What is a Business Credit Asset ™ and why is it important to your business?

A Business Credit Asset ™ is one of the most important concepts that every business owner
needs to understand.  It represents an asset that you can build within your business that increases the likelihood
that your business will survive and thrive and will have a greater value.

A Business Credit Asset starts with your business entity having its own strong business
credit scores with the three top national business credit reporting agencies.
It is making sure that the credit lines which are used by your business entity
are reported only on the business credit reports and not reflected as being
tied to the business owners personally. But it is also more than just that.

The starting point for a Business Credit Asset is the business owners taking the time and effort
to establish a business entity, either a corporation or an LLC.  While other forms of doing business such as
partnerships or sole proprietors can build business credit scores, they cannot create a Business Credit Asset. Why is that? Business credit scores that are built under any form of business which is not a separate entity can only be used by that business owner personally. They cannot be transferred in any ownership change because all the debt is tied directly to the owners personally rather than to the separate entity.

After the business entity has been formed, the next step is making sure that business
entity is listed, the right way, with all the National Business Credit Reporting Agencies; Experian Business Information Services, Dun & Bradstreet, and the Equifax Small Business Financial Exchange.

Once that is done then having the business entity build strong business credit scores that
are 100% separate from the business owners,and tied only to the business entity, creates an asset that can then be used to secure larger lines of credit, equipment leases, office leases, vehicle financing, credit cards, and business loans which are in the name of the business only and do not show up on personal
credit reports.

Probably the best feature to a Business Credit Asset is that it is fully transferable with the business. This means when the business owners choose to transfer ownership or sell the business entity, the business’s debt and its
Business Credit Asset can be transferred to the new owners cleanly and transparently. This can greatly increase the attractiveness of the business for a sale and can mean that the business is worth more, to a larger pool of buyers.

Having a Business Credit Asset in place can also mean receiving more cash from the business
sale because the owners may not need to carry back financing. Here’s why, the new owner will not have to spend time and resources building their own Business Credit Asset, that will have already been done for them. For many businesses, the value of a Business Credit Asset can be worth 100’s of thousands of
dollars.

In these economic times it’s not just lenders who are studying every business closely. More people than ever are taking a hard look at a business before they award that new contract, lease the business an office or storage space, or extend any type of financing to the business.

In the United States vendor credit makes up the majority of all business lending. Vendors
will check the business entity’s credit before they agree to extend net 30 day payment terms. There are tens of thousands of companies that will extend a vendor line of credit to other businesses, but in the case where the business entity has not developed a Business Credit Asset, then those vendor credit lines will be based on the personal credit of the owners and it will be the owners who are required to personal secure the debt.

Lenders are now extending credit based on business credit scores. SBA lenders use it as a final
approval factor, and if your business is approved, it will be your business credit scores that determines the amount of the loan that the business will receive.

Many business credit cards now require to see at least 10 reporting trade-lines on your business credit reports with at least one reporting a credit line of $10,000 or more before they will consider extending the business entity a credit card which is not tied directly to the personal credit of the business owners.

The term “trade-line” refers to any credit provider which extends credit to the business
entity and then reports the credit terms and payment history to the business credit agency. Typical trade-lines are leasing companies, vehicle financing, vendor lines of credit, gas fleet business credit cards, business credit cards from stores (Staples, Home Depot, etc.), and business financing from hi-tech companies (Dell, Cisco, Microsoft, HP, etc.)

Building and maintaining a Business Credit Asset is very much like building and maintaining
your personal credit. Your business entity will need to get approved for at least 10 reporting trade-lines, use those trade-lines month in and month out and pay them each on time. Then you will need to monitor the business credit scores just like you monitor your personal credit scores.

A Business Credit Asset is an extremely valuable and useful tool for your business, but it
is also one that you must pay careful attention to if you want it to be there where and when you need it most.

It is reported that in the United States today that only 30% or all businesses are operating
as a separate entity and 85% of those have 3 or less reporting trade-lines. So as it exists today there are only a small fraction of businesses who have built a Business Credit Asset. They do however turn out to be in the top 10% of those businesses which are successful.

If you are interested in developing your Business Credit Asset Today Click Here!!!

Small business is in crisis. This crisis is driving our unemployment and undermining
the financial security of the US.

Our banking system has evolved into looking at a small business as an individual, not as a
business entity.   Most small businesses cash financing and lending is driven by personal credit.  This single source view of credit is the Achilles tendon that is putting literally millions of small business at risk for failure!

