What You Need to Know About How Personal Credit Impacts Business Operations

There are 125 factors that affect the fundability of your business. Personal credit is one of them. Since it impacts the fundability of your business, personal credit impacts business operations.

Personal Credit Impacts Business Operations in More Ways Than One

Fundability is the obvious one. This is the ability of your business to get funding. If you don’t have funding for your business, it can’t operate.

However, there are more subtle effects as well. For example, if you are worried about your personal finances, business decisions can suffer. You may be more tempted to make decisions based on trying to control personal issues, rather than what is best for the business. Personal financial issues can distract you from running your business well.

Control What You Can, Mitigate What You Can’t

Bad credit doesn’t have to be the downfall of your business. Some factors are out of your control. Others are not. The key is to know what is causing the problem, fix what you can, and mitigate the rest.

One way to mitigate personal bad credit and its negative impact on business operations is to build strong business credit. It can also help to know which types of funding rely most heavily on the credit score from your personal report.

Until you improve your credit, you may not qualify for a traditional business loan. However, there are other options.

Your Personal Score Even Affects the Types of Funding You Can Get

While you are working on improving your credit score, you don’t have to be stuck without funding. You just have to find those types of funding that you can qualify to get with a less than ideal credit score.

Invoice Factoring

If you have open invoices and offer credit to customers in some form, then you can get paid faster with invoice factoring. Usually, this involves invoices with net terms, such as net 30, 60, or 90. You turn those invoices over to a factoring company, and they give you an agreed upon percentage of the total of the invoices. You get this amount of money immediately, and when your customer pays, the factoring company keeps their agreed upon fee while sending the balance to you.

Merchant Cash Advances

A merchant cash advance (MCA) technically isn’t a loan. Rather, it is a cash advance based upon the credit card sales of a business. A small business can apply for an MCA, and have an advance deposited into its account fairly quickly. This is ideal for business owners who accept credit cards and are looking for fast and easy business financing.

A lender will review 3 months of bank and merchant account statements, looking for consistent deposits. They’ll also verify revenue of $50,000 or higher per year and a time in business of 6 months or longer. A lot of Non-Sufficient-Funds (NSFs) showing on your bank statements will likely be a deal breaker, as will excessive chargebacks on merchant statements.

Basically, they want to see that you manage your bank and merchant accounts responsibly. Of course, a decent number of consistent credit card transaction deposits each month is important for this type of financing as well.

Alternative Lenders like Fundbox

Fundbox offers a revolving line of credit for up to $100,000 and will auto debit your weekly payment from your bank account. They connect directly to your online accounting software. You pay in equal installments over the course of a 12 or 24 week plan.

You do need to have a 600+ personal FICO score and $100,000+ in annual revenue, and you must have a business checking account. Ideally, you will also have 6 months in business or more.

Can You Fix Personal Credit?

If you have bad credit, it needs to be fixed. How do you do that? The short answer is, pay your bills. Still, if you already have bad credit, it will take some time for that to make a difference.

Also, make sure your credit report is current and free of mistakes. YIn fact, you can get a free copy of your credit report annually.

The three main reporting agencies when it comes to personal credit are:

You can get a free report from all three each year. How?

Per FTC.Gov:

“You’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. Order online from annualcreditreport.com, the only authorized website for free credit reports, or call 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity.”

Once you get your report, read it carefully and make certain all of your information is correct. Contact the appropriate credit agency in their preferred manner if you find a mistake. Each agency has its own procedures for corrections. Generally, you can find them on their website. Online options for disputes are more common now due to the pandemic.

These steps will help you get a jump on improving your credit score.

Credit Monitoring

In addition to a free copy of your credit report each year, there are free monitoring services that will give you an updated credit score each month. New information that has been posted to your credit report is available with some of these services. As a bonus, some will offer suggestions as to which factors are dragging down your score. Some of these services even provide real-time credit updates for a fee.

Good Personal Credit Also Affects Business Operations

Of course, a good FICO score will impact business operations as well. Business lenders will generally look at personal credit when you apply. Consequently, good credit will not only help you get approvals, but better rates and terms also.

Maintaining good credit is important for a number of reasons. Keeping your business running is one of them.

The post What You Need to Know About How Personal Credit Impacts Business Operations appeared first on Credit Suite.

5 Year Business Credit & Funding for House Flipping Guide

What is Our 5 Year Business Credit & Funding for House Flipping Guide All About?

It’s about finding business credit—and funding for house flipping. Your business has stages, and they all correspond to types of financing and business credit. We’ll get to those later.

Where Do You See Your House Flipping Business in Five Years or More?

Do you double your revenue? Replace your equipment? Hire people, or more people? Retire and pass your house flipping business along to a family member or sell the company? Something else?

Your House Flipping Business’s Plans and Future

All these scenarios for house flippers will require funding! Even going concerns with stable, steady revenue can experience emergencies, or need to seize a business opportunity quickly and before they have the funds. All businesses can use business credit to achieve their aims – whatever they are. But instead of year by year, let’s go phase by phase since there is some overlap in time. So even if you’ve already been through some phases, checking out the earlier phases could help you see if you missed anything. And if you’re just starting out, checking out the later phases could show you how to start flipping houses with financing in the future so you can be ready.

