Building business credit is key to accessing unlimited funding without personal guarantees or credit checks. It's an easier way to qualify for financing, and you can get more money and better terms.
For example, Sam started as a franchisee for Benjamin Franklin but broke free and started his own store, Walmart, which became successful. He used his strong credit profile with Dun and Bradstreet to get credit lines and build a massive empire. Walmart purchases 80% of everything they sell using business credit, and customers pay for it, allowing Walmart to pay off their credit. This is how they became the number one retailer in the world, using other people's money.
Walmart, Facebook, Dell, Microsoft, Apple, Pilot Flying Jay, and Publix, among other large privately owned or publicly owned companies, are using other people’s money and business credit to grow and scale. They borrow a lot of money using business credit to pay for things like research and development, expansion, or building new stores.
Walmart, for example, has 513 trade lines on its business credit reports. This shows the masterful use of using business credit to grow and scale. Mars Incorporated, which creates Mars bars, has 22 accounts, while newer companies already have about 50 or 70% as many accounts on their business credit reports as Mars does, six months into the process.
The reason why these companies sit on a lot of debt, like Apple's $100 billion, is that they're using other people's money to grow and scale. They're using business credit to be able to pay for the things that business credit will pay for, and then they're taking their cash and using it for expansion.
Small businesses can follow the same system as large businesses to build business credit and access other people's money to grow. Access to capital is a major concern for entrepreneurs, as it's the number one reason businesses fail, with 82% of failures linked to cash flow issues.
A staggering 90% of business owners agree that loan availability is a problem, and it's a major source of worry for them. Business credit is the formula used by the largest companies, and small businesses can obtain it too if they know the recipe. Building business credit is key to reliably growing and scaling a company, and any business can do it.
Business credit is credit for a business. Just like consumer credit reports from TransUnion, Equifax, and Experian, where we establish credit by using it and paying our bills, business credit works the same way. The difference is that, instead of a credit profile being linked to our social security number, businesses build a corporate credit profile linked to their EIN.
This allows the business to fund itself without relying on personal guarantees from the owner or their creditworthiness. As the business establishes itself and builds its credit, it can become self-sufficient and less reliant on external sources of funding during the growth stages.
You can get approved for business credit regardless of your personal credit quality, meaning anyone can get business credit, even if their personal credit is bad. Properly building business credit requires no credit check, and there is no personal guarantee or liability. If a business defaults, it won't affect the business owner's personal credit reports, and business debtors can't come after the owner.
Business credit separates liability and doesn't attach a personal guarantee. There are no inquiries on the consumer credit reports, which is important for borrowing and funding opportunities. Limiting inquiries on personal credit reports gives business owners a greater ability to borrow on the personal side and use those inquiries.
Businesses may require certain loans and credit lines for acquiring capital, but they may not know how to conduct a necessary credit check for such scenarios. However, their business credit profile can help them without needing consumer credit or credit inquiries.
According to the SBA, business credit account limits are 10 to 100 times higher than those for consumer credit. Corporate credit cards have higher limits because they fund a business, which requires more money to operate. Business owners who use consumer credit cards often damage their personal credit, quickly max out those cards, and ruin their ability to obtain other financings.
Building a credit profile quickly is essential in the consumer world. Establishing a credit score can take up to six months for FICO to calculate. However, in the business world, the score is based on how bills are paid. By getting credit that reports and paying bills on time, good scores are achieved.
This process can be accomplished quickly, often within weeks or less than 30 days, making it a fast solution for getting capital. It also helps secure better rates. Business credit separates consumer and commercial credit, creating a credit profile for the business to fund itself. The result is more than double the ability to access capital.
Business credit reports are public records that anyone can see, making it important to maintain a good reputation. Lenders, suppliers, and customers all look at the business credit profile to determine the business's credibility.
Business credit alone qualifies for almost any kind of revolving credit. Many stores, including Apple, Dell, HP, Sam's Club, Costco, Staples, Office Depot, Nordstrom, and Macy's, offer corporate credit without personal guarantees or credit checks. Auto financing is also available.
This type of credit is short-term, less than six months. One client was approved for $185,000 in Ford credit without a personal guarantee or credit check. As the business grows and scales, it gets access to more capital without guarantees.
Walmart has 50 million credit lines on its corporate credit profile, which shows the depth of credit. With enough depth of credit, no guarantees are necessary.
Recent business credit approvals include WEX fleet cards, gas cards from Racetrack, Shell, and Wawa, JC Penney's and Sam's Club cards, and Amazon credit cards. Business credit can provide access to MasterCards, Visa cards, auto financing, vendor credit, and retail credit without a personal guarantee or credit check.
Building business credit can lead to unlimited capital, with small limits starting at 2-5 thousand dollars and growing to 10-20 thousand dollars within months, and up to hundreds of thousands of dollars within six to twelve months. The process is rapid and can be simplified for small business owners to achieve the same results as large corporations.
Fundability is crucial for businesses to be able to obtain credit cards, credit lines, and loans. It refers to a business owner's ability to get money from the system, and most business denials occur because lenders don't see the business as credible or fundable.
Knowing your industry code, or NAICS code, is essential, as it determines your risk for lenders and credit issues. It's also important to set up a corporation as the best type of entity, have a separate address and phone number for the business, professional email addresses, a business license, and business bank accounts.
There are 120 fundability factors, and it's the very first step towards getting approved for maximum credit and financing. Fraud is the number one reason for loan and credit application denials, accounting for more than half of all denials. Mismatched data between application data and the Secretary of State's data can lead to fraud alerts, and validating the business's information across the web is crucial to ensure its legitimacy.
The next thing is to build the initial credit by getting accounts on the business credit profile and score. There are two ways to build initial credit:
Using credit lines with personal guarantees and good credit to the business owner enables them to obtain high revolving credit lines of up to $150,000. These credit lines report to the business credit reporting agencies and jumpstart the business credit report with 10-30k credit limit accounts, allowing the business owner to obtain higher limit accounts on future approvals.
Vendors give credit and report it to business credit agencies. The goal is to have at least three to five accounts on business credit reports from Dun & Bradstreet, Equifax, and Experian. Experian and Equifax create a credit profile even if there is no credit, which makes it difficult to get financing. Having three to five accounts on business credit reports jumpstarts the credit reports and scores, making it easier to get more credit in the future.
The next step is to continue building credit. With about five accounts, you can obtain credit from major retailers. Once you have eight accounts, you can get fuel cards, fleet credit, and other similar things without guarantees or credit checks.
After four to six months, you will usually have about 14 accounts, which will allow you to get auto financing, Visa cards, MasterCards, and more without personal guarantees or credit checks. As you use this credit, your limits increase, and you can achieve all this without personal guarantees or credit checks.
When it comes to building business credit, there are several tips to keep in mind to ensure success. Here are some key points to consider:
Don't give out your social security number: When applying for business credit, you may be asked to provide your social security number as a means of verifying your identity. However, be wary of lenders that require your social security number for other reasons, such as performing a personal credit check. Providing your social security number for anything other than identity verification could put your personal credit at risk.
Building a strong business credit profile is essential for accessing funding without personal guarantees or credit checks. Large corporations such as Walmart, Facebook, and Apple have been able to scale their businesses and grow with the help of business credit.
Small businesses can also follow the same recipe to build their credit profile and access other people's money to grow. Business credit is credit for a business, and it separates liability, meaning it won't affect the owner's personal credit score if the business defaults.
Coaching businesses can use their business credit to acquire almost any type of revolving credit, including auto financing and corporate credit from stores like Sam's Club and Macy's. Building business credit is the key to reliably growing and scaling a company, and any business can do it.