The problem is that business owners are living with one credit source, and that is personal
credit (FICO).  This single source dependence on their personal credit resource creates an over usage of personal credit, that results in declining credit scores and limited credit availability. Personal credit is not an unlimited credit resource. In fact, the more you use it (credit inquires, new revolving credit accounts, increase use of credit cards) the lower your credit score goes.   For example, when a business exceeds 50% usage of a credit card, you will likely not only have a dramatic reduction in credit score, but also, the card provider
will likely reduce your available credit limit.  In short, you damage your credit score and reduce your credit
availability at a time that you need more credit to support personal and business cash needs.

Three Reasons why small business owners are in this situation?

• First- Lenders are interested in minimizing risk.
  The easiest way to minimize risk is to tie lending and credit to
  existing assets, and for most small business owner, their personal  asset are obvious targets.
• Second- Business owners have not been educated to the opportunity to build additional
  credit assets in their business.  Nearly
  90% of small businesses have underdeveloped business credit profiles.  If business owners knew that they could easily build a business credit asset that would increase their access to credit
  and lending and reduce their personal exposure to business liability; “Who wouldn’t do that?”
• Third- Small business owners underutilize trade credit to enhance cash flow and fund
  their business.  95% of all US business funding is based on trade credit.  That means
  that less than 5% of all financing is cash financing including credit cards, lines of credit, loans etc.   There is over $1 Trillion dollars of trade credit available to small businesses, however less than 30% utilize trade credit, and of those most are underutilizing this credit source.   If your business is not structured to maximize trade credit, you are leaving $100K’s of dollars of credit and cash on the table.

How do you change the game? – Understand the rules

Reduce your dependence on your personal credit – Blindly using personal credit as the sole source of cash credit for your business is a recipe for disaster.  Stop using personal credit in your business, and if you need to guarantee a business loan or line of credit, make sure that you are building your business credit
score.

Invest in building business credit – Most business owners do not understand that business credit is not automatically created when you formed your business.  Business Credit must be created in a systematic way, and before you can create and build a credit file, your company must be lender compliant.

Leverage credit and funding that builds your business credit score– there are 10’s of thousands of  trade credit providers, however only  5% of these vendors report.  It’s important that you work with a partner who can help you identify and apply with reporting vendors.

Leverage your growing business credit-  to support as much cash and trade credit as
possible. The more credit you acquire and support through your business, the
greater the value of your business credit. Your goal is to create a Business Credit Asset ™ that increases the
value of your business.

Reduce your dependency on cash credit:  small business owner are far too dependent on cash credit, it is estimated that the average small business in the US has over $200,000 in cash equivalent trade
credit.  This is an untapped source to finance the growth and health of your business.

For a small business,
branding is half of the game. It is different from large-scale businesses which
have all the means and machinery to promote the company. Most small businesses
would like to be well known in order to win the loyalty of its target market. At
the same time solid branding helps to position the small business to compete
with bigger businesses and competitors.

One of the chief reasons your
business brand is important is because of its powerful recall. If there is
recall, then there will be preference over the products and services provided by
competing small businesses. Subconsciously, the company becomes the answer to
the target market’s needs. Instead of going for the products offered by the
competitor, they will give preference to the one that they are familiar with. It
is a matter of mind games. Consumers want what they know.

Another reason
why branding your business is important is that small businesses need a quick
way to be interesting. Your business brand adds a little something extra to the
company. It helps to attract the people to come and check out what the company
is all about.

Your company must attract its perspective clients in order
to win them. The key here is to have a strong brand. A strong brand is the type
that is united and polished. It must not be susceptible to multiple
interpretations by the people who see it. A good brand must be distinct and can
clearly tell what the company is about. It must also convey a good image.

Competitive edge against other competitors, whether big or small, is the
greatest contribution a brand makes to your small businesses. Get the most for
your business by establishing a good product brand. Without a good business
brand, the identity of your business becomes loose and unorganized. This makes
it hard for the target market to get a recall and make a purchase.

by: Bob Hamilton

A business plan is a statement of intent; of your goals and missions, of the competition and industry you are entering, of your business strategy. The style and format of your business plan should be tailored to the audience you are writing it for. If you are going to a bank for funding, then you should stick to a formal business plan (summarized at the end of this article for you). If you’re pitching to a business angel, you may wish to adopt a slightly different approach. Angels want to hear and see passion from you about your idea/business proposal, so you should think about how you could incorporate this into your business plan and make it a true reflection of you and your goals.