Phase 1: Setup and Launch

We have liftoff! Setting up a business is a task with a lot of moving parts. It’s a lot more than just saying you’re in business. The way the business is set up can directly affect the ability of your house flipping business to succeed. This first phase covers your first six to twelve months of existence.

Fundability

Fundability is a business’s ability to get funding. A lot of the power to get business money is in the hands of house flippers. A business starts with no credit profile. As a result, what’s on an application is all that’s reviewed for approvals. So your application must be very strong. Nearly half of all companies fail in their first 5 years, and about 2/3 in the first 10. As a result, new businesses don’t seem fundable to lenders. You can change that by building for fundability from the very start and get more funding for house flipping.

Business Name

Check with your Secretary of State –a business name may have to be unique. Make sure your SOS has all the necessary, up to date, and correct information for your company. Make sure that you are in good standing with them and that your entity is active. You will have to file annual reports and pay an annual fee to stay active.

Keep the name of a high-risk or restricted industry out of your business name. Your flipping business can be Amy’s rather than Amy’s Fix and Flip. There is nothing underhanded about this; it is completely legitimate and honest.

A common reason for loan and credit card application denials is the lender can’t easily locate a business offline or online. So make it painfully easy for lenders and credit providers to find your flipping business. Make sure the business name is exactly the same on corporation papers, licenses, utility statements, and bank statements. Also make sure the business name and all other information is the same on every online listing you can find.

Business Address

This must be a real brick and mortar building, a deliverable physical address. This can never be a UPS box or a PO Box. Some lenders will not approve and fund unless this criterion is met. A virtual address can also be a good idea if you need to hold a meeting or an interview, and it’s a lot more professional than doing this at your kitchen table. We like Regus, Davinci, and Alliance Virtual Offices. But keep in mind that we know of at least one credit issuer that will not accept virtual addresses.

Business Entity and EIN

Get a free EIN for your flipping business and choose your business entity at IRS.gov. Use your EIN to open a bank account and to build a business credit profile. To truly separate business credit from personal credit your business must be a separate legal entity, not a sole proprietor or partnership. Only incorporating creates a new and separate entity which by default will reduce your personal liability. Other entities (like partnerships) don’t. File this with the Secretary of State for your state. Make sure to set your entity up in the same state as your business address.

NAICS Codes

The IRS website is also where you choose NAICS codes, which are for the purpose of collecting, analyzing, and publishing statistical data on the US business economy. Per the NAICS, the 236118 code covers Residential Remodelers. This code also covers general contractors for home improvement.

The good news is, 236118 is not on the NAICS list of high risk and cash-intensive businesses. But that list is from 2014 and does not appear to have to been updated. It makes sense to err on the side of caution. Hence, to be on the safe side, it makes sense to keep the words like ‘flipping’ and ‘fix and flip’ out of the business name, as any industry with a low barrier to entry is bound to have higher risks than the norm.

Business Licenses

Contact State, County, and City Government offices to see if there are any necessary licenses and permits to operate your flipping business. Licensing requirements differ depending on state, town, and industry. Always make sure you have the proper licensing for your corporation. Being fully licensed builds credibility in your house flipping business, and that can help you get more customers.

Business Phone and 411 Listing

It’s quite easy and inexpensive to set up a virtual local phone number or a toll free 800 number. A cell or home phone number as your main business line could get you flagged as un-established – but VOIP is okay. If you don’t want customers calling you all day, do not use a personal cell phone as the business phone number.

It also helps with fundability to have a dedicated business phone number. Your number must have a listing with 411 for most credit issuers and lenders to approve you. Check for your record to see if you’re listed and your information is accurate. No record? Then use ListYourself.net to get a listing.

Web Domain and Professional Website

Lenders and credit providers will research your corporation on the internet. It is best if they learned everything directly from your corporate website. Not having a professional website can hurt your chances of getting corporate credit. Buy web hosting from a hosting company like GoDaddy or HostGator.

Your domain should be your business name, if possible. Add a company email address for your flipping business on the same domain as your website. This often comes with a website domain provider. This is not just professional; it also greatly helps your chances of getting approval from a credit provider. Do not use Yahoo, AOL, Gmail, Hotmail, or similar kinds of email.

Business Bank Account in the House Flipping Business’s Name

You must have a bank account devoted strictly to your flipping business. The IRS does not want you commingling funds. Make accounting easier and reduce the risk of audit at tax time. Keep personal and business funds separate. Having a business-only bank account makes that easy.

Get Set Up With the Business Credit Reporting Agencies

Go to D&B’s website and look for your business. Can’t find it? Then get a free D-U-N-S number on the D&B site. A D-U-N-S number plus 3 payment experiences leads to a PAYDEX score. You need a D-U-N-S number to start building business credit. Once you are in D&B’s system, search Experian and Equifax’s sites for your business.

