1 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

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1 1 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

2 Table of Contents Decide on a name for your business...3 Confirm that your business name is original..3 Register a domain name..3 Select an official office location..3 Setting up your business entity filing incorporation documents...6 Request a Tax ID number...7 Request a DUNS number.7 Open a business bank account.. 11 Get a business phone line. 11 List your business phone line in telephone and online directories.. 12 Create a website for your business...13 A Brief intro to vendor credit Obtaining business tradeline Steps to Applying for Net 30 Vendor Lines of Credit Open Net 30 vendor accounts that report to the bureaus. 19 Fleet cards / gas cards another vendor line of credit you don t want to miss A brief intro to revolving lines of credit..22 How to apply for revolving lines of credit and what to look for.23 Which revolving accounts to apply for and when 25 Obtain revolving lines of credit..26 The easiest way to get your first business bank loan The bank loan multiplier trick 30 Conclusion 32 This quick start guide cuts out most of the components within the Business Credit Blitz program that is of educational value, and jumps right to the meat of building business credit the actual application. While we did our best to condense this quick start book to contain purely applicable steps, some components from the full-length program remain as it is necessary to understand how to proceed with certain steps of your business credit building endeavors. 2 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

3 Disclaimer The publisher used its best efforts in preparing this book and the information provided herein is provided as is, solely for educational information purposes. The publisher makes no representation or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaims any implied warranties of merchantability or fitness for any particular purpose and shall in no event be liable for any loss of profit or any other commercial damage, including but not limited to special, incidental, consequential, or other damages. The publisher is not engaged in rendering legal or other professional advice, and nothing contained herein should be constructed as such. The publisher encourages readers to seek professional advice from competent legal counsel when necessary. While the publisher is confident readers who follow the advice in this book can build and improve business credit fast, the publisher cannot and does not guarantee that anyone and everyone will achieve such results. Individual results depend on many factors beyond the publisher s control including, but not limited to, a person s motivation, personal credit scores, business credit scores, lender financing requirements, business location, business industry, etc. Trademarks: This book identifies product names and services known to be trademarks, registered trademarks, or service marks of their respective holders. They are used throughout this book in an editorial fashion only. In addition, terms suspected of being trademarks, registered trademarks, or service marks have been appropriately capitalized, although the publisher cannot attest to the accuracy of this information. Use of the term in this book should not be regarded as affecting the validity of any trademark, registered trademark, or service mark. 3 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

4 Decide on the Name of Your Business Unless you have already incorporated your business, be sure that your proposed business name is not too comparable to an existing business s name. Credit bureaus monitor relationships between companies and at times apply inaccurate information to other business owner s accounts due to the simple fact that the business names are similar. So, coming up with an original business name would be a wise thing to do. Confirm that Your Business Name is Original Go to the Dun & Bradstreet website and search for your company name and in the State drop-down box, select Nationwide. Confirm that your business name does not conflict with registered trademarks by going to the US patent & Trademark office website or you can pay someone to do an in-depth search for you. Register a Domain Name One of the first things you should do, even before your incorporate your business, is select and purchase a domain name for it, preferably one with the.com extension. It would be counterproductive to invest your hard earned money on building your business only to find out that your ideal domain name is taken. When registering your domain name, you want to be sure that you register one with you company s exact name or something that relates closely to it. This is because, when prospective customers discover your business by word of mouth, they are likely to search for it using your company name. For example, if your company name is Wyatt Construction Partners, it wouldn t be wise to have a domain name that says Party Building. Luckily, with the advancement of search engine optimization and other traffic generating features over the internet, you aren t as much tied down to choosing 4 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

5 domain names that spell out your exact company name, but try to have it be a great representation of what function your business address or the name of your company. Another reason for selecting a domain name that is easily recognized is that lenders also need to find your site at a swift tap of a few buttons. If they can t find your website through a Google search or by simply typing in your company name with a.com on the end, they will likely assume that your company is not well established or even worse, fictitious. We recommend using GoDaddy.com to secure a domain name. It is reasonably inexpensive and often times you can find discounts on line for your purchase. Choosing this route is money well spent. Furthermore, it is highly advisable that you invest a few extra bucks on registering variations of your company s name on GoDaddy.com. Examples of this would be MyBusiness.com, My-Business.com, MyBusinessInc.com. The reason for doing this is that you protect yourself from internet vultures who register variations of your company s name to steer away your customers or conduct fraudulent activity in your shadow. Protecting your company name up front by purchasing different variations of your name makes a lot of since from a business standpoint. Plus, you can actually make use of each domain as you wish make one a page for blogs, press releases, investor dialogue, etc. What to do if your domain name is taken If your domain name is taken you have a few options to use 1. Think of a new business name or alternative domain name that is still relevant to your company If you haven t selected a name for your business yet and you re not completely attached to the one you already have, brainstorm a new name for it. If you already have decided on a business name and have it incorporated, you can still get a domain name that represents your business without using exact wording. Alternatively, 5 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

