“How to Obtain Credit That’s Linked to Your EIN Not Your SSN… With No Personal Guarantee or Credit Check.”
Having access to money and credit for your business ultimately determines your business’s success or failure according to the SBA. But unfortunately according to Enterprenuer.com 90% of business owners know nothing about business credit, and ironically about 90% of businesses in the United States that open end up failing
and closing their doors for good.
Having a good business credit profile and score can be all of the difference between you having a highly prosperous business, or being at the helm of a sinking ship. You have to have money and credit to grow, especially to grow into a highly successful business. This is actually one commonality ALL successful business have… they all have established business credit.
Facebook, Microsoft, Apple, and every highly successful private and public company does have business credit. This means the business can use its own credit profile to
grow, without the owner or CEO providing their personal credit or liability to secure that credit. Walmart gets 80% of their total cash injection for business credit alone, one of the reasons they have grown into one of the largest retailers in the world.
But what about you? Do you have business credit established now? Are you able to go out right now and get high-limit store and cash credit cards for your business…
without even having to provide your social security number on the application? If not, you need business credit, it actually might be the only thing holding you back from
But how do you get business credit… how do you become one of the exclusive and elite 10% of entrepreneurs who understands business credit and gets it for your company to help you grow? In this Definitive Guide to Business Credit Building you’re about to find out, even if you know nothing about business credit now.
Business Credit is credit that is obtained in a Business Name. With business credit the Business builds its own credit profile and credit score. With an established credit
profile and score, the business will then qualify for credit.
This credit is in the business name and based on the business’s ability to pay, not the business owners. Since the business qualifies for the credit, in some cases there is no personal credit check required from the business owner.
There are a ton of benefits that business credit provide including that a credit profile can be built for a business that is completely separate from the business owner’s personal credit profile. This gives business owners DOUBLE the borrowing power as they have both Personal and Business credit profiles built.
Business credit scores are based only on whether the business pays its bills on time. A business owner can obtain credit much faster using their business credit profile versus their personal credit profile.
Approval limits are much higher on business accounts versus personal accounts which is yet another benefit. Per SBA, credit limits on business cards are usually 10-100 times higher than consumer credit.
When done correctly Business Credit can be built without a personal credit check. Business credit can quickly be obtained regardless of personal credit quality. And
business credit doesn’t report to the consumer credit reporting agencies and won’t show up on your personal credit report. So as you obtain new business credit and use it, your scores won’t dramatically decrease as they will with consumer credit.
Plus most business credit can be obtained without the owner taking on personal liability, or a personal guarantee. This means in case of default, the business owner’s personal assets can’t be pursued.
Even though most don’t know this, when a business owner applies for financing, their business credit IS reviewed. Not having business credit established will get an owner DECLINED for financing. There are no regulations that require the lenders notify the business owner for their reason for denial, so most never know.
The business can use its credit to qualify for revolving store credit cards like Staples, Lowes, Sam’s Club, Costco, BP, Wal-Mart, even MasterCard, Visa, and AMEX. The
business can also qualify for credit lines and loans.
Building Your Business Credit
It’s actually not hard to build business credit… you just need to know the proper steps to get started. Business credit building isn’t that much different than consumer credit. You start off with no credit established. You then get approved for new credit that reports to the BUSINESS credit reporting agencies helping you establish and initial credit profile and score.
Once your profile and score are established, you can then use that profile to start getting more and more credit. As you grow your credit you will get access to more useful credit such as store credit cards and cash accounts such as Visa and MasterCard credit you can use anywhere. Your credit limits will also grow, so you’ll have access to more and more credit as you continue to expand your credit profile.
Let’s jump in a take a look at the actual business credit building steps.
Business Credit Building Step 1- Building Your Business Credibility.
The perception lenders, vendors, and creditors have of your business is critical to your ability to build strong business credit. Before applying for business credit a business must insure it meets or exceeds all lender credibility standards. There are over 20 credibility points that are necessary for a business to have a strong, credible foundation.
It is very important that you use your exact business legal name. Your full business name should include any recorded DBA filing you will be using. Insure your business name is exactly the same on your corporation papers, licenses, and
You can build business credit with almost any corporate entity type. If you truly want to separate business credit from personal credit your business must be a separate
legal entity not a sole proprietor or partnership. Unless you have a separate business entity (Corporation or LLC) you might be "doing business" but you are not truly "a business”. You need to be a Corporation or an LLC in order to separate personal from business.
Whether you have employees or not, your business entity must have a Federal Tax ID number (EIN). Just like you have a Social Security Number, your business has an EIN. Your Tax ID number is used to open your bank account and to build your business credit profile. Take the time to verify that all agencies, banks, and trade credit vendors have your business listed with the same Tax ID number.
Business Address must be a real brick-and-mortar building, deliverable physical address, cannot be a home address, cannot be a PO Box, and cannot be a UPS address. Some lenders will not approve and fund unless this criteria is met.
You must have a dedicated business phone number that is listed with 411 directory assistance, under the business name. Lenders, vendors, creditors, and even insurance providers will verify that your business is listed with 411. A toll-free number will give your business credibility, but you must have a LOCAL business number for the listing with 411 directory assistance.
Lenders perceive 800 Number or toll-free phone numbers as a sign of business credibility. Even if you're a single owner with a home-based business, a toll-free number provides the perception that you are an even bigger company. It’s incredibly easy and inexpensive to set-up a virtual local phone number or a toll free 800 number.
A cell or home phone number as your main business line could get you "flagged" as an un-established business that is too high of a risk. DON'T give a personal cell phone or residential phone as the business phone number. You can forward a virtual number to any cell or land-line phone number.
Credit providers will research your company on the internet. It is best if they learned everything directly from your company website. Not having a company website will severely hurt their chances of obtaining business credit. There are many places online that offer affordable business websites so you can have an internet presence that displays an overview of your company's services and contact information.
Stay tuned for Part 2 - Getting Your Business Credit Reports
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