Business Credit History

Get the most favorable funding by paying all bills on time. This way, you get:

A PAYDEX score of 80
Equifax Credit Risk Score of 90 or better
A good FICO SBSS score, which is driven (in part) by on-time payments and business credit history

For Experian, historical behavior (payment history) is 5-10% of the total score

Business Credit Building from the Ground Up

Start with vendor accounts, a proven way to start building business credit. Vendor credit is generally not attached to a bank. So under federal law a Social Security number is not necessary. When not attached to a bank, there is no Social Security requirement for starter vendor credit. This is unlike bank loans and bank cards. You can legitimately leave the SSN field blank, to force them to pull your business credit under your EIN.

Using Business Credit Vendors

Check out four of our favorite starter vendors for the house flipping industry:

Grainger
Marathon
Uline
Home Depot Pro Institutional

Grainger

They report to D&B. They work with more than 1,300 suppliers. Grainger sells electrical products, fleet maintenance, HVACR, hardware, janitorial, power tools, pumps, and more. If a business doesn’t have an established credit, they will require additional documents. like accounts payable, income statement, balance sheets, etc. There is no minimum order amount necessary to report but Grainger does prefer for a business to have at least a $50 payment history. Apply online or over the phone. Terms: Net 30.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address (matching everywhere)
D-U-N-S number
Flipping business license(s), if applicable
Business Bank account
Business registered with the Secretary of State for at least 60 days

Marathon

Marathon Petroleum Company provides transportation fuels, asphalt, and specialty products throughout the United States. Their product line supports commercial, industrial, and retail operations. Marathon is under the Wex umbrella. This card reports to Dun & Bradstreet and Experian. Before applying for multiple accounts with WEX Fleet cards, make sure to have enough time in between applying so they don’t red-flag your account for fraud.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address- matching everywhere.
D-U-N-S number
Flipping business license(s), if necessary
And a business bank account
Business phone number with a listing in 411
Good D&B PAYDEX score of 80 or higher

Must also have a good Experian business credit score. Your SSN is necessary for informational purposes. If concerned they will pull your personal credit talk to their credit department before applying. You can provide a $500 deposit instead of using a personal guarantee if you’ve been in business less than a year. Apply online or over the phone. Also, their terms are Net 15.

Uline

Uline is a distributor of shipping, industrial, and packing materials, and industrial and janitorial products. 99.5% of Uline’s orders ship the same day, with no backorders. This card reports to: D&B and Experian.

To qualify, you need the following:

Corporate entity must be in good standing with the applicable Secretary of State
An EIN
Company address matching everywhere
D-U-N-S number from Dun & Bradstreet
Your Flipping business license(s), if necessary
A business bank account
Business phone number with a listing in 411

Uline prefers that a business has a good credit profile with D&B, but this is not necessary. Your application may get approval for net 30 at the time of order. But upon final review, their credit department may change to a few prepaid orders before granting a net 30. Apply by creating an account first, then place an order and select Net 30 terms. Their credit department will then review the account. Also, their terms are Net 30.

Home Depot Pro Institutional

Home Depot Pro is a single-source supplier for facilities maintenance supplies, including everything from cleaning and janitorial supplies and PPE to plumbing parts and lighting products. If in business for less than 1 year, they require at least 2 prepaid orders using their credit cards over the course of 90 days. Must be an active web customer for 90 days to apply for Net 30. No minimum order necessary.

They will not accept virtual addresses. You should be in business at least 1 year to qualify. Reports to Experian. Also, their terms are Net 30.

To qualify, you need the following:

Your corporate entity must be in good standing with the applicable Secretary of State
An EIN
Company address matching everywhere
D-U-N-S number from Dun & Bradstreet
Your Flipping business license(s), if necessary
A business bank account
Trade and bank references

Business Credit Building with Credit Cards with a PG

Every step and every credit provider is designed to help your house flipping business. It’s meant to help you qualify for business credit cards that you will actually use. As you continue building, your time in business will help. But to get started, you may need to give a PG. That’s okay; that’s a part of the strategy.

PG (Personal Guarantee) Financing

According to Investopedia, a personal guarantee is:

“an individual’s legal promise to repay credit issued to a business for which they serve as an executive or partner. Providing a personal guarantee means that if the business becomes unable to repay the debt, the individual assumes personal responsibility for the balance. Personal guarantees provide an extra level of protection to credit issuers who want to make sure they will be repaid.”

When you provide a PG, you are adding your Social Security number to the application. You should expect a hard inquiry. You’re also adding the details of your personal income to the application.

Good Personal Credit and Funding for House Flipping

If you already have good personal credit, then you’re all set. But if not, you can work with a credit partner or guarantor. And never stop working to improve your personal credit, no matter what shape it’s in.

Phase 1 Funding for House Flipping Option: Our Credit Line Hybrid

A credit line hybrid is a form of unsecured funding. Our credit line hybrid has an even better interest rate than a secured loan. Get some of the highest loan amounts and credit lines for businesses. Get 0% business credit cards with stated income. These report to business CRAs so you can build business credit at the same time. This will get you access to even more cash with no PG. You need a FICO credit score of at least 680 or a guarantor with good credit to get an approval. No financials necessary.