6 you can file to Do Business As (DBA) which will allow you to use a different name for your business aside from the name it is registered under. This can be accomplished through LegalZoom.com 2. Wait for the domain name to expire For about $20, GoDaddy.com can monitor any registered domain name, and if it expires they will attempt to get it for you. This typically only works if the domain name is up for renewal and its owners forget to pay the renewal fees. 3. Purchase it In some cases, domain names are purchased but the websites associated to them are undeveloped. When this is the case, consider offering the owner of the domain name a fee to purchase it from them (around $60 and $200). You can also get a Domain Name Broker involved to handle the transaction for you if you would like to protect your identity. Set Up Your Business Entity by Filing Incorporation Documents For the purpose of building business credit, setting up a limited liability partnership (LLC) or corporation is best since it give your business more credibility and ensures that your personal credit is not comingled with your business credit. However, if you are uncertain as to which type of business entity you should use from a legal standpoint, (LLC, partnership, corporation, LLP, etc.), we advise that you consult a tax professional and/or an attorney beforehand. In most states you can form a corporation or LLC online in as little as one hour of time. All you have to do is research your State s Secretary of State or Department of Corporations website for information regarding how to incorporate your business. Fees for State incorporation range from $50 to $800. For the sake of simplicity, your best bet would be to use a service like MyCorporation, from the makers of Quicken and Quickbooks, to setup your business for you. Why? Because their basic incorporation service is free (you d just pay state filing fees), and their customer service is top notch. For as little as $99 to $299, you can upgrade to their premier packages which feature fill in the 6 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

7 blank corporate documents (minutes, bylaws, waivers, etc.) corporate compliance checks and reminders, registered agent services and more. Being that overlooking even the smallest details can cost you a boat load of money, investing in MyCorporation s business formation packages is worth the investment. Request a Tax ID Number In order to establish a unique credit identity for your business, file business tax returns, and open a business bank account you will need an Employer Identification Number (EIN). An EIN is similar to a social security number for your business and it is required for corporations and LLC s. It is also needed if your company pays wages to employees. You can get an EIN for free in less than five minutes by visiting the IRS website. When you apply for any type of business credit, always provide your EIN. Avoid using your social security number unless a personal guarantee is required. Request a DUNS Number If your business is fairly new, you can likely expect the guys and girls and Dun & Bradstreet to be knocking on your door soon after incorporation, selling you on their great offer that will only cost you $499. These sales professionals will approach you by either saying that they have noticed some negative activity on your company s credit profile, and will then volunteer to clean it up for only $499. But wait! At this point, your company doesn t even have an active credit file or credit score yet, so how could there quite possibly be any negative aside from the lack there of on your business profile? Nonetheless, D&B will promise to clean it up for you and also give you a credit score within a few short days. That s the good news, and of course, most new business owners are inclined to make this 7 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

8 investment in order to establish a credit score. D&B puts these new businesses under the impression that if they do not pay the $499, that they will never have an opportunity to establish an active credit file or credit score for their business that will allow them to obtain credit cards and loans. They also advise that without their service, your business s assets are at risk of being co-mingled with your personal assets. It is at this point that most new business owners may be confused, thanks to D&B, because they were under the impression that by forming an LLC they were protecting themselves from that. This is the kind of attention most first time business report receiving from D&B. That s because Dun & Bradstreet hires trained sales professionals that, at times, stretch the truth in order to make a sale and earn commission by selling credit building products. And sure, these products actually work for most companies, but the questions remains, is it worth it? In our opinion, the answer is, no! That s because you can quite frankly accomplish the same goals with your own effort with less than a couple hours of work cumulatively. We outline that work in this program, of course. Furthermore, purchasing their credit building products does not help you establish profiles with Experian and Equifax. As such, you d still need to follow the steps we outline for you in order to do that, along with the $499 you wasted. You Can Get a DUNS Number at No Charge A DUNS number ID s your business in D&B s database. Many vendors require it to report your payment history to D&B. It may take up tot thirty days to get your number (five days if you pay $49 for expedited processing). If you re applying for government grants or contracts, you can get a DUNS number within 48 hours. Your D&B profile will be considered inactive until one of your vendor s reports payment information to D&B (which takes days). 8 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

