Establishing Business Credit, Why Do It?

Business credit is credit obtained in a business name. With business credit, the business builds its own credit profile and credit score. With an established credit profile and score, the business will then qualify for credit. This credit is based on the business’s ability to pay, and not the business owners. Since the business qualifies for the credit, in some cases there is no personal credit check required from the business owner. 

Similar to personal credit, business credit determines whether your company can be trusted by the way it manages money. Think of your business credit report as a gauge for the financial reputation of your business.

By taking the necessary steps to build business credit the more financial opportunities your business will have. Banks, lenders and suppliers rely on business credit reports to assess the creditworthiness of a company. With strong business credit, you create a safety net for your business so you should have no trouble gaining access to the business funding you need.

Whether it’s the desire to grow your current business or prepare your future company for success, now is an excellent time to create your plan and put it into action. Businesses depend on cash flow… and cash flow depends on business credit. Don’t give your business a reason to fail. It takes 6-9 months to establish and get high limit credit accounts, so why not start today?  

Having business credit can get you 10 to 100 times more funding than leveraging your personal credit! Startups and small businesses enroll in our service at Sprout Financial to get business credit. Our team takes the time to help your goals become a reality, so don’t miss out on the opportunity to jump start your business credit. Call (800) 516-0916 now to speak to an advisor. 

The Secrets of Business Credit

If you are looking to grow your business and you want the easiest and fastest way to get business credit, don’t stop reading! 

Sprout Financial has helped business owners build hundreds of millions of dollars in corporate credit, which is backed up by thousands of results and video testimonials online. Sprout Financial believes you should know exactly how to get approved before even applying! We also believe that you should have access to the same business credit building blueprint that large companies use. By working with us, you will be able to get the best credit at the best terms possible. 

Take Walmart for example, their entire business plan was based off of business credit and has become one of the top growing companies in the world. 

It can be very frustrating to repeatedly get turned down by banks and loaners. Here are some tips on how to succeed with getting credit: 

1. Make your business fundable by meeting lender approval criteria BEFORE you apply. 

2. Get business credit for your EIN that’s not linked to your SSN to become more lendable. 

3. Fundability determines if you get automated approvals, or get denied. 

Some fundability factors that make a difference are the type of entity you have, the business phone number you use, whether or not you are listed, the type of address you use, the type of licensing you have, and the congruency of your records.

EIN vs SSN: What’s the Difference?

An EIN is to a business as a SSN is to a person. An EIN is an “employer identification number.” An SSN is a “social security number.” The IRS tracks your personal tax filings with your SSN, just as it uses your EIN to keep tabs on your business filings. For example, if you want to secure an LLC, hire staff, or establish your business credit, you need an EIN. 

Consider Sarah, a freelance graphic designer who doesn’t employ anyone. She pays her business taxes through tax form 1040. She operates as a sole proprietor and isn’t required to have an EIN.

However, regardless of your business type, you must have an EIN number when you have at least one employee. Sarah can keep using her SSN when paying business taxes until she grows her business by adding paid staff.

You do however need a new EIN when you change business types or transfer the ownership to someone else. If Sarah wants to establish her graphic design business as an LLC before hiring an employee, she should create the LLC before applying for an EIN.

As a business owner, you can use an EIN to:

-Opening a business bank account

-Form an LLC and hire employees

-Changing your organization type

-Establish business credit

-Establish pension, profit sharing, and retirement plans

-File employment, excise, alcohol, tobacco, or firearm taxes

How To: Use Business Credit For Your Real Estate Business

Taking the time to establish business credit can lead to using it to access money. Investing that money wisely can make it possible to use the funds to gain a profit in your real estate investment business.

Here are 3 ways you can leverage business credit to purchase real estate:

1. SBA Loans

You can’t use a loan from the SBA to purchase rental property. However, some SBA loans can be used to finance commercial real estate purchases. Why? The interest rates! They are hard to beat, and are currently in the range of 4%-9%. Although this can sometimes be a challenge, as if you are in a rush to access funding SBA loans may not be your #1 choice. They can take anywhere from 60-90 days. 

2. Business Lines of Credit

Another way to leverage your business credit to use for your real estate business is by taking out a business line of credit. BLOC’s are available online, and at traditional banks. 

A business line of credit is similar to business credit cards in many ways. Like a credit card, you can use it up to the “limit”, pay your balance, and repeat until the account is open and in good standing. Business lines of credit are used when you need to make purchases that you can’t take care of with the swipe of a card. 

Business lines of credit can be difficult to get but with the help of a company like Sprout Financial, you will be in better standing to have a better chance at securing one. 

3. Credit Cards

Some real estate investors decide to purchase an entire property using a credit card. However, there can be a lot of risk involved when you use a credit card, whether business or personal to purchase investment properties. A good use for credit cards is short term financing needs. 

Managing a business credit card well can help you build your business credit profile, which is essential in order to qualify for low rates and good terms on loans down the road.