Phase 1 Funding for House Flipping Option: 401(k) Financing

This is not a loan, and you will not have to pay an early withdrawal fee or a tax penalty. You put the money back by contributing, just like with any 401(k) program so you won’t lose your retirement funds. The IRS calls this a Rollover for Business Startups (ROBS), which is a separate entity with its own set of requirements. The plan, through its company stock investments, rather than the individual owns the trade or business.

This financing isn’t a loan against, your 401(k), so there’s no interest to pay and does not use the 401(k) or stocks as collateral. Instead, this is simply a movement or change of custodian. our 401(k) must have more than $35,000 in it and cannot be from a business where you are currently employed. You can get 401(k) financing even with severely challenged personal credit.

Phase 1 Funding for House Flipping Option: Stocks Financing

Some lenders will make loans using securities as collateral. Securities-based lending provides ready access to capital. The only restrictions to this kind of lending are other securities-based transactions, like buying shares or repaying a margin loan. You continue to earn interest on stocks pledged as collateral. But you will have challenged personal credit.

Phase 1 Funding for House Flipping Option: Sell Part of Your Flipping Business’s Equity

Your fix and flip business and its potential are assets. Talk to people you know about angel investing. Angels buy a smallish stake in your company. They usually don’t expect as big a return as venture capitalists do. VCs might also buy a stake, but they generally just want paradigm-changing businesses. Most house flipping companies won’t fill the bill unless your take on the industry is utterly unique. Another way to sell a part of your equity is to take on another founder or partner.

Phase 1 Funding for House Flipping Option: Crowdfunding

Crowdfunding success has no guarantees. Crowdfunding platforms like Kickstarter will take a percentage of any money you raise. But it can still be a way to get a cash infusion without having to give up equity. If you’re particularly good online and have a compelling service and story, then you’re more likely to succeed than most people. And it can be a way to start flipping houses with no money.

Phase 1 Funding for House Flipping Option: Grants

Grants can come from the government or private businesses. Expect a lot of competition, difficult entry requirements, and not a lot of money. But it’s another way to get some cash without having to sell a chunk of your flipping business. You may find there are few grants for the flipping industry, but you may be able to score grants based on the kind of entrepreneur you are, e. g. female, disabled, LGBTQ+, etc. Also check under terms like gentrification and rehabilitation.

Phase 1 Goals for Credit and Funding for House Flipping

Right now, you have minimal Growth Monthly Revenue (GMR). This is a fast paced growth house flipping business plan, throw it against the wall and take what you can get right now. Look at some short sighted daily and weekly goals for quick cash and growth. During this phase, your focus is on the bare essentials to create a viable business. Your goal is to build your consistent revenue to $10,000 per month and continue to work to improve your personal credit.

Phase 2 Development: $1,000 to $10,000 GMR

In Phase 2, start developing marketing Now you’re at an aggressive sales pace adding nurture and longer sales cycles. Use medium term monthly growth planning (campaign to campaign). It’s time for software implementation and system development. You’re building the blocks of how your flipping business is going to be, now and in the future. This phase should run somewhere between the first six to 24 months from launch.

Phase 2 Credit Options

Your credit options will increase once you get to Phase 2, including:

Business credit cards (No PG)
Advanced vendors
Vehicle financing
Tier 2 business credit
Cash flow management with providers like Brex and Divvy

Business Credit Cards With No Personal Guarantee

As you continue to build exceptional business credit and pay your bills on time, credit providers trust you even more. You can get higher limits and better terms. And you can start to get business credit cards with no PG.

No PG Financing

With no PG financing, you can get higher limits and better terms. Continue building exceptional business credit and pay your bills on time. In general, the following will reduce the need to provide a PG for this type of house flipping financing:

Good business credit
A decent amount of time in business or
Good personal credit

Much like with any other kind of business borrowing, the more assurances you can give the lender, the better.

Advanced Vendors

There are many vendors who do not report to the business credit reporting agencies unless you default. But they’re still a good idea, because credit can help you beyond business credit building. Not having to put up 100% of the costs of equipment or a building or anything else can help with budgeting. Credit can sometimes be the only way to take advantage of a limited time opportunity if you don’t have the money right now. And if your business credit cards offer rewards, cash back, or points, then using them is to your advantage.

Vehicle Financing for Funding for House Flipping

Vehicle financing is a great way to get a pickup truck or other business vehicle without having to wait until you can just pay cash and drive it off the lot. Note: it may be necessary for business owners to personally guarantee vehicle loans. If you are a co-borrower, the loan will most likely report to your personal credit report. Some loans have a prepayment penalty and charge you for paying ahead. It is a good idea to have a loan proposal. A loan proposal should detail your flipping business, loan needs, and financial statements. Here are a couple of vehicle financing choices from us.

Ford Commercial Vehicle Financing Through Credit Suite

Ford offers several commercial vehicle financing options. These include loans, lines, and leases to actual business entities. This is not for sole proprietorships. Get a loan or a lease.