9 You do not need to spend money on a PAYDEX score Don t let the D&B sales pros fool you! The PAYDEX score, which ranges from 1 to 100, is a dollar-weighted average that tells creditors how fast your company pays its bills. You only need four vendor s payment history to D&B to activate your PAYDEX score. We ll discuss which ones report to D&B in later sections along with how to open accounts with each vendor. So remember, you do not need CreditBuilder to establish a PAYDEX score. All you need to do is have four or more vendors report your payment history to D&B for one to populate. In order to get predictive credit scores and credit ratings from D&B all you have to do is give your DUNS number to your vendors and creditors. Afterwards, your credit profile will eventually get activated for your business. Two Resourceful Ways to Get a DUNS Number in 30 Days or Less First Way: Get DUNS in less than 48 hours If you intend to apply for government grants or contracts, you need a DUNS number first. And thanks to government policy, you can get one for free in less than 48 hours using this link. While the federal government may require a DUNS number to apply for grants and contracts, you don t necessarily need to pay for a D&B credit-building service to establish your D&B profile. A DUNS number is all the government requires. After you receive your DUNS number, you have to register your business with the federal governments Central Contract or Registration (CCR) website. You will need your company s DUNS number, tax ID number (EIN/TIN) and bank account information to complete the process. This link takes you to the CCR website. WARNING: DO NOT use PO Boxes or mail boxes for your company s address when you request a DUNS number, apply for business credit or open business accounts. Use your physical location, even if it s a residential address. 9 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

10 Putting a residential address on credit applications will not negatively affect your ability to get credit, however, using a PO Box or mail box will. Lenders and credit bureaus cross-reference their records with databases of mail boxes. If you use a mail box, it may eventually be noted in your company credit file. DO NOT DO IT! Do not forget to complete the CCR registration process, because D&B will revoke your DUNS number or freeze your credit file if you don t. You don t necessarily have to apply for grants and contracts right away, but you definitely must complete the CCR registration. Second Way: Get a DUNS in 30 Days or Less If you have need for grants or contracts, you can still get a free DUNS number, it will just take your thirty days to get it five if you choose to pay for expedite processing). To start the registration process, use this link. You can likely expect a few phone calls from D&B during this period. They will try to persuade you to buy the credit-building service. When this happens, just tell them that you re not interested and already have vendors that need your DUNS number so that they can start reporting your payment history. We ll repeat this again In order to start building business credit all you need is a DUNS number issued for your company. With that in hand, you can share that information with vendors and credit profile will be established once at least four of those vendors report your payments to D&B. Once again, if you d rather not go through the hassle of applying for a DUNS Number, we can apply and garner it for you. Open a Business Bank Account Often what s most important to creditors is your legitimacy and a business bank account grants this to you. A good place to go for a basic business account with little or no fees is Chase 10 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

11 Bank. Their business account includes no monthly service fees if you use your debit card at least five times monthly and offers up to two hundred free transactions a month. You can open an account online today by visiting chase.com. Get a Business Phone Line In order to get approved for credit, your business needs to have a dedicated phone line. Lenders will verify that your business phone number is listed in 411 when they review your application. Here are a few more rules to business phone lines: They must be 100% dedicated to business Someone must answer the phone with a greeting that includes your company name. Alternatively, you can have a voic box setup that includes the same thing. Luckily, you do not have to spend a boat load of money to get a business phone line. You have the option of either using Google Voice, adding a line to your personal cellular phone plan, signing up for a business cellular phone plan, getting internet phone service, or get a regular business phone line. Google Voice With Google Voice you get a free phone number in any area code of your choosing. Incoming calls and texts can be forwarded to your personal cellular phone. There are a lot of other cool free features that come with this service as well. Use this link to learn more. Add a Phone Line This is a simple step that can be done by simply calling your cell phone carrier. Be sure to request that they change the name that shows up on caller ID to your company s name. This can be done easily in most cases. On rare occasions though, you may be directed to purchase a business cellular phone line. 11 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

12 Business Cell Phone Plan Though it may be an exaggerated tasks compared to the other options listed above, getting a business cell phone plan is a huge benefit in that it will likely report to your company s credit. To refresh your memory, you need at least five vendor lines of credit reporting to D&B to establish a PAYDEX score. A business cell phone plan will allow you to obtain one. Be sure to provide the phone company with your EIN, not your social security number, when you open an account. If they require a deposit, ask them to waive it. Most phone sales professionals will be able to do this if they are motivated. T- Mobile usually offers easy to set up business cell phone plans. Internet Phone Service PhonePower allows you to set up an internet phone service as long as you have a high speed internet connection. They will send you an adapter that connects a standard phone to your internet connection. With this service you also get bonus features such as unlimited long distance, caller ID, voic , three-way calling and call waiting. Check out PhonePower. Get a Standard Business Phone Line You can get a business line from your local phone company. This is a good alternative because it gets your business number listed in 411 automatically. Also, they may report your payment history to the business credit bureaus. If you operate a home based business, a business phone line is essential. Avoid getting another personal line. Get Your Business Phone Line Listed in Telephone and Online Directories After you have setup a business phone line, you should verify that the number is listed in telephone directories such as 411. This happens automatically if you set up a business phone line through your local phone company. Otherwise, use directory assistance through the 411 call center to have your number added to the phone directory. Generally, it takes one to seven days to have your number 12 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

