So picking up right where we left off… Getting a Business Loan is the Reason to Build Business Credit (Part 2) Step 3 requires you to get your business credit files open with all three business credit reporting agencies … Dun & Bradstreet, Experian, and Equifax. Most vendors who extend lines of credit use Dun & Bradstreet and report to them regularly. Landlords use them to approve office leases as well. Many credit card companies and non-traditional business lenders use Experian. Equifax is called the “Small Business Financial Exchange” and is most important for cash lenders such as banks. A note of caution: There are some confusing claims made by the business credit reporting agencies. For instance, Dun & Bradstreet claims that you must pay them or your business file will never be opened. That is simply not true. Your file will activate with them, it just will take a few reporting cycles. Equifax claims that they don’t allow business owners to purchase a copy of their reports. That is true, but later on, I will show you how to obtain a copy of your Equifax business report without purchasing it. Look there is a lot of confusion about the Business Credit Reporting Agencies. I’m hopefully going to be able to give you a much clearer understanding of the business credit reporting process and hopefully give you insights into how your business credit scores are developed when you’re finished. remember, the end game is securing that business loan. Vendor Credit (Net 30) A vendor line of credit is when a company (vendor) extends a line of credit to your business on “Net 30, 60, or 90” day terms. This means you can purchase their products or services up to a maximum dollar amount and you have 30, 60, or 90 days to pay the bill in full. So if you purchase $300 worth of goods today, then that $300 is due within the next 30 days. The facts about vendor credit lines: You can get products and services your business needs and defer the payment on those for 30 days, thereby easing cash flow. This is called “Net 30”. When your first Net 30 account reports your “tradeline” to Dun & Bradstreet, the DUNS system will automatically activate your file and your number if it isn’t already. There are many vendors that will open a Net 30 terms account for your company with as little as an EIN number and a verified 411 listing. I’ll be certain to share those with you as we go. There should be enough vendors to choose from so that if one or two of them insist on requiring an active credit file first, you’ll be able to move on to another. Do me a favor and always apply first without using your SSN. You know some vendors will request it and some will even tell you flat out on the phone they have to have it. STOP! Submit first without it, with your EIN only. Some vendors may even ask you to place an initial prepaid order. If so, get that order out of the way fast and move on to having a Net 30 account opened. Remember that the goal here is to have at least five (5) Net 30 accounts opened and reporting, not necessarily to have vendors that serve 100% of your business needs right now. Later, once your scores are built, you can add better vendors, as you may need them. Remember 5 (five) is THE magic number (not 3, not 4 but 5!) Pay your vendor accounts as close to Net 15 days as possible. The quicker you pay them the better your business credit scores will be. However, you must be patient and allow time for the vendors’ reporting cycles to get into the system and begin impacting your business credit scores. It typically takes three (3) cycles of “Net” accounts reporting to build credit scores. Remember that I said from the very beginning that it takes 90 to 120 days to build business credit scores. The credit reporting cycles are the main reason for that and it cannot be done faster. Sorry. (That’s why most business lenders like Sunwise Capital needs to see you in business for at least 6 months) Revolving Credit Accounts Now here’s where it gets really exciting. Having three (3) Revolving Business Credit Card accounts is key to building business credit (and makes it so much easier to get working capital). For your business credit building success, you need to obtain three (3) revolving business credit card accounts. These accounts report to the business credit agencies in different ways and carry more weight than the vendor credit that you select in Step 4. A revolving credit account is simply one that allows you to pay a “minimum due” per month and not the full outstanding balance. These accounts normally report to Experian and sometimes to D&B and Equifax. Because of how they report, these accounts will help build your business credit on a larger scale than just the Net 30-day vendors alone If you haven’t completed Steps 1 through 4 There is no point in starting Step 5. Why? Because you will most likely get declined. These accounts will be checking to see that your business credit foundation is set and that your business credit files are open. They may also check your bank rating, look to see if you have some open vendor lines of credit and, in many cases, they will want to see that your D&B file is open. Just remember that in this step it does not matter which Revolving Credit Card Accounts you open and make purchases with. There is a great selection of companies offering products and services that are of value to any and all businesses. Before I move on can I share a funny story with you? First, you must understand that a true business credit card is a credit card that only has your business name. Most “business credit cards” are not truly just in the business name. How can you tell the difference? Well if your name is on the credit card this tells the world that you are personally guaranteeing the card’s debts. Anyway back to the story. So I flew into Los Angels on a business trip and I went to the car rental counter to pay for my vehicle. When I handed them my credit card I knew I was in real trouble. You see the name on the AMEX was “Sunwise Capital.” They look at me and look at the card and I knew what was next. “You’re not Sunwise”. My challenge? How do I prove to them that I’m Sunwise Capital? After a 10-minute discussion and one manager later I come up with a brilliant idea. Let’s call AMEX. Two minutes later I’m driving away. So stealing the line from a too often played commercial, “What’s in your wallet?” Bank Credit Now for the Grand POOBAH. How to get real street creed from your bank. Getting “Bank Credit” makes your business more credible in the eyes of almost all other lenders. Makes sense, right? I will walk through what must be done to obtain Bank Credit that will start the reporting process for your business and place your business on all other lender’s radar. Imagine banks reaching out to you asking if you’re business needs working capital or a small business loan for growth and expansion. Imagine being a small business and being able to play with the big boys. Here’s the deal; I will teach you about how a strong business bank account rating indicates your business has the ability to repay loans, and I will show you how banks rate your accounts. You know that Sunwise Capital has small business loan funding programs that can bring quick cash to your business. But I can also show you some creative programs for accessing personal cash that can then be used in your business. Here’s the bottom line. I will detail why your business needs a bank loan that reports to the business credit agencies, exactly how to go about obtaining it and which banks to go to. Fair enough? I’ll provide you with details that other small businesses use successfully to get one bank loan and that have verified reports to the business credit agencies. Many banks that offer business credit cards and business loans either do not report to the business credit agencies or worse they only report on your personal credit. Not fair, not fair at all. I’m going to save you hundreds of hours of researching on your own and I will make sure that you get it done the fastest possible way! Stay tuned and let me know your success.