Ford may ask for a PG if you don’t get approval on the merit of your application. Apply at the dealership. Ford will report to D&B, Experian, and Equifax.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address- matching everywhere
D-U-N-S number
Flipping business license(s), if necessary
And a business bank account
Strong business credit history
At least 1 year in business
Must have a good Experian business credit score, good Equifax business credit score, and PAYDEX of 80+

Ally Car Financing Through Credit Suite

Ally provides personal financing. But they will also report to business credit bureaus. If your flipping business qualifies for financing without the owner’s guarantee, you can get financing in the business name only. Ally will report to D&B, Experian, and Equifax.

Ally Commercial Line of Credit

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address- matching everywhere
D-U-N-S number
Flipping business license(s), if necessary
And a business bank account
Bank reference
Fleet financing references
Good PAYDEX of 80+

If you provide a PG, Ally will not report to the personal credit bureaus unless the account defaults.

Ally Commercial Vehicle Financing

Get a lease or a loan. To qualify, you need most of the same things as you need for an Ally Commercial Line of Credit, except for a bank reference and fleet financing references. There is no minimum time in business requirement. Apply in person only, dealer will advise if you’ll get approval or if a PG is necessary.

Tier 2 Business Credit

With at least 3 Tier 1 vendors reporting, Tier 2 starts to open up. Here are five of our favorite Tier 2 vendors to help you with your house flipping business:

Quill
United Rentals
Home Depot
Northern Tool
Amazon

Quill

Quill sells office supplies, cleaning supplies, handheld computers, and more. If not given a Net 30 they will ask for prepaid orders of $100. Normally any prepaid order will not report but you need them to get a Net 30 account. Net 30 accounts require a $50 purchase to report. Sometimes an order is shipped, and the customer thinks they have approval, but this may not be the case.

New businesses or businesses with no credit history with D&B may need to prepay purchases for 3 consecutive months until Net 30 approval. It can take Quill’s credit department approximately 3 hours to process an application. Reports to D&B. Also, their terms are Net 30. Apply over the phone.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address- matching everywhere
D-U-N-S number
Flipping business license(s), if necessary
And a business bank account
At least 3 trade or credit references
PAYDEX of 80+
At least 3-5 trade accounts reporting on D&B credit report
At least 6 months in business

United Rentals

United is the largest equipment rental company in the world. Reports to Equifax. Apply online or at a local store. Also, their terms are Net 30 or Net 45.

No minimum time in business is necessary. No minimum purchase to report. Need an established business credit history (good Equifax business credit score) to have the option to apply without a PG. If Equifax business score is low, a PG is necessary.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address- matching everywhere
D-U-N-S number
Flipping business license(s), if necessary
And a business bank account

Home Depot

Home Depot offers a wide range of home improvement products. They offer both a pay in full and a revolving option. Reports to D&B, Experian, and Equifax. Apply online or at the store. Terms: Commercial Account (Pay In Full Terms) -Net 30 or Net 60; Commercial Revolving Charge Account -Revolving.

To qualify for either option, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address- matching everywhere
D-U-N-S number
Flipping business license(s), if necessary
And a business bank account
Business phone number with a listing in 411
Must have a good Experian business credit score and PAYDEX score of 80 or higher

Additional Terms Specific to Each Option

For pay in full terms, you also need:

They like to see at least 2 accounts reporting, but will look at the merit of your overall application
At least 3 years in the business
You can request Net 60 after account is established. If not enough business credit history or you have been in business for less than 3 years, a PG is necessary

For revolving terms, you also need:

No minimum time in business is necessary
But a PG is necessary

Northern Tool

Offers a wide selection of products—from consumer goods to industrial and construction equipment—to do-it-yourselfers, contractors, and professional shops. Reports to D&B and Experian. Apply online or at a branch. Also, their terms are Net 30.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address- matching everywhere
D-U-N-S number
Flipping business license(s), if necessary
And a business bank account
Business phone number with a listing in 411
Bank references
Trade/credit references
PAYDEX score of 80 or higher and good business Experian credit score
At least 3 years in business
If you don’t get approval based on business credit history or in business for less than 3 years, they may ask for a PG.

Amazon

You can get nearly anything at Amazon—including materials to stage finished homes for sale. Reports to D&B and Equifax. Apply online. Also, their terms are Net 55.

No minimum time in business if strong business credit history. You should have at least 2 years in business. Amazon will pull business credit reports to make sure there is some established business credit history. Must have a good PAYDEX score of 80 or higher and a good Equifax business credit score. If a company has been in business for more than 2 years but does not have an established business credit history, a PG is recommended but not necessary. It may increase the likelihood of approval and is recommended if you have a young or small business, and not enough business credit history.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address- matching everywhere
D-U-N-S number
Flipping business license(s), if necessary
And a business bank account
Business phone number with a listing in 411

Cash Flow Management

Managing small business finances can be overwhelming. There are several tools that can help streamline the process. Options like Brex, Divvy, Expensify, Lola, and more are growing in popularity. Which one is right for your fix and flip business?

Brex and Divvy

Brex and Divvy are business money management systems that integrate with your accounting software. You can track expenses and, depending on the level of service you choose, can also help with paying bills and controlling spending. Also, Brex has a partnership with the FDIC and your funds are secure.