13 listed. Be sure to verify that your company is listed with 411 prior to applying for business credit. To give your business more credibility, make sure that it shows up in the most common online directories and make business listings on Google, Bing, and Yahoo!. Doing this will also help you to get more customers contacting your for your goods and/or services. Create a Website for Your Business A business website is an important resource that creditors and vendors look at to validate your business s existence. Most lenders will search your company online to verify its legitimacy and learn more about your business activities. It is wise to have a website that positively influences the opinions of vendors and creditors. Avoid simply creating a website just to take up space on the World Wide Web - creditors and vendors can spot a fraud from a mile away. Does the sound of creating a website sound daunting and out of reach for you? If so, before you start to panic, be aware that you can create a basic, yet professional website for your business in one day for under $20-30, and without any design experience whatsoever! If you can use MS Word or compose an , you can build a website. Rather you re ready to build a website or not, you need to put one together right away! Getting approved for credit may hinge upon whether you have a website, so get started today! A couple great drag-and-drop, easy-to-use webpage building services is Weebly.com and Wix.com In order to be approved for loans, lines of credit, and vendor merchandise, there are a few items that you must include on your website. 13 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

14 While putting a website together may sound daunting, there is no need to panic. Your website does not need to be complex. Follow this simple website structure in order to further validate your business. A Company Home Page On your websites homepage, be sure to use a catchy phrase or quote to welcome your website visitors. An alternative to this would be to simply outline who you are and what you do on the home page. An example of a catchy phrase or quote on the homepage of your business website would be to say Finally! A Trusted Source for Your Classic Auto Parts Needs, if you provide classic auto parts. Using a headline like that is much more effective than simply saying Hello, and Welcome to Our Website. If your introduction doesn t catch your visitor s attention, you will lose them quickly. Moreover, vendors want to have a clear and concise idea of what you re doing and how you re doing it so providing a quick phrase or quote makes it easy for them to quickly identify who you are and what services you are providing. You don t want to flood your homepage with content and gibberish, but a paragraph or so will be just fine. If you don t have the writing chops to do this yourself, hire someone to do it for you. You can find independent contractors for just about anything on UpWork.com just simply describe what you re looking to achieve, the budget you have and post your job. It s that simple. Before you know it you ll have a flood of qualified (and some not so qualified) professionals that are willing to do your task often for less than $20. An About Us Page On the About Us page, place things like your companies mission statement, core objectives, staff bios, partnerships, testimonials, etc. on it. Of course, if you ve only been in business for a few months, that s one detail that you may want to omit from your web page. 14 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

15 A Contact Us Page On your Contact Us page list all of your company s contact information (postal address, phone number, and addresses). Also, be sure to include your company name, address, and phone number at the bottom of each webpage. With those three pages published on your website you offer great validation for you and your business to prospective creditors. Remember, you DO NOT need to be an expert in web design in order to build a professional website, now days it is as easy as pointing your mouse and dragging it. It doesn t get much easier! The only two or three companies you ll need to get started are GoDaddy.com for your domain names and addresses, and either Weebly.com or Wix.com for your easy-to-use web building needs. You can have a website in as one evening. We d recommend that you use the pro versions for a couple extra dollars a month in order to remove the branded watermarks/logos of the web hosts from your website since those default components can often make your site appear cheap, unprofessional, and unestablished. Now that we ve gotten that part out of the way, in the next sections you will learn tactics that will allow you to effectively build business credit. Compared to what you ve done in previous sections, this part will be a breeze! If you ve already completed all of the steps in the previous sections, continue reading. Otherwise, go back make sure that you complete each step first so that you have a great foundation in place for building business credit. 15 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

16 A Brief Intro to Vendor Credit Before we get started, confirm that you have done the following: Got a DUNS number from D&B Filed a business entity (LLC or Corporation) Got an EIN (Tax ID) number from the IRS Got a dedicated business phone line listed in 411 Got a basic business website and an address associated to your business s domain name Got a business bank account If you ve finished with the tasks listed above, continue reading. If not, we strongly advise you not to move forward until you have completed them. Like other oxymoronic things like employers requiring 5 years of work experience for entry level positions (where the heck do you get experience if everyone requires it beforehand?), there s the same dilemma to establishing business credit how do you build business credit without credit? When you apply for business credit, lenders and creditors expect your business to already have exceptional and diverse credit. They require this because they want to confirm that your business pays its debt obligations on time and manages debt responsibly. While this may seem like a challenge for you, we re going to show you how to swiftly work your way past this issue. In order to establish a credit profile and excellent credit as a business, to start you will need the following: At least five vendor lines of credit that report on time payments Three revolving lines of credit such as credit cards, reporting on-time payments 16 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

