Jason Alonso, COO of Fund&Grow, goes back to the basics of business credit for beginners. Who better to teach the basics than those who have mastered it? In this video, Jason divulges everything you need to know from how to qualify to what you can use the funds for.
Hint: The uses are limitless and we’re going to teach you all about it!
Introduction: What is Business Credit?
Business credit is provided by many major lenders like Bank of America, Chase, American Express, PNC, and Capital One. The beautiful thing about business credit is it's exclusive to business owners and it doesn't report to your personal credit report.
Business credit exclusively reports to the tax identification number, or the EIN for your business. Now, it is personally guaranteed, but it does not show up on your personal credit report.
Getting into a Lendable Position
When you apply for business credit, the banks are going to look at your personal credit report just to make sure that you're in a good lendable position.
If you have a 400 or 500 credit score, you've got derogatories, or bankruptcies, they're not going to feel comfortable lending to you. You have to be able to get into that lendable position in order to qualify for business credit.
Business credit accounts are revolving accounts. So it's just like a personal credit card in that if you apply, they're gonna give you a set limit that you can spend up to. Installment accounts & installment loans are the things like auto loans, mortgages, and a HELOC. So two completely different things. Whether you're a contractor, you're an Ecommerce business, or in real estate, you can use business credit to accomplish any goal for your business regardless of the industry that you're in.
Also, business credit is very underutilized. A lot of people don't even know that business credit exists. Generally, business owners assume they have to go out and get a business loan. What is key to understand about business loans, SBA loans, & hard money loans, is that you're paying interest from day one.
All the business accounts that Fund&Grow goes after are 0% interest. If you're looking to save money AND scale your business over time, business credit is definitely the way to go.
Other Ways to Use Business Credit
Now, there's other ways that you can use business credit in ways that traditionally you can't use a credit card for.
Plastic is a third party that we send our clients to where they can actually wire transfer money and purchase things that they can't traditionally purchase with a credit card for only 2.85%.
For example, imagine closing on a real estate deal. Instead of pulling money out of your back pocket and spending cash, keep the cash in your pocket, use the 0% interest, and wire money or send a cheque through plastic.
Corporate Credit
Now, there's also corporate credit. Corporate credit and business credit are two completely different things. There's a lot of people out there that say "corporate credit business credit, they tie them all into one and pretend it's all the same thing. It's not!
Corporate credit is basically vendor lines. It's a store card on the business side. They usually have to be paid back in net 30 or net 60 terms. Business credit is a business credit card that you can use anywhere. You just have to make that monthly minimum payment, which starts at about 1%. So if you have a smaller balance, your minimum payments either going to be 1%, or right around $25-$35.
Business Credit Doesn't Affect Personal Credit
Business credit doesn't impact your personal credit score because it doesn't show up. I also mentioned that it's personally guaranteed, right? So when you apply for a business credit account, like we do every single day for our clients, they are going to put a hard inquiry on your personal credit report because they need to personally guarantee it to somebody.
So if you happen to default on the business credit account after 60, maybe even 90 days, if you don't make any payments, yes, it is going to impact your personal credit account. But for anybody starting a business, they're going to make that monthly payment. Now if you accidentally miss one payment, it's not going to impact your personal credit score.
Shark Tank on TV, you see people come in they've got these great ideas with different inventions that they have. They're going up there and they're pitching this idea to a group of panelists that are saying, "Okay, I'll lend you $100k, but I want 40% of your business or your profits."
What? Are you crazy? Why? Why give somebody access to your business, to your revenue, when it was your idea? It's your profits to have! So don't go after those deals. It just doesn't make sense!
Keeping your Personal and Business Separate
Now, the other thing that this allows you to do is keep your personal and business expenses separate. I can't tell you how many clients come into our program and their balances are just through the roof!
Their scores are in the low 600s
They don't have any late payments
They don't have very many inquiries
They don't have any derogatories on their report
They don't have any bankruptcies, charge offs, or collections
The only thing that's dropping their score is the balances on their personal reports. That's where business credit comes in. Keep everything separate!
You want to keep your balances on your personal report 30-35% or lower. The lower the better. The only way that you're going to do that, as a business owner, is to separate the expenses from the personal side to the business side.
Banks want to Lend to You
Banks want to lend! How do you think they make their money? They're still making money off of the 0% interest business credit accounts.
Every time you swipe that card, they're getting a kickback; Visa is getting paid, MasterCard is getting paid, American Express is getting paid. On the back end, the issuer of that card, the Bank of Americas, the Capital Ones, the Chases, the Wells Fargos, the PNC's, they're also getting a kickback. That's how they can give you that introductory 0% interest account without getting any money in return for the interest.
They're going to approve you pretty quickly. It's not going to be as quick as a personal account because they need to dig into the business, make sure it's an active business, make sure that you're using your personal credit correctly. For most of our clients that come into our program, they're getting funding within 3-4 weeks, if they're ready to go. Other business owners may need to take our recommendations and fix their their personal credit a little bit in order to raise their lendability position.
Limitless Ways to Use Business Credit
Overall, it's a very fast approval rate. The application process is extremely easy. You don't need to supply any kind of documents, no tax returns, no income verification
Purchasing real estate? You can buy a real estate property with business credit. Also, you can pay contractors as well as buy fix and flip materials. So if you need lumber, drywall, paint, materials, or whatever it is that you need to purchase, business credit is available for you to use.
Also, the rewards on these business accounts are extremely important to focus on. When you're using your credit accounts, you're going to be able to collect cash rewards that are sometimes up to 5%. Usually, they're right around 1-3%, but on certain purchases, they'll give you up to 5% back. Ultimately, with business credit, you're saving money left and right here for your business!
Remember, we're here to help. We want to see you grow as a person and grow as a business. We're here for you. Ultimately, when we fund you grow!
To learn more about obtaining 0% interest business credit, register for our FREE training!
Here's what you can expect to discover when you watch the Business Funding Training:
How to properly form and position a lendable entity.
How to get up to $250k in unsecured business credit which does not report to your personal credit profile.
How to uncover and remove the negative hidden items on your personal and business credit reports.
How smart business owners just like you are getting hundreds of thousands of dollars in unsecured business credit with no collateral at 0% interest!
How we can help you acquire business funding fast. Whether you're a Real Estate Investor, Online Business Owner, or a Brick and Mortar shop (or any other business for that matter, we've got you covered).
Who is Fund&Grow?
Since 2007, Fund&Grow has helped 29,000+ business owners and real estate investors across America get access to over $1 Billion in growth capital. We're on a mission to empower entrepreneurs and investors by helping them utilize the smartest form of funding - low-interest, unsecured business credit.
Transcribed by https://otter.ai
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