Business Credit
Credit Angel Consultants
A company’s lifeblood is access to cash and credit. A corporation can utilize business credit to borrow money to buy items or services. It is predicated on the expectation of payment in the future. What are the benefits of establishing business credit? A separate legal entity, such as a corporation or limited liability company, gives business owners the unique opportunity to establish a credit identity with business credit reporting agencies, often known as a business credit profile. A business credit profile is crucial because credit grantors use it to decide whether or not to offer credit to a company.
Many small enterprises use business credit to finance the purchase of new machinery, inventory, and expansion. Short-term loans can even cover ongoing expenses like payroll. Most lenders want reassurance that they’ll be reimbursed on time, and one way they do that is by looking at the company’s credit scores and ratings with the major credit reporting agencies. These indications can assist banks in deciding whether or not to lend money and at what rates. In addition, many businesses’ business credit files are evaluated when they bid on contracts or shop their services to potential business partners. Companies want to make sure they are working with associate businesses that can deliver products on time or complete projects as promised – and have a low risk of going out of business
There are several ways companies can benefit from strong business credit scores and ratings, including: More favorable lending terms from banks Higher trade credit limits from suppliers or vendors Lower insurance premiums Better lease terms for real estate and machinery
To secure true business only bank and cash credit card financing your business must have and maintain:
- At least 10 reporting business credit trade-lines.
- Business credit scores of 70 or above with all three agencies.
- All twenty (20) items of Lender Compliance completed.
- A minimum business Bank Account Rating of a “Low 5”.
- Established comparable credit to the amount requested.
- A business entity type LLC or Inc, not sole prop or partner.
- A verifiable business presence; local , national and 411.
There are 20 items of Lender Compliance that will get your business viewed as a high risk of default if not completed. Some of those are:
- Not having a business entity either LLC or INC.
- Operating from a non-business location (Home or PO Box)
- Operating solely from a listed cell phone number.
- Operating from a free email account, @gmail, yahoo, etc.
- Not having a business website and local directory listings.
- Not having open business credit reporting files with all 3 agencies.
- And 14 more items that are easily and often overlooked.
Your business needs to have 70 or higher scores with all three major business credit reporting agencies. To do that you need to make sure that your business:
- Is listed correctly with all 3 major agencies.
- Has at least 10 credit reporting trade-lines.
- Has at least 3 credit reporting revolving accounts.
- Has at least 2 credit reporting installment accounts.
- Pays all its credit accounts at least 10 days before due.
- Verifies that all creditors are reporting on legal name.
- Has all 20 items of lender compliance completed.
Having ongoing access to business financing is all about attention to detail and maintaining in good order all the things business lenders will look at for approval. Some of those key elements are:
- Having all 20 items of lender compliance completed at all times.
- Maintaining business credit scores with all 3 agencies at 70 or above.
- Keeping your business entity and EIN tax status in good standing.
- Maintaining your business presence with website, local listings, and 411.
- Obtaining and maintaining a minimum of 10 reporting credit trade-lines.
- Having the owner’s personal credit scores stay above 70 FICO 8.
- Keeping your business bank rating all times at a low 5 or higher.
Obtaining Cash Type Business Credit Cards
When seeking cash type business credit cards (Visa, Mastercard, Discover, Amex) it is important to realize that these will be personally guaranteed by the business owners and as such based mainly on the business owner’s personal credit. The general approval guidelines for business credit cards are:
- FICO credit scores generally in the 70 and up range.
- Having at least one aged revolving account of $5,000 or more.
- Having revolving balance to limit of no more than 45% per account.
- Having a stated income of at least $50,000/yr ($150,000+/yr optimal).
- Having a current debt to income ratio of no more than 40%.
- Having no more than 3 recent credit inquiries in last 90 days.
- Having no open late, collections, judgments, or public records.
Paying Any Business Bills With Credit Cards
As a business owner did you know that you can pay any bill with your business credit cards just like you would using cash? That means you can pay contractors, payroll, rent, utilities, vendors, inventory, etc. with the business credit cards that we will help you obtain.
As a business success system member not only will we help you obtain financing and business credit cards but we will also provide you with services that will let you use your business credit cards to pay any of your business bills. It Is Almost Never Just One Loan
As a business owner it is natural to say “I need $200,000 in financing”, when in reality finding a single lender who will lend $200,000 is extremely difficult, makes your chances of qualifying much smaller, and places much more risk on that single lender. The better question is “what do you need the money for” which then allows for the method of funding to be broken down into segments.
For example;
- $50,000 in a credit union term loan that is easy to qualify for.
- $50,000 spread over 5 or 6 credit cards that are easy to qualify for.
- $50,000 in equipment financing that is also easy to qualify for,
- And $50,000 in vendor financing for needed products & services.
In this example the end result is the same $200,000 that you wanted and in a form that is much easier to qualify for with a very high probability of approval. For the lenders their risks are much smaller and therefore their approval guidelines are much lower, and their terms more liberal.