17 Two paid off loans A 75+ PAYDEX score Active credit files with all three business credit bureaus Once you ve completed the credit building steps above, you will have no problem applying for credit lines up to $50,000 and being approved for it. Requesting more than $50,000 will require collateral and/or financial statements. The good news is you do not need to have a pre-established business credit history in order to get the five vendor lines of credit. Vendor lines of credit (also known as purchase accounts or Net 60/30/15/7 accounts) allow you to order items on credit and pay for them later based on the net terms. However, unlike revolving lines of credit such as credit cards and store cards, you have to pay of your balance in full on the due date when using vendor lines of credit. There isn t an option to pay a minimum amount and carry a balance from month to month. You can determine that grace period for paying back your debts for vendor lines of credit by recognizing the number after the Net. For example, Net 30 vendor lines of credit, the most common vendor lines, offer a 30 day grace period after you are invoiced to make your payment. Keep in mind that you will need at minimum five vendor lines of credit that report to D&B to get a PAYDEX score. To achieve a PAYDEX score of 80 or higher, be sure to pay off your lines of credit on time or before the grace period elapses. You will need at least a 75 PAYDEX score prior to lenders approving you for credit cards or loans. For the best results, we recommend that you open at minimum five to ten Net 30 accounts over time so that you simultaneously activate your credit files with Equifax and Experian. Net 30 accounts are easier to garner since you are expected to pay them back by their due date. But while numerous companies offer Net 30 repayment terms, you will surprised to know that not all vendors report your payment history to 17 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

18 the bureaus. When you first begin to build your business credit via vendor lines of credit you may not have much interest in the products that you will ultimately purchase from the vendors offering Net 30 repayment terms, but don t get too caught up on that fact. Keep in mind that essentially you are investing into building strong business credit. The products or services you buy are a small part of that equation. Plus let s not forget that you can likely easily pawn these items off to someone else by selling them on ebay, Amazon, or Craigslist. That way, you are able to get some of your investment back. In summary, your only concern when applying for Net 30 terms should be whether or not they report your payments to the bureaus. Steps to Applying for Net 30 Vendor Lines of Credit Steps to Applying for Net 30 Vendor Lines of Credit After you have targeted a vendor that reports payments to D&B, Equifax, and/or Experian, follow these simple steps: 1. Visit the vendors' website & create a customer/client account for your business. 2. Request a catalog from them (not always necessary, but it shows that you plan on being a continuous shopper). 3. Apply for Net 30 repayment terms online or by telephone and remember to give the vendor your DUNS number and EIN number and enter your business name and address exactly as it appears in your D&B profile. At no point should you give them your Social Security Number even if they request it. Personal guarantees should not be given on small Net 30 accounts. Note: for some vendors, you may not have to fill out a credit application. Simply place an order and select bill me or Net 30 as your payment type. 18 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

19 4. Once your account is setup, place a small order between $50 and $100 and remember to select Net 30 or bill me at checkout. 5. Wait until you receive an invoice. Once you do, pay it in full ten to twenty days before it is due. However, do not pay it too soon. If you do, you re on time payment may not report to the bureaus. Open Net 30 Vendor Accounts That Report to the Bureaus Now that you know the process for applying for Net 30 vendor lines of credit, now it s time to do so and achieve a 75+ PAYDEX score. Once you ve accomplished that feat you will be one step closer to getting approved for other business credit such as credit cards, and huge credit lines. We have selected the following set of Net 30 accounts because... They report your repayment history to D&B, Equifax and/or Experian They are typically easier to get approved than other vendor accounts as long as you are sure to follow the preceding steps mentioned for applying They sell products that you can actually use Remember, you will want to open at least five to ten vendor lines of credit over time, spacing out your applications 2 to 4 weeks at a time. Don t forget that applying for too much credit too soon may also negatively impact your credit. Also keep in mind that it may take three or more months for your business to get a PAYDEX score. The proceeding vendors report payment information to the credit bureaus once a month. So in some instances, you may have to wait one or two monthly cycles for your one time payments to show up on your businesses credit report(s). We strongly advice that you do not procrastinate and that you get started right away! As we have pointed out a number of times, building business credit is a process that requires finesse and patience. Also, you must be sure to start building business credit before you actually need it. 19 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

