Easy Business Credit – Use it 5 Ways

Easy Business Credit is Possible, Fast Business Credit is Not

Business credit is credit in the name of your business, not your own name. It is not connected to the business owner's personal credit. Because of this, a business owner's business and consumer credit scores can be very different. There are many benefits to building business credit. Because business credit is distinct from the consumer, it helps to secure an entrepreneur's personal assets in case of a lawsuit or business insolvency. It is easy to get business credit, but it is not fast. 

Even start-ups can get easy business credit. This is important, because visiting a bank for a business loan can be a formula for disappointment if personal credit isn’t top notch. By building small business credit, you can have a plan for success that does not involve your personal credit score or liability.

Share our foolproof business credit building checklist and tell your friends about how you're building business credit the quick and easy way.

How to Get Easy Business Credit

As already stated, easy business credit doesn’t mean fast business credit. It also doesn’t mean you sit back and build it on autopilot. You cannot build business credit passively. You have to work at it, intentionally. Work doesn’t sound easy, I know, but the process really is uncomplicated. 

The whole thing moves more quickly if you start by setting up your business to build business credit from the beginning. However, even if your business is already operating, you have to do that before you can start working on business credit. It will just be a slower process. Your business has to be established as an entity separate from yourself.

Establish Your Business as An Entity Separate from Yourself

This is the vital first step. If you do not do this, then everything you do to build business credit will only affect your personal credit score. You will still not have a separate business credit score. Here is how you start with easy business credit, and separate your business from yourself in the eyes of creditors and credit agencies.

Set Up Your Business for Building Credit

• Your business has to have its own phone number and address that is separate from your personal phone number and address. The phone number should be from a toll-free exchange. Be sure to list your business name with its own contact information in all of the directories, including 411.

• Formally incorporate your business with the IRS. You get to choose from a corporation, an S-corp, or an LLC. The one you choose will depend on the amount of protection you want and how much you want to spend.
• Get an EIN. This is an identifying number for your business that functions similarly to an SSN.  Get an EIN for free at IRS.gov.
• You’ll need a D-U-N-S number to start building easy business credit. That’s another identifying number assigned by Dun & Bradstreet. They do not open a business credit file unless you have this  number. As the largest and most commonly used business credit agency, you definitely need a file with them.
• Open a business bank account. Use it for all business expenses. You can pay yourself a salary out of it if you need to, but it has to be for business transactions only, and it must be opened in the name of the business using the business contact information.
• Make certain your business has a professional website. It is best to hire or barter with a professional for this. A poorly put together website can do a lot of damage, and having no website in this day and age is basically the same as not existing. 
• Get a dedicated email address for your business that has the same URL as your website. A free service such as Yahoo or Gmail will not work.

How Can You Get Easy Business Credit When You Have No Business Credit?

It probably seems unrealistic that easy business credit is even a thing. That’s because we all know that, with personal credit, it is hard to get credit without credit. When you apply for credit, the creditors want to see a good credit score before they give it. Why is the process different with business credit? Because there is a secret. Lean in close so you can hear it. The secret is the vendor credit tier.

Share our foolproof business credit building checklist and tell your friends about how you're building business credit the quick and easy way.

You must start with trade vendors. There is no other door to easy business credit. You can't start with retail credit cards or a business loan from your bank. If you do, you'll get a rejection 100% of the time.

Vendor Credit Tier

Trade vendors are those vendors that offer tradelines and report payments to the business credit reporting agencies. This is what we call the vendor credit tier. They will often offer net 30, 60, or 90 terms on invoices without a credit check. It is not revolving credit.

Therefore, if you get approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, such as within 30 days on a Net 30 account.

Not every vendor can help like true starter starter vendors do. These are merchants that will grant an approval with very little effort. Also, you want them reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian. This is key, as if they are not reporting, the accounts are not helping you build your business credit.

You need 5 to 8 accounts reporting from this tier to move up to the next one, which is the retail credit tier. It takes a little time to reach this step, as some vendors may require a minimum amount of time in business or minimum annual revenue even if they do not require a credit check.

There are several such vendors out there, but as a general rule these are some of the easiest to get started with.

Uline Shipping Supplies 

Uline Shipping Supplies offers shipping, packing, and industrial supplies, and they report to D&B.

They require a D-U-N-S number, so be sure you have that handled before you apply. They will also ask to see 2 references and a bank reference. In addition, they may require you to order a few things and pay for them before approving net 30 terms.

Quill

Quill works well for this purpose also. They sell office, packaging, and cleaning supplies, and they report to D&B and Experian.

Because Quill reports to two separate credit reporting bureaus, you get two credit experiences with them. Consequently, they should probably be your first stop so you can open a credit file with both Experian and Dun & Bradstreet from the beginning.

They will usually put you on a 90-day prepayment schedule, and if you order items each month for 3 months, they will go ahead and approve you for a Net 30 Account.

