Business Credit

[Sam T.]

Is anyone using business credit to fund their deals? looking for some information about this. I have done hard money deals in the past but i would like to get more info on this, any help would be great!

[Christine Glasner]

Hi. I'm sure there are more knowledgeable people than me, but I'll share what I know. If you haven't established business credit yet, find businesses that report to Dunn & Bradstreet. I believe Staples does. Once you have some positive activity, create a business profile with D&B. The score ranges from 1-100 and you want a 75 or better. I have only learned this recently and you may already know it. If anyone can add to (or correct if necessary) this info, I'd love to know more as well. Good luck!

[Sam T.]

Thanks for the reply Christine. I have done a little research and I understand some of the basic steps to building it and am starting down that road now. I am hoping an investor on BP uses this strategy. I am working on my personal credit as we'll but want to double up and build buisness credit. I am looking to link up with an investor who already does this or is attempting to

[Geoffrey Jones]

I have done this for multiple businesses for a few friends and myself.

Getting credit like Staples, Dell, HP, etc are only supply trade line credit. To fund the acquisition of real estate deals you need to get real cash lines of credit and credit cards which only report to the business.

This requires having an excellent credit score 720+.

Personal Guarantee (Which could be removed after making good payments on-time)

History on your credit report.

A registered corporation with age

There a lot more to discuss here. And strategies that I use to build credit faster and invest in real estate, but this is a whole book on its own. I would love to share what I know but its just too much to discuss in 1 topic.

[Brandon L.]

@Sam T. this is the method I use to establish business credit.

http://www.biggerpockets.com/blogs/5868/blog_posts/41077-how-to-build-business-credit-in-6-easy-steps

[Sam T.]

Thanks! The link was very helpful. Would I need to obtain a D&B number? and do i have to establish a new entity or can I use a previously established business I have? I ask because I have an EIN and bank account already it could jump-start things if I can use this one. 

[Vinny Gaines]

Hi Sam, yes you will want to acquire a D&B number. It is imperative when building a credit file within their database; and they ARE the main source for business credit data. 

In addition to the information that is on the blog link that Brandon shared, you can also apply for small vendor trade credit. 

Do know, that there are many ways to establish business credit and all of them take at least a little time. The only one way that you can obtain a business line of credit for a substantial amount is if you have a strong business guarantor to co-sign for the company. Oftentimes the business credit wont appear on the personal guarantors (business'cosigners' ) credit file. 

I've been doing business credit development for quite some time and have a good grip on the ever changing trends

[Joe Fairless]

@Sam T. I would get introduced to some local community banks and credit unions - they typically have some favorable terms on lines of credit 

[Stanley Whigham]

To fund real estate deals you need unsecured business lines of credit.  If you have a corporation or llc over 2yrs old, high levels of unsecured lines of credit can be obtained with a strong Dun and Bradstreet Paydex Score, Credit Profile and a "low 5" business bank rating.

Here is what you do:

1) Establish a strong internet presence for your company by listing it on at least 15 sites-- Facebook, LinkedIn, Twitter, Scoop It, Bing, Manta, 411, Google+, Google Places, etc.

2) In addition to your business checking account, open an expense and savings account in the same bank.  Purchase a certificate of deposit and borrow against it (now you have a secured loan ).

3) Make regular deposits for 90 days to establish a favorable bank rating.

4) Add higher level trade references to Dun and Bradstreet to provide depth to your Paydex Score (net 30s are usually lower amounts; you'll need higher approvals from your trade references-- 2k to 4k).

5) Upload your company financials to Dun and Bradstreet to complete your file and create a strong credit profile.

6) After 90 days apply for unsecured lines of credit.  Here is why you'll be approved:

  * a bank has already loaned your business money (secured loan); Dun and Bradstreet, Experian Business and Equifax Business have all reported your loan(s).  The secret is to pay back and repeat the secured loan at least 3 times in the 90 day period.

  * the added trade references will add credit profile depth, as will uploading your financials

  * your deposit activity and use of bank products (cd) shows ability to repay

  * bank rating is formed after 90 days of deposit activity 

[Sam T.]

Thanks Guys! @Stanley Whigham Thank you for explaining that so well, I appreciate the breakdown and I will use this information to start building my business credit profile. Really great stuff!!!

[Steven Mingione]

@SamT just got my EIN NUMBER

Any suggestions on my first steps to establishing business credit ?

[Account Closed]

You need t o have at least 5 lines of vendor of contractor credit that report to the business credit agencies. i have a list of 10+. Some are easier than others. Once you have 1) The age of your business at 1 year 2) The Revenue (Not profit) of your business above $50,000 3) Meet minimal business credit requirements and 4) Listed ina ll of the right government and public directories you are are more likely to get a business loan from a business lender like Kabbage and Lending Club. This has nothing to do with your personal credit, but it always helps to have your personal credit healthy as well.