20 Here s a list of Net 30 Starter Accounts that will allow you to start building your business credit: Grainger (Industrial Supplies) Create a customer account from their website then revisit the website in two days and see if Net 30 terms appear on their order form. You can also order by phone and request Net 30 payment terms. Sometimes, with Grainger, you will be required to prepay for your first order, but there have been times when that has not been the case. Quill (Office Supplies) As a rule of thumb, be sure to order at minimum $50 worth of supplies. Smaller invoices may not result in payment reporting to the credit bureaus. Reliable (Office Supplies) Be sure to order at minimum $50 worth of supplies because they only report payments on invoices that are $50 or more to the credit bureaus. Seton (ID/Safety Supplies) U.S. Plastics (Industrial Storage) Bags & Bows (Retail Packaging) ULINE (Shipping Supplies) Request a catalog before applying for credit! Also, wait until you have one or two other vendor credit lines reporting to D&B before applying with ULINE. They re typically a little harder to get approved for. Gemplers (Safety & Outdoors) 20 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

21 Fleet Cards / Gas Cards Another Vendor Line of Credit You Don t Want to Miss Once you have successfully opened four or five starter accounts and your company gets a PAYDEX score, be sure to apply for a fleet card. Fleet cards are Net 30 gas cards that help your business monitor and control fuel costs. With a fleet card you can: Track fuel purchases by driver and vehicle View transactions in real-time and get detailed reports on fuel usage Restrict fuel purchases by amount or even time of day Even if your company is a one-person business, having the ability to track your fuel costs is a great bonus. Especially come tax time. Moreover, it is a Net 30 account that you are sure to find useful. Who doesn t spend money on gas now days? We recommend applying for any Fleetcor gas cards. You can apply for a branded card such as BP, Chevron, Argo, or Citgo) which earns cash back, or you can apply for a MasterCard or Fuelman card which can be used for fuel purchases anywhere. Visit Fleetcor to learn more about their gas cards. Fleetcor determines your credit limit based on your current highest credit limit. If you don t have any revolving credit accounts, your highest credit limit is the largest purchase you ve made using one of your Net 30 Accounts. This has to do with the fact that even though Net 30 accounts have credit limits, only your largest purchase amount, not the actual credit limit of that account, gets reported to the business credit bureaus. If you aim to maximize your Fleetcor credit limit prior to applying we suggest that you get a Capital One Spark business credit card if you have a decent credit score. If you choose the basic credit card, they usually only require a credit score of 650 or so (sometimes lower) and typically give you a starting credit limit of $500. So, if 21 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

22 you don t mind having a personal guarantee on one of your business lines of credit, this may be a great way to increase your purchasing power and boost your business credit profile. Also keep in mind that Fleetcor will consider you for a credit limit increase after six consecutive on-time payments. A Brief Intro to Revolving Lines of Credit Your first few revolving credit lines serve the same purpose as your first five vendor lines of credit which are to build credit. Keep in mind that it does not matter what you get approved for initially as long as the merchants/creditors report to at least one or all three of the business credit bureaus. Putting this plan into action, in six to twelve months you will have at least five vendor lines of credit and three revolving lines reporting. As long as you pay your bills on-time and avoid maxing out your credit lines you will get approved for credit cards with higher credit limits and lower interest rates as time progresses. This is typically how you can expect to see your credit approvals go: Revolving Line #1: Store card or gas card with a $500 credit limit and 20%+ APR interest rate Revolving Line #2: Store card or gas card with a $500-$1,500 credit limit and 20%+ APR interest rate Revolving Line #3: Store card or gas card with a $1,500+ credit limit and a 15%+ APR interest rate Revolving Line #4: Credit card, store card, or gas card with a $2,500+ credit limit and 12%+ APR interest rate Revolving Line #5: Credit card, store card or gas card with a $5,000- $10,000+ credit limit and 10%+ APR interest rate Don t lose momentum and get discouraged if your initial business credit card has a small credit limit and charges an excessively high interest rate. Until you can 22 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

23 prove your creditworthiness, banks and lenders won t extend you credit cards with high credit limits. By using your revolving credit cards strategically as a credit building tool rather than a financial lifesaver, each new credit approval will bring you a small reward in the form of higher limits, better rates, and other promotional benefits. If your personal FICO scores are over 700 you will have the ability to build revolving credit much quicker and get approved for better cards with higher limits right away. While we would strongly advise that you limit your personal exposure, personally guaranteeing your first few business credit cards move the process along quicker. How to Apply for Revolving Lines of Credit and Things to Look for This is an exciting stage of building business credit when you re able to start applying for revolving credit accounts. However, don t think for a second that lenders are lined up around the corner simply waiting to give you credit. First of all, you d be surprised as to how challenging it is to actually find commercial credit applications. Secondly, once you do find them, you want to make sure that you fill them out correctly and that your business credit is in tip-top shape. For example, let s consider Target in order to find the application for a business REDcard, you ll have to start by clicking on the credit card link at the top of their home page. Once you ve done that, tucked away at the bottom left side of the page is a link that says Target Business Card and it is very easy to miss as it is not as prominent on the page as the personal credit cards. In order to alleviate a lot of stress from your life from chasing down credit applications, simply go to Google and type in company name business credit 23 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

