubSpot. It can cost up to $99 per month, depending on your usage

iii. Use Your Website’s Form Builder

If you’re already collecting customer information via contact or subscribe forms on your website, you likely have a form builder that you use. You can probably get into your website dashboard and whip something up based on what you’ve learned here.

There are many other options out there to help you offer an online application — I’ve just found these to be the simplest to use and most reliable.

How Should You Ask a Customer to Fill Out a Credit Application?

If you’re eager to extend credit to customers — perhaps you want to use your credit offer as a highlight to make more sales — you can include your credit option at checkout (in-person or online) or during the sales process, depending on how your operations run.

Service businesses might want to mention their credit application in proposals or bids — at the point just before the sale is made or earlier.

I also recommend that you bookmark or download our trade reference request template and cover letter template (or create your own), because you can share them with your applicants to help them provide you with more information. Then, you can better determine if they meet your requirements for a credit account.

Recommended Reading: Trade References: Learn Everything You Need to Know

Don’t Forget to Do These 3 Things When You Offer Credit to Your Customers

Here are a few tasty reminders with a helping of details for you to munch on.

1. Do Your Due Diligence and Be Selective

The application form is only the first part of a credit application. If you are going to extend credit to your business customers, it’s so important to make sure that you verify everything that the applicant tells you.

Double-check credit report information with Dun & Bradstreet (D&B), Experian Business, and Equifax Business. Pull personal credit reports if you’re wary. Call the references applicants list on their app. Be 100% sure that someone is honest and qualified before you trust anyone in a buy now, pay later situation.

How to Pull a Business Credit Report From D&B

To get a full D&B credit report and PAYDEX Score, visit D&B’s website and select your plan. It will cost from $61.99 to $799 per year, depending on how many reports you will need.

How to Pull a Credit Report From Experian Business

To obtain an Experian Business credit report, go to Experian’s website, search for the business (be sure to select Other Business), and choose whether you would like a one-time report for $39.95 or $1,495 to $1,995 per year (for anyone who needs more than three reports monthly).

How to Pull a Credit Report From Equifax Business

To receive an Equifax Business credit report, visit Equifax’s website and fill out the contact form on the Small Business Credit Report page to connect with the sales team — they can hook you up with the right plan.

2. Consider Reporting Payments to Business Credit Bureaus

As a courtesy to your customers and other creditors, consider reporting on-time payments to the business credit bureaus. Doing so will help your customers establish and grow their business credit profile, and can be a selling point that places you ahead of your competitors.

Furthermore, reporting slow, late, or missed payments help protect other businesses (like yours) from disreputable companies that tend to stiff their creditors on payments.

So, you might want to consider reporting on-time payments to D&B, Experian Business, Equifax Business, and Creditsafe — this typically requires that you join their trade exchange programs.

How to Report On-Time Payments to D&B

To report account activity to D&B, you must either be a part of their DNBi or PPP programs or join the trade Exchange Program. To sign up for D&B’s Trade Exchange Program, you need at least 300 active credit customers.

To apply, either visit D&B’s website or call 1-844-201-9144 to speak to your relationship manager.

How to Report On-Time Payments to Experian Business

Experian doesn’t charge creditors for reporting, but they have requirements such as, members must report a full portfolio monthly. To become an Experian reporting partner, shoot an email to bisdatareporting@experian.com.

How to Report On-Time Payments to Equifax Business

You can register to report payments to Equifax via the registration page on their website or by calling 1-800-831-5614 (Select option three to speak to the correct department).

How to Report On-Time Payments to Creditsafe

Creditsafe is not the most popular business credit reporting solution, and will never hold more weight than one of the primary bureaus. Still, third-party data continues to become more and more desirable to creditors. So, after you pull an Experian Business or Equifax Business credit report, you might also pull from Creditsafe.