Remember, a successful business on paper doesn’t necessarily translate into a successful business in real life, so don’t worry too much about producing the perfect business plan. The key elements to include are:-

1. A full financial model
2. A marketing plan; including strategy, competition and product positioning
3. People management (including you)
4. A 2-5 year projection for the business

Whoever you are pitching to for funding, you should be able to demonstrate a complete knowledge of the industry you are looking at entering, including competition, target market, challenges etc. Knowledge is power and if you can competently and confidently talk about your business with real passion and enthusiasm, you’ll win the investors over every time. If you panic, flounder and are unable to answer numerous (all brought on by lack of insight and preparation) questions pitched to you, well I’m sure you can deduce the outcome. The real purpose of a business plan is to demonstrate to investors that you’ve actually thought about your business, you have a clear vision and you know the challenges and possibilities.

A formal business plan should include the following:-

1. An Executive Summary
a. This is a summary of your business plan, highlighting the key points of interest and value. It should be concise but not superficial. It needs to grab the readers attention, so needs to be interesting – think in marketing terms ‘AIDA’, Attention, Interest, Desire, Action. The aim is to get the investor to go through all of these states, resulting in the desire to invest in you.

2. Company Overview and Strategy
a. This should include the objectives, mission and feasibility of your company
b. The Price – detail what you plan to sell your product/service for and why you have decided on the price point outlined.
c. The Product – define your product and why you think there will be demand for it; include how you are going to develop it. What are the USPs? (Unique Selling Points)
d. Place – state your distribution plans; how are you going to sell your product?
e. Promotion – how are you going to promote your business? Think about your communications plan in terms of advertising, direct mail, merchandising, brand awareness

3. Competition
a. This should be as detailed and up-to-date as possible – their products, customers, distribution, service, known strategies.

4. The Market
a. What is the size of the market you are looking at entering, trends, influences, threats?

5. Customers
a. What is the target audience? Where do they live? What do they do? How old are they? Male/Female bias?

6. Managerial
a. Include yourself in this part.
b. Detail other members of your team, their skill set and the value they bring to the business (experience is of great value)
c. Training required?

7. Financial Projections
a. Include forecasts, cash flow and funding.

Remember nothing is set in stone; there is no perfect template. But, if you know your market, product, finances and competition and have oodles of passion and enthusiasm, you’ll stand out as a professional rather than an amateur.
by: Emma Mitchell

You see, we have been sending him a lot of referrals lately and he is getting used to having
files handed to him that are in lender compliance, they are credible company’s and have
established a solid Business Credit Asset™ so he is starting to get a bit spoiled.

As we walked around the corner, this is what we saw:

Thats when he said, you know my biggest frustration is, when I deal with clients that have not gone through your system, their biggest problem is they are invisible!

I asked him what on earth he is talking about, he said that when typical business owners walk in off the street hoping to apply for financing and get approved, when I send them to underwriting, they are invisible! Meaning, they don’t exist on anyones radar!

We then talked about the 4 C’s of Lending, he said that when clients don’t have any of the 4 C’s they are essentially invisible. No one wants to lend to them and they are not on anyone radars for being a company that is credit-worthy.

Is your company invisible? How many of the 4 C’s of lending do you have?

Here they are:

1. Credit history –Lenders will look at your business credit history. How has your business handled credit in the past?
2. Credit history- Lenders will look at your personal credit history. How you handled personal credit in the past.
3. Cash flow- Does your business have any verifiable revenue. If so, this dramatically helps your chances to obtaining financing without a personal guarantee.
4. Collateral- does your company have any collateral or assets? If so, this dramatically helps your chances to obtaining financing without a personal guarantee.

As long as your company has at least ONE of the 4 C’s in place, we can help you obtain financing. If you don’t have any of the 4 C’s, then don’t worry; we will help you build business credit history. The step 2 funding options are based on 3 of the 4 C’s, personal credit history, cash flow and collateral.

You will have the option for two types of financing, financing WITH a personal guarantee and financing WITHOUT a personal guarantee.

Feel free to call us anytime if you have any questions on building business credit and obtaining financing: 800-685-2108

• Being hounded by creditors?
• Declaring bankruptcy?
• Being denied a mortgage?
• Paying more than your fair share of interest on your loans?
• Losing your house?

If you answered “no” to one or more of these questions, this may be the most important report you’ve read in a long time.

Because, if you’re like most entrepreneurs, investors, and business owners I’ve met over the past 28 years, you’re in danger of facing all of these horrific problems.

And it’s all because of your business.

You see, entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. In most cases, they don’t realize that they’re making a mistake.

And to tell the truth, even when they do realize they’re making a mistake … they lull themselves into thinking that the consequences will be a minor annoyance.

Until, one day, they can’t qualify for a mortgage. Or they can’t get the to-die-for financing offered on the new car they’re buying. Or they’re hounded by creditors and eventually have to declare bankruptcy.