24 card to see if a particular merchant offers business credit and discover how to apply if they do. Some companies avoid allowing you to apply for business credit cards online. In such case, you may have to print and fax them. Even if you can apply online, we strongly advise that you fax over your application. WHY: The reason being is that most online applications will not allow you to proceed without completing the personal guarantee section of the application. If you have the option, applying for business credit cards in-store is the best approach because you are more likely to be approved and get approved for a higher credit limit. Moreover, you can typically use your credit line that same day. Things to Look for on a Revolving Credit Application Before you start applying for a revolving credit line make sure to do your due diligence and thoroughly inspect each credit application you fill out. You should be looking for the following: Make sure it is a business credit card application. You can tell if it is because all commercial credit applications ask for a TAX ID / EIN number whereas personal credit applications will ask for a Social Security Number. Business credit applications also inquire about how long you ve been in business and how many people your business employs. Confirm that the application is for revolving credit by reading the Terms & Conditions that accompany the application. You can be sure that it is a revolving credit application if it cites terms like purchase APR, minimum finance charge, etc. Remember that not all merchants offer revolving credit accounts so as such you ll want to confirm that the credit you re applying for is revolving and not a purchase account. If the application includes a Joint and Several Liability section, it is the same request as a personal guarantee. Be sure to thoroughly read the 24 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

25 application instructions to see if a personal guarantee is required. Some merchants like Home Depot won t process your application without one. Beware of credit card applications that market to businesses with bad credit for these merchants will usually charge application fees and annual fees which are billed to the card upon activation. As such, always read the Terms & Conditions first. Investigate who the credit card issuer is so that you can diversify your credit card holdings. Being in possession of several credit cards from the same issuer is not a bad thing as long as you have cards from other issuers as well. The Big Seven card issuers are Bank of America, American Express, Chase, Capital One, Citibank, Wells Fargo, and Discover. Having a grip on who issues a card is useful when you have been recently turned down for credit. You want to avoid applying for a different card backed by the same issuer until you have uncovered why they denied you in the first place. Which Revolving Accounts to Apply For and When First Step: Office Supply Store Revolving Accounts Without a doubt, the easiest revolving credit cards to get, aside from secured cards, are office supply store cards. The only two companies that offer revolving credit accounts for office supplies are Staples and Office Depot. Staples and Office Depot revolving accounts are issued by Citibank, so you only need to apply to one card or the other. Once you are approved, you can apply for the other card three to six months later. For whatever reason you re turned down for any Citi-backed card, wait 90 days before reapplying. If your business successfully passed the credential check at the beginning of this section, go ahead and apply to one of the cards now. Here are the application links: 25 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

26 Staples Commercial Store Card Application Office Depot Commercial Store Card Application Second Step: Citibank-Backed Store Cards Before moving forward, your business needs the following: Established credit files with the three business credit bureaus Have at least one trade line (Net 30 or revolving) with a credit limit of $500 or higher. Keep in mind that on Net 30 accounts the credit limit that gets reported to the bureaus is based on your largest purchase, not how much credit a vendor actually extends to you. If your business meets these criteria, apply for another Citibank-backed commercial card such as: Sunoco Shell Gas Card Exxon/Mobil Gas Card Sears (Net 30) Tractor Supply Home Depot One good thing about these cards is that you can get most of them without a personal guarantee with the exception of Home Depot. If you re turned down, you will have to wait 90 days before you reapply for 26 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

27 another Citibank card. Not waiting will result in an almost automatic denial. You can also apply for a Capital Once visa business credit card if you don t get desirable results with Citibank. Be aware Capital One pulls all three personal credit reports, plus your business s credit reports. Their business credit cards also report to your personal credit, but that s a small price to pay to build business credit. The benefit is their cards are easily-attainable and their cards report to all three business bureaus. Capital One Visa Business Credit Cards The Northern Tool s revolving account backed by HSBC is another great card to consider. Northern Tool s Revolving Account Third Step: GE Capital-Backed Cards & Key Bank Before you continue, your company should already meet the criteria from step two, and in addition it needs to: Have ten or more open accounts whether Net 30 or revolving Five or more accounts reporting to Experian and Equifax At least one trade line reporting a credit limit of $2,000 or higher If you meet these criteria you have a better chance of getting approved for any card backed by GE Capital, which include the following: Amazon.com Sam s Club Wal-Mart Lowes 27 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