Virtually everyone that opens a Brex cash account gets a corporate card. Brex reports any payments to Dun & Bradstreet. Divvy reports to the Small Business Finance Exchange, which in turn provides data to all SBFE partners, including business credit bureaus.

Phase 2 Options for Funding for House Flipping

In Phase 2, your funding options also multiply, to add:

Merchant cash advances
Revenue lending
Lines of credit (Fundbox)
Equipment financing/leasing
Invoice factoring

Merchant Cash Advances

MCAs technically aren’t fix and flip loans; it’s a cash advance based on the credit card sales of a business. A small business can apply for an MCA, and have an advance deposited into its account quickly. So you can offer Net 30 terms but not have to wait a month to get paid. With an MCA you get funding based strictly on cash flow as verifiable per business bank statements. A lender mainly just wants to see consistent deposits.

Business Revenue Lending for Funding for House Flipping

You can technically qualify with only one year in business, but the annual revenue requirement is high enough that phase 2 may make more sense. You can raise capital from investors who get a percentage of the enterprise’s ongoing gross revenues in exchange for money invested until a predetermined amount is paid. Often this predetermined amount is between 3 – 5 times the original amount invested. Monthly payments will fluctuate with revenue highs and lows and will continue until you’ve paid back the loan to flip a house in full.

Fundbox

Fundbox will connect directly to your online accounting software when deciding whether to fund your flipping business. They will auto debit your weekly payment from your bank account. But Fundbox does not report to the business credit reporting agencies.

You need to have:

Accounting software you have used for at least 2 months with at least 6 invoices
A business checking account
Active business checking account for 3+ months with 30+ transactions
Annual Revenue of $100,000 or more
A FICO score of 600 and up with Experian

Equipment Financing

Use a loan or lease to purchase or borrow hard assets for your flipping business. Physical assets can include items such as a pickup truck or a laptop. Pay predictable amounts every month. You can build business credit on a program like this.

Equipment Leasing

Or lease equipment, rather than buy it outright. You will often put down less money than you would if you were buying the equipment. You may be able to negotiate flexible terms with an equipment lease, and it’s easy to upgrade equipment after your lease ends. This is helpful if your equipment is something like a computer which quickly becomes obsolete.

Equipment Sale-Leaseback

If you already own your equipment free and clear you can use that as collateral for financing. Sell equipment to a lender for cash. Then lease it back from them. You can unlock Section 179 tax savings, and depreciate your entire equipment purchase in the first year. You’ll need at least one larger piece of higher value equipment to qualify. A pickup truck should do nicely.

Invoice Factoring

If you have open invoices and are extending credit to customers in some form, then you can get paid faster with factoring. Usually this involves invoices with net terms, like net 30, 60, or 90. To be paid faster, you turn those invoices over to a factoring company. They immediately give you an agreed upon percentage of the total of the invoices, like 80%. When your customer pays, the factoring company keeps their fee, and they send you the rest. But keep in mind – factoring only works if your customers pay.

Phase 2 Goals for Credit and Funding

Strong business credit (10 to 12 Accounts). Good personal credit will always help. Build consistent revenue to $10,000 or more a month. Always develop business connections in your community and with potential lenders.

Phase 3: Growth: $10,000 to $2 Million GMR

Successful growth…it’s working! It’s time to start optimizing systems and operations. So, you’ll be undergoing massive team and infrastructure development, and long term growth and planning for semi-annual to annual focus lifetime customer value. You’ll need to make some high level strategic hires (Managers, VP’s, Essential C levels). This phase will happen at about 24 months or more from launch.

Phase 3 Credit Options

Your Phase 3 credit options put your Phase 1 and Phase 2 options on steroids, with:

Team access to vendors and cards
Continue to buy pickup trucks and other vehicles with vehicle financing
Vendor Portfolio Growth

Phase 3 Options for Funding for House Flipping

Phase 3 opens your funding options up to:

All Alternative options available
SBA Loans
Bank Loans
Tier 3 and Tier 4 Business Credit

Alternative Options

Alternative lending can mean online lending. For certain industries, online lending is one of the only ways to get money. Before you dip into your savings, investigate house flipping business lending. Because lenders that specialize in the fix and flip industry lending are out there.

SBA Loans

More time in business will make SBA loans a real possibility for your flipping business. It’ll be easier to get an SBA loan in Phase 3 versus earlier. This is because you can more readily show your fix and flip business is established and making money. Demonstrated profitability and responsible credit and bank account management will improve your chances of getting an approval for an SBA loan. SBA loans have great terms. There’s a reason why you should be striving to be eligible for one.

Bank Loans for Funding for House Flipping

Banks are often the first place we think of when we think of financing. But big banks only sign off on about 25% of the small business loan applications that come their way. Term loans often have lower interest rates than many other funding options. Also, they also tend to be for higher loan amounts. But you will most likely have to undergo a personal credit check and/or provide collateral.