And it is all because they use their personal finances to fund the launch or expansion of their business. They then use personal credit cards to pay for business expenses. If you are in business or thinking about starting a business, business credit is a must.

Let me explain, most business owner have no idea that they can establish business credit and even fewer know how to how to establish business credit. If owners would take the time necessary to educate themselves about establishing credit they would no longer have to use their personal funds for start up capital or working capital.

They would also be able to use business credit cards which don’t report to their personal credit reports, therefore, not lowering the personal credit scores.

The most important goal of business credit though is to obtain unsecured business lines of credit, which can be done once the business credit profile is set up properly. Once a business obtains unsecured business lines of credit, they then have the working capital they need to start a business or expand their business. The business owner has check book control to use the business lines of credit as they wish. And best of all, the business lines of credit don’t report to the business owner’s personal credit report.

If you have set up your business profile correctly there are a number of banks that will lend to brand new start up business. That is right, brand new start up business with no track record whatsoever. The banks will extend unsecured business lines of credit so they can have the start up capital they need to finance the business of their dreams.

Make no mistake about it; business credit is a MUST for every business owner. Don’t put your personal assets at risk finance or fund your business!

Creative Business Services makes it easy to establish business credit.

Corporate credit is an unsecured loan the financial institutions grant after verifying a business’ status. Owner assets and credits though are not at risk here. However, the financiers do verify their personal credit record to establish their credibility. Now, what if you have a bad personal credit? The answer is, you can still get the loan though you should strive to keep your business status compelling. The ensuing discussion explores the ways to strengthen your chances of securing business credit if you have a bad personal credit.

Business entity. Your business should have its own legal existence and identity, independent of its owner. Therefore, register your company as an LLC or a corporation to build its own reliability. The proprietorship companies and partnership firms, however, face disadvantage on this front, as owner’s credibility is business’ credibility. As a result, the proprietors have to stake their personal assets to secure business loans. In addition, an owner’s bad personal credit is a big disqualification in these cases, while it has reduced impact if the organization has larger spread as is the case with LLC or corporations. Therefore, your organization’s LLC or corporation status leverages your chances of getting business loans despite bad personal credit.

Business peripherals. A physical address, other than the P.O. Box, and a business telephone line, add much towards the integrity of your business. They reflect that it exists and is reachable.

Other factors. Have your business operating license, good bank rating, Dunn and Bradstreet number or Duns number, around five trade references for paydex score, all in place.

Trade credit. Trade credit is one category where you can avail business credit for a specific purpose, material purchases, even if you have low personal credit scores. However, you can use trade credits at the issuer’s specified centers only. Therefore, trade credits definitely lacks the flexibility of a cash credit and better suits the companies not requiring working capital. It is not very useful for most of the businesses with cash requirements of varying nature.

Personal credit. It is important to understand that being an LLC or corporation does not mean that your bad credit will not have an adverse impact on your corporate credit at all. The financiers do check the owners’ social security number (SSN), and credit reports, prior to granting business credit. Mostly banks consider the applications of the owners with a credit score of 640 and above. Therefore, if your credit score is low, then without delay, it is best to start building your personal credit along with the business credit. In fact, prioritize this work.

All said and done, avoid bad credit at all costs as it makes it difficult to obtain cash credit from a bank. But even if you have bad personal credit you can still build good business credit.

Creative Business Services makes it easy to establish business credit.

But the question is how? What do you need to do to get loans for your business without putting your personal assets and credits at risk? This article explores just that, in particular, how to establish business credit. We are discussing here the various dos and don’ts for the businesses to build eligibility for raising corporate credits.

Dos. The following tips guide you towards gaining a sound grounding for getting corporate credits:

• Legal entity. The financial institutions grant you corporate credits after verifying the soundness of your business as an entity. Therefore, it is very important that you have a definite status for it as an LLC, or a corporation, as applicable. Do ensure that all the legal papers of your organization are up to date, including your business license. This is vital to in the steps to establish business credit.
• Contact details. Your business must have a physical address, not a P.O. Box address, and a dedicated business telephone connection. This authenticates your business’ worthiness.
• Financiers. You need to find ‘genuine’ financiers who can extend you business credit without requiring your personal assets and credits details. You ‘must’ also ensure that these institutions, after disbursing loans to your organization, inform the business credit reporting services so that they take a note of your organization. This is a valuable step towards establishing business credit history just like your personal one.
• Personal Credit. If you have good personal credit it is much easier to obtain unsecured business lines of credit. If you do not have good personal credit, rest assured you can still establish business credit.