28 GE backed credit cards also report to your personal credit, but that minor part is worth getting your foot in the door by opening at minimum, one account. GE Capital offers many financial products for small, medium, and large businesses including lines of credit up to $100,000 and custom commercial financing. Following this formula, you also have a good chance of getting approved for Key Bank MasterCard (issued by Citi Bank) which includes an introductory rate of 0% APR and optional rewards. Key Bank MasterCard Application Fourth Step: Dell Business Credit By now, your company s highest credit limit should exceed $5,000 and there should not be any outstanding UCC filings against your company s assets. If this is the case, you have a really good chance of getting approved for Dell Business Credit, which is financed by Citi bank. Dell requires a personal guarantee if your business is under five years old, but they are pretty generous with their credit lines. Dell Business Credit Application The Easiest Way to Get Your First Business Bank Loan If you re wondering how to get your first bank loan, this is the most painless way to do it...if you have at least $1,000 in cash, put it in a certificate of deposit (CD) and ask them to loan your business the same amount using the CD funds as collateral. You re probably wondering, Why would I get a loan if I already have cash on hand? Well, the answer to this question is, to build credit faster. Having a bank loan reference will help significantly for your credit approvals. One key thing to remember about building business credit is this: You will build credit much faster when you are willing to invest money to build it. This point 28 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

29 cannot be overstated. Plus keep in mind, for the sake of this example; you re not really spending money, but rather putting it up as collateral temporarily until you pay off your first couple bank loans. Yes, chances are you'll pay more interest on the short-term loan than the CD compensates you. But it's part of the process. In case you re wondering what type of repayment terms and length you should employ and how long you should keep money in the CD, we recommend taking out a loan and putting money in a CD for the shortest time allowed. If your bank will allow a three-month hold, that would be a great option! The reason being is that you don't want your cash tied-up for too long and you want to make sure the loan reports to the business credit bureaus. It would be highly discouraging to tieup your money for 6 months or more and pay interest on a loan only to discover it doesn't build credit. The Loan Multiplier Trick - How to Qualify for Higher Credit Limits Early On You may recall how we said that big credit limits produce bigger credit limits. Well, the same applies to loans. If, and only if, you have more than $1,000 cash you can afford to tie up in a CD for a few months, it would be in your favor to do so in order to get a bigger loan. Here s the reason When creditors see a $40,000 paid-off loan on your company's credit report, that's all they see. They don't see that you used $40,000 in cash-based assets to secure it. So it looks really good on paper. But wait, there s more... When your company's credit shows two $40,000 paid-off loans, imagine how easy it will be to get approved for five-figure revolving lines and six-figure loans without collateral. 29 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

30 Suddenly you'll go from getting approved for $1,000 and $5,000 revolving lines to $25,000+ revolving lines. And, you'll give your business the safety net and capital for expansion it needs in the form of $40,000+ credit lines and so on... Do not underestimate the power of strategically using cash to buy your company bigger, better credit lines. There may be more at stake than you initially realize. Not too long ago, many smart, hard-working business owners did the right things but still lost their companies in 2008 and And why, might you ask? Because, instead of using their assets to build-up their credit lines before disaster hit, they let their money sit in the bank dormant (minus the far from noteworthy interest they may have accumulated). If they would have followed the advice in this section, they would have a couple key safety nets: 1. The money they saved, and, 2. The credit lines they worked hard to build-up Now, of course we are not suggesting that credit is a crutch for everything potentially damaging to your business. But, when your cash-flow is severely restricted by slow-paying customers, account write-offs and downturns in sales, having enough cash and enough credit on hand means the difference between your business surviving and failing. As such, we encourage you not to become complacent when business is going well. You should make a continuous effort to build credit so that you have it when you need it most. 30 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e

31 Conclusion You now have a very solid plan at your disposal for building business credit. When you follow these steps consistently and aggressively, you will be well on your way to building six-figure, or even seven-figure business credit! It is time for you to take control of your company s financial success. It rests in your hands now. Do not delay Take action NOW! Map out a credit building plan using the guidance from this program Set deadlines Place reminders in your calendar and on your phone Also keep in mind that credit building education does not end here. The more you are sure to learn, the greater success you will have financially. Commit to spend two hours or so a month on learning more about business credit. In doing so, you will have a more amplified edge than the majority of other business owners. On behalf of Business Credit Blitz, we wish you exponential success in building your business credit! Best, 31 B u s i n e s s C r e d i t B l i t z Q u i c k S t a r t G u i d e