Phase 3 Goals for Credit and Funding for House Flipping

In Phase 3, your mission is to take your flipping business to the next financial level, so your goals are:

Profitability (to calculate loans for flipping houses)
Maintaining good personal and business credit
Build up to $2,000,000 in annual gross revenue
Maximizing leverage of cash flow with vendors and business credit

Grow Your Vendor Portfolio with Tier 3 Business Credit

Buy everything from office supplies to power tools. Vendors will check whether your business information is uniform everywhere. They will also check if your flipping business is properly and thoroughly licensed (if necessary). Also, terms can be revolving. You will need at least 6 (more is always better) accounts reporting to the business CRAs.

Here are two Tier 3 vendors we love:

TSC Tractor Supply
Kleer Card

You will generally need some time in business before you can get approval.

TSC Tractor Supply

Buy tools and hardware, home goods, and more. Reports to D&B and Equifax. Apply online or at the store. Also, their terms are revolving.

You must have trade accounts reporting to all 3 major business credit bureaus for at least 3 years. Must have a good Experian business score and a good PAYDEX score of 80 or higher. Also, you must have a good Equifax business credit score. If any above criteria is not met, a PG may be necessary. Providing a guarantee may increase the likelihood of approval and is recommended if you have a young or small business.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address (matching everywhere)
D-U-N-S number
Flipping business license(s), if applicable
Business Bank account
At least 3 years in business

Kleer Card

Kleer Card helps with expense tracking, controls and issuing of credit cards all on one platform. Get accounting solutions for your flipping business. No PG necessary. Reports to D&B, Experian, and Equifax. Apply online or over the phone. Also, their terms are Net 7.

To qualify, you need:

Entity in good standing with Secretary of State
Business credit history
EIN number with IRS
Business address (matching everywhere)
D-U-N-S number
Flipping business license(s), if applicable
Business Bank account
Bank references
Average bank balance of at least $15,000

Grow Your Vendor Portfolio with Tier 4 Business Credit

To get to Tier 4 means you have at least 9 accounts reporting. Terms can be revolving. To ensure that your vendor’s report your payments, make a purchase of $50 or more. Also, there may be a minimal time in business requirement.

Here are 3 Tier 4 vendors we love:

Sam’s Club
Sutherlands
Menards

Sam’s Club

Sam’s Club offers office supplies, business furniture, janitorial/cleaning supplies, paper products, computers, and more. Reports to D&B, Experian, and Equifax. Apply at the store. Also, terms are revolving.

To get approval without a PG, it helps to have $5 million in annual sales or revenues and/or at least 2 years in business, and/or more than 10 employees. A PG is necessary if your company is a sole proprietorship or partnership. Cash advance available with business credit card approval, amount of cash advance depends upon approval amount.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address (matching everywhere)
D-U-N-S number
Flipping business license(s), if applicable
Business Bank account
Business phone number with a listing in 411
Must have club membership
Must have a good PAYDEX score of 80 or higher

Sutherlands

The Sutherland Lumber Company specializes in complete building packages, including storage sheds, garages, post frame buildings and pole barns, and entire houses. You have the option to apply with business liability only, Sutherlands will advise if you get approval, or a PG is necessary. Also, if you don’t get approval based on business credit history, a PG is necessary. Reports to D&B. Apply online or at the store. Also, their terms are revolving.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address (matching everywhere)
D-U-N-S number
Flipping business license(s), if applicable
Business bank account
Business phone number with a listing in 411
Good PAYDEX of 80+

Menards

Menards offers a complete selection of name brand merchandise, tools, materials and supplies for all home improvement needs. Their Commercial Credit card has no annual fee and its own line of credit. You will need strong business credit history with good PAYDEX score of 80 or higher and a good Experian business credit score. You must have at least 3 years in business. If your business is a nonprofit corporation, corporation or LLC, a PG is necessary if the business is less than 3 years old. Reports to D&B and Experian. Apply online or at the store. Also, their terms are Net 30 or Net 50.

To qualify, you need:

Entity in good standing with Secretary of State
EIN number with IRS
Business address (matching everywhere)
D-U-N-S number
Flipping business license(s), if applicable
Business Bank account
Business phone number with a listing in 411
Trade/credit references

Phase 4: Maturity: $2M to 5M+ Annual Income

Consistent growth is key. You’re aiming for long term consistent and stable growth and moving toward market domination (Competitor Buyouts and Acquisitions). Product development and expansion becomes critical for longevity. Now it’s time for the big hire. You’re going to fill out C Level, Directors, and middle management. Yes, your flipping business can become this big! This phase will happen at around four to five years from launch.

Phase 4 Credit Options

By Phase 4, the sky is pretty much the limit! You should be able to get:

Most major credit cards with no PG
All vendors should be accessible

And you should be able to leverage reports for specific vendors. This also includes asking for a credit line.

Phase 4 Options for Funding for House Flipping

In addition to everything we’ve already talked about, your house flipping business can potentially take full advantage of private equity and/or investors. You might even sell shares in your corporation or go public!

Phase 4 Goals for Credit and Funding for House Flipping

Now you’re playing the long game. Your mission is to look to the future and help your flipping business for decades to come. Therefore, you need to balance your costs vs your cash flow vs your business’s profit. And you need to leverage funding for expansions and buyouts. Also, you should be maximizing leverage of cash flow with vendors and business credit.