Don’ts. You should avoid the following steps vis-a -vis corporate credit:

• Personal credit. While attempting to build your business history, do not ignore building your personal credit. Keep shaping your sound personal credit as well, so that you have better liquidity and a sound credit record over a period.
• Business age. Your organization’s age can have much influence on your corporate credit. If your organization is older than 24 months it will be easier to obtain credit, however, you do not need to bother about forming an aged or shelf organization to establish business credit. Your new business can contrive sound corporate credit.
• Buying credit. You must not indulge into this. Some companies sell some business information to other organizations. This trade references buying proposition is out and out dicey for your business as it can get a “high risk” rating anytime.

Creative Business Services makes it easy to establish business credit.  To help you establish business credit, we also offer a free business assessment, this assessment will specifically help you determine to steps you need to establish business credit and what it can do for your business.

Too many business owners come to us last minute trying to obtain additional financing. We are constantly approached by business owners asking how to obtain business financing, and more importantly, how to obtain it without a personal guarantee! We watch as successful businesses are turned down for financing because they haven’t taken the time to set up the business credit properly.

More vital is after the business credit is set up, who should the business contact to get financing? Let me also say one thing, there is a common misconception, good business credit will overcome bad personal credit. In most cases, this is simply not true. It is important to have good personal credit and good business credit.

Let’s face it, banks are not donation centers! They will be looking at both the business credit and the personal credit of the owners of the business. Just because a business owner has great business credit doesn’t mean that the bank will completely ignore the negative personal credit.

Part of building a good, solid business is taking care of both business credit and personal credit. Although, building business credit is totally different than building personal credit. With business credit you will need to make sure that you have a proper business entity set up. You will need to make sure it is a real business. By that I mean it should have the proper licensing and permits to operate in your local jurisdiction. You will also need to have a real address. Not a P.O. Box! You will need to set up the phone number properly so that the business credit bureaus can verify that you really are in business.

You will need to do business with companies that report to the business credit bureaus. There are over 500,000 companies that extend credit and less then 10,000 actually report to the business credit bureaus. If you are doing business with someone who doesn’t report it does nothing for establishing trade references.

The best advice that I can give is start now! The point that your business needs the money is not the time to start building business credit. Start before you need it so when you need it it is available. Remember, the most important part of building and operating a successful business is laying the foundation and business credit is part of that foundation that needs to be set up properly in the beginning.

Let us give a couple words of warning!

1. Don’t try and buy credit. There are a few companies that will try and sell trade references for a large sum of money. This is a rip off and as soon as the credit bureaus find out they will put your company in “High Risk” status.

2. You don’t need to spend large sums of money on “Shelf Corporations” or “Aged Corporations,” shelf corporations have their place and can be a benefit, but you can also build business credit and obtain financing to a brand new corporation.

3. Don’t try and substitute good business credit for bad personal credit. Spend the necessary time and money to repair your personal credit while building your business credit.

Do yourself a favor and start building business credit the right way so when your business needs financing you know where to go to obtain it!

Creative Business Services makes it easy to establish business credit.

Most businesses want to be able to borrow money when they need it, without the owners having to personally guarantee the loans. This means less risk to the owners. Hoping to get a business loan without a personal guarantee is one thing and actually obtaining it is quite another.

The solution is to understand what business credit is and why every business owner should build it. By building business credit every business owner is able to separating business debt and liability from their personal debt and liability. Most importantly, by building business credit a business owner is able to obtain larger amount of business financing at better interest rates.

Before a business owner rushes out in a frantic search of business credit, one must understand that there are no laws protecting business owners from the business credit bureaus! It is imperative to know how to set up business credit properly, but most importantly what to do prior to setting up business credit and in what order to proceed. The reason this is so important is, like personal credit, where someone has the right to dispute in inaccurate information, by law the personal credit bureaus must respond within a certain time period. If a business owner’s business credit is inaccurate or set up improperly, the business owner does not have such protection to dispute inaccurate information.

Make sure that you meet all business credit criteria prior to setting up business credit and before applying for any type of business lending. A business credit profile can be established for a common C- Corporation, S- Corporation or LLC. Don’t bother trying to build business credit to a Sole Proprietor, as most Sole Proprietors are based on the business owner’s social security number and not a tax id number.

Once the business credit is build then the business owner can apply for business financing on obtain credit without personal credit checks or personal guarantees! The stronger and stronger business credit the owner builds the better financing the business is able to obtain.

There will come a time, if not already, that every business owner will need additional financing. If you have taken the responsibility of separating business credit from personal credit then your business will flourish as you will have all the business financing that you need.

Do yourself a favor and start building business credit the right way so when your business needs financing you know where to go to obtain it!