#28 Unlocking Business Loans Not Tied to Your Personal Credit with Stephen Wible
Jun 8, 2021
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Stephen Wible, a Marine Corps veteran with real estate sales and credit-building experience, discusses the power of business credit, obtaining non-recourse debt, and the primary business credit reporters. He explains how most business credit cards are tied to personal credit scores and shares strategies to increase credit limits. Wible emphasizes the significance of business credit for funding day-to-day operations and obtaining loans. He also discusses factors influencing lenders, the impact of multiple bank accounts, and insights on the housing market.
Most companies you transact do not report to the credit rating agencies unless you specifically ask them.
Business credit can be a powerful tool to unlock hundreds of thousands of dollars of non-recourse debt that’s not tied to your social security number.
Building trade credit with net 30 accounts and establishing a positive payment history are crucial for developing a robust business credit profile.
Deep dives
The Importance of Business Credit
Business credit plays a vital role in running day-to-day operations as it provides credit for necessary business expenses. It allows businesses to access credit and establish relationships with vendors, suppliers, and other companies. Business credit can also be used to secure loans, acquire high-limit credit cards, and access various financing options. Building a strong business credit profile is crucial to demonstrating financial responsibility and qualifying for credit. By establishing good payment history and managing business credit effectively, businesses can gain access to higher credit limits and better financing opportunities.
Understanding the Difference between Business Credit and Personal Credit
Business credit differs from personal credit in terms of its purpose and evaluation criteria. While personal credit focuses on personal expenses and consumer spending, business credit is tied to the day-to-day operations and financial health of a business. Business credit is evaluated based on factors such as payment history, cash flow, and credit utilization of the business. Unlike personal credit, business credit is not impacted by personal credit utilization, inquiries, or debt level. Building a strong business credit profile is essential for business owners to access financing options, establish credibility, and separate personal and business liabilities.
Benefits of Business Credit for Real Estate Investors
Business credit can provide significant benefits to real estate investors, particularly in managing cash flow and accessing financing options. Real estate investors can leverage business credit to secure high-limit credit cards, lines of credit, and loans for purchasing properties, acquiring supplies, and conducting business operations. Business credit also allows investors to separate personal and business expenses, protect personal credit scores, and build a strong financial foundation. By establishing a robust business credit profile, real estate investors can enhance their credibility, expand their financing options, and gain access to favorable terms and higher credit limits for future investments.
Factors Affecting Business Credit Fundability
Several factors contribute to a business's fundability when it comes to obtaining credit. These factors include the email address used for the business, the business address, the business phone number, and the business bank account. Using a professional email address and having a legitimate business address, such as a commercial building or home address, can enhance the business's fundability. A dedicated business phone number listed with the National 800 database adds credibility and legitimacy to the business. Additionally, having a separate business bank account shows financial stability and establishes a business's creditworthiness. These fundability factors collectively contribute to a strong business credit profile.
Strategies for Building Business Credit
Building business credit requires a strategic approach. Start by obtaining a DUNS number, which is an international identification number for businesses. This number helps establish a business's credit profile and is often required by lenders and creditors. It's important to understand which vendors and creditors report to business credit agencies and make sure their credit history is accurately reflected. Building trade credit with net 30 accounts and establishing a positive payment history are crucial for developing a robust business credit profile. Monitoring and managing business credit regularly, as well as maintaining congruency among business information, are essential to maintaining a strong and impactful business credit profile.
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Stephen is a Marine Corps veteran with a deep background in real estate sales, flipping, property management, and building business credit. He’s director of business development at Credit Suite, Inc., author of Business Credit - The complete Step-by-Step Guide and is an expert in teaching business how to build credit and obtain loans not tied to your social security number.
Helpful Links:
creditsuite.com/reports
Episode Highlights:
- Most companies you transact do not report to the credit rating agencies unless you specifically ask them.
- Business credit can be a powerful tool to unlock hundreds of thousands of dollars of non-recourse debt that’s not tied to your social security number.
- Experian business, Equifax business, and Dun & Bradstreet are the 3 primary business credit reporters.
- Most business credit cards marketed as business cards, are actually directly tied to your personal credit score, being no different from a personal, non-business credit card (i.e., it doesn’t build your business’s credit score).
- It is often possible to go from a credit limit of $1,000 to as high as $250,000 within one year