Grainger Industrial Supply

Grainger Industrial Supply is likewise a true starter vendor. They sell safety equipment, plumbing supplies, and more. They also report to D&B. You will need a business license, EIN, and a D-U-N-S number before they will approve you.

For under a $1000 credit limit they will approve nearly any person with a business license.

Retail Credit Tier

Once there are eight or more vendor trade accounts reporting to at least one of the CRAs, you can apply for credit in the retail credit tier. These include retail stores such as Walmart, Amazon, and Office Depot.

Another example is Lowe's. They report to D&B, Equifax and Business Experian. They want to see a PAYDEX score, the main score from Dun & Bradstreet, of 78 or higher.

Fleet Credit Tier

After eight or more accounts are reporting your payments from the retail credit tier, you can apply for cards in the fleet credit tier. These are companies like BP and Fuelman. Use this credit to buy fuel or to repair and maintain vehicles.

An example of a company in this tier is Shell, which reports to D&B and Business Experian. They need to see a PAYDEX Score of 78 or more, and they require a 411-directory business phone listing as well.

Shell might claim they want a certain amount of time in business or revenue. The truth is though, they will still approve you without meeting those requirements if you have enough vendor accounts reporting before you apply.

Cash Credit Tier

If you handle the credit you get in these tiers responsibly, then the cash credit tier will be your next stop. This includes cards from Visa and MasterCard that are not related to a specific retail store. This is the top tier. If you make it here and handle the credit you have in this tier responsibly, you will have a strong business credit score that will help you run and grow your business. 

When applying credit in any of these tiers, be sure to use your EIN and not your SSN. Your SSN and birthdate should only be for identity verification purposes on these applications.

Easy Business Credit vs. Fast Business Credit

As you can see, the process of establishing and building business credit is not hard. It is actually pretty simple if you follow the steps in order. It’s a snowball effect that does not happen overnight though. As you get approval for more accounts, more accounts are reporting, and you will be approved for even more accounts. As positive payment history is recorded, your score will continue to build and your business credit will grow stronger and stronger.

Share our foolproof business credit building checklist and tell your friends about how you're building business credit the quick and easy way.

It is a process similar to building muscle. It's easy in that all you have to do is eat right and work out. Results do not come quickly however. It definitely takes time to build business credit just like it does to build muscle. During the process, you also have to keep an eye on things, similar to stepping on the scale and measuring your waist. 

Monitor Your Progress

You have to know what is happening with your credit. If you don’t, you will not really know how many accounts are being reported from each tier, and you will not know when the time is right to move on to the next tier. You also need to make sure to correct any inaccuracies ASAP. This is more difficult with business credit than with personal credit however, as there is no free annual report available for your business credit like there is with your personal credit. Business credit monitoring costs money.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: www.creditsuite.com/monitoring.

At D&B you can monitor at: www.dandb.com/credit-builder. At Experian, you can monitor your account at: www.smartbusinessreports.com/Landing/1217/. And at Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Experian and Equifax cost about $19.99; D&B ranges from $49.99 to $99.99.

5 Ways You Can Use Business Credit to Improve Your Business

Once you have business credit, a world of opportunity is open to your business. There is so much you can do with business credit that is not possible without it. Here are 5 ways to use your business credit to further the success of your business.

Take Advantage of Special Pricing

Often times you can find a great deal on goods and services if you purchase in bulk. A diner may be able to get a 10% discount on certain high use spices, or a retailer may be able to get a great deal on certain inventory items by purchasing more than the standard amount. The diner can save on expenses, and the retailer can cut the cost of goods sold. Both situations have the potential to increase the bottom line, but there is usually a significant cash outlay involved.

Bridge a Seasonal Cash Gap

Do you run a seasonal business? If you specialize in holiday items, toys, camping equipment, or any number of other things, your revenue may be higher during certain times of the year. This can make for some pretty tight off-season budgeting issues. Having strong business credit allows you to bridge those gaps with ease.

Earn Rewards

If you choose your cards carefully, you could make a substantial dent in expenses with credit card rewards. The key is to find the rewards that best fit your needs. If you earn cash back for certain expenditures or for spending at specific types of businesses, be sure those are things you spend on and places you spend at frequently enough to make a difference. It doesn’t do you any good to earn cash back at restaurants if you prefer to eat at home. 

Repair and Replace Equipment

If you have strong business credit, there will be no reason to stress or even have to go through a loan process each time you need to repair or replace equipment. Need a new computer, printer, or industrial refrigerator. Your business credit cards can handle that, and you can take care of the problem right then, without depleting cash on hand.

Small Expansion or Maintenance Projects

If you need to replace a window, upgrade your air conditioner, or install new lighting, you can do so quickly and easily without the hassle of a new loan and without running your cash reserves too low.

Easy Business Credit Is Possible: Use it Wisely

Getting business credit isn’t hard, but there is a specific process that must be followed. Trying to do things out of order will result in denials every time. If you take the time and work the process however, you can have the business credit you need to handle whatever is thrown at you.