Why I mention them here, is because you can join their Trade Exchange Program a bit easier than the other bureaus… and they can automate reporting through your accounting software. Here’s how to leverage the program:

Claim your company on Creditsafe’s directory
Login to your Creditsafe account
Authorize your accounting or ERP software

Many popular accounting tools will easily integrate (Xero, Quickbooks, and Freshbooks, to name a few). If the platform doesn’t integrate with your software, or if you don’t use accounting software, you can still manually report.

3. Enlist a Third-Party App or Platform to Manage Your Credit Program (At Least Think About it)

If the sole reason you want to offer business credit is to get more high-ticket sales, and you have no desire to earn income from fees and interest, explore your options for third-party credit offers, since they will make your job so much easier.

Your choices vary greatly and depend on your business offer. For example, check out Affirm, Klarna, and Afterpay to see if your business might qualify to offer customers their buy now pay later terms — if so, they will do everything for you.

If you do want to manage your credit program, it’s a good idea to explore debt collection offers so that you might outsource that portion of your work (I can almost guarantee you will have to collect on missed payments at some point).

Summary

To extend business credit to your customers, you can use the business credit application template at the top of this page to get started — note that all legal documents should be reviewed by an attorney. And, printable applications are great, but so are online applications.

If you’re just starting down the path to offering business credit to your customers, remember to do your due diligence and verify everything on the application. Think about reporting on-time payments to business credit bureaus. And, consider enlisting help from third parties (if you can find an offer that meets your needs).

Do you have a customer or client who didn’t quite meet the mark and got rejected for a line of credit through your program? Invite them to join Business Credit Workshop to learn how to boost their business credit score and obtain up to $100K in business credit in as few as 30 days.

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

By Joe

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?

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:

Business Contact Information – Legal business names, addresses, and phone numbers for the vendor and the client/customer involved.
Reporting date – AKA “as of date,” the reporting date is the date that the reference is collected.
Manner of payment – Details whether payment was made via cash, check, debit, or credit card.
Rolling, 12-month high credit – Indicates the highest amount of credit used in the past 12 months when applicable.
Current total amount owing – Denotes the amount owed to the vendor ass of the reporting date.
Current total past due – Identifies when an amount owed is unpaid past the agreed-upon date of payment.
Selling terms – Outlines the payment agreement including payment amount, due date, and net terms.
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 Supplies Crown Office Supplies Home Depot Business Account Amazon 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:

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

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
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.

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.

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.

Sam’s Club Business Credit Card
Office Depot OfficeMax Business Credit Account
Shell Small Business Gas Card
SuperAmerica Fleet Credit Card

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).

Brex Rewards Card
Stripe Corporate Card – see our full write-up here.
ScaleFactor Visa Charge Card
Bremer Bank Business Card
American Express Corporate Cards
Capital One Corporate Cards
Citibank Corporate Cards
JP Morgan Chase Corporate Cards
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.

Kabbage
Fundbox
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

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
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

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”

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

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.
Get business insurance if you need it – Forbes lists 13 types of insurance that small businesses might need.
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.
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.
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.

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

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

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.

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

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

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.

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

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?
- 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.

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.

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.

Form a legal business entity in your state.
Apply for an employer identification number (EIN).
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:

Dun & Bradstreet
Experian Business
Equifax Business
CreditSafe
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?

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.

Do you want coaching to obtain Business Credit and Grow your Cashflow?

Discover the "3-Step System" to Get You Significant Business Credit (Without Having to Show Any of Your Financials). So that you can increase your cash flow, have true freedom and peace of mind!

Apply Now

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
Solving the Mysteries of Business Credit
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.

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:

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

You can scan your report for inaccuracies and clean up anything negative.
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.
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.

Financial programs change
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 (now KeyBank). 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.

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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.

Network with the banks
Build rapport with decision-makers
Ask what goes into an approval
Listen to the answer
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:

Sign up for an account with NAV.
Check out your business credit score and create a plan to clean up anything that makes your business high risk for lenders.
Join at least one new group where bankers hang out.
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.