Phase 5: Exit

By this time, your business should be very well established. At this phase, you want to cash in on all the work you have invested. This is where the funding and credit has the long game return. A Business Credit Portfolio is transferable and increases the value of your fix and flip business.

Your proven track record with merchant cash advances or revenue lending pays off big time, since it can keep business cash flow moving through the ups and downs. Having a proven track record with the SBA, and a profitable banking relationship, will improve the value of your flipping business as well. People want to buy something they can lend against if they need to.

Phase 5 Options for Funding for House Flipping

Selling can mean you’re retiring, or maybe you’re exchanging one form of entrepreneurship for another and want to change industries yet remain an entrepreneur. In Phase 5, you can:

Self-fund the sale in structured buy outs
Go to the SBA for acquisition money

In essence, you should be prepared to sign for your own buyout. A profitable, seasoned flipping business can be an exceptionally valuable legacy.

Your 5 Year Business Credit and Funding for House Flipping Guide: Takeaways

Your financing and credit options will change, from your startup to your exit. It may be tricky to navigate the nuances. Let us work with you–we’ve got the design!

The post 5 Year Business Credit & Funding for House Flipping Guide appeared first on Credit Suite.

Protecting Your Business Finances During Times of Economic Uncertainty

Economic Uncertainty Isn’t on the Horizon—It’s Already Here

It’s an understatement to say that times are uncertain right now. Inflation, the (hopefully) winding down pandemic, current supply chain issues, and the situation in Ukraine are all creating massive global economic uncertainty. There’s even economic policy uncertainty in our government.

As a result of this kind of instability, protecting your business assets should be up there. Markets are changing rapidly, as are consumer attitudes toward spending. Succeeding just might get a bit tougher. There is always risk and uncertainty in economics. But now, it’s on steroids.

Protecting Your Business Assets During Economic Uncertainty Should be Top of Mind

Fortunately, there are ways to protect your assets. And yes, business credit and financing are the way to go. Right now is the time when good business credit and a Fundable foundation are key.

Spend Better During Times of Economic Uncertainty

While no one knows what the future will bring, one thing is for certain. Prices are going to be in flux, because economic uncertainty can influence the price of just about anything. Is it better to stock up now, expecting a price rise? Or is it better to try to wait it out and see if prices will get better?

Whichever decision you make, business credit and financing can help.

Stock Up Now with Inventory Financing

If you want to stock up now, then you might not have enough cash on hand to cover a big purchase. This is where inventory financing can come into play. It can make it possible for you to buy big today in anticipation of bigger sales tomorrow.

Inventory financing is a revolving line of credit, or a short-term loan acquired by a company so it can purchase products for sale later. The products serve as the collateral for the loan. There may be restrictions on the type of inventory you can use. This can include not allowing cannabis, alcohol, firearms, etc., or perishable goods. There can be revenue requirements. And there may also be minimum FICO score requirements.

Get approved for a line of credit for 50% of inventory value, regardless of personal credit quality.

Rates are usually 5 – 15% depending on type of inventory. You can get funding within 3 weeks or less. But note that it can’t be lumped together inventory, like office equipment.

Or Wait Out Economic Uncertainty With Merchant Cash Advances

If you want to wait, then a good use of your time can be to enhance your relationships with your preexisting customers. This can include offering better payment terms. But it can hurt your bottom line if you end up waiting for payments from your customers. Not to worry. MCAs can make it possible for you to give your customers more time to pay without harming your own bottom line.

Details on Merchant Cash Advances

An MCA technically isn’t a loan. Rather, it is a cash advance based upon the credit card sales of a business. A small business can apply for an MCA and have an advance deposited into its account fairly quickly. So you can offer Net 30 terms, but not have to wait a month to get paid.

A merchant financing program is ideal for business owners who accept credit cards and are looking for fast and easy business financing. An MCA program works to help you get funding, based strictly on your cash flow as verifiable per your business bank statements. Hence lenders in general will not have any burdensome document requests.

A lender will review three months of bank and merchant account statements. They are looking for consistent deposits. There should be deposits showing revenue is $50,000 or higher per year. A lender also verify time in business of six months or more.

Lenders also want to see that you don’t have a lot of Non-Sufficient-Funds (NSFs) showing on your bank statements. You shouldn’t have a lot of chargebacks on your merchant statements. And you should have more than ten deposits in a month going into your bank account.

In essence, a lender wants to know that you manage your bank and merchant accounts responsibly. And they want to see that have a decent number of consistent credit card transaction deposits each month.

Save More During Times of Economic Uncertainty

How can you save more money when you’ve still got to get supplies for your business? Putting everything on credit is a recipe for a future default. But what about saving when you spend? Or getting rewarded for spending?

The Wex Fleet Card and Wex Flex Card

These are great cards for business credit building because they report to Experian and D&B. Wex offers universal fleet cards, heavy truck cards, and universally accepted business fleet cards. Their cards have features supporting a small business, including a rewards program. But before applying for multiple accounts with WEX Fleet cards, only apply for two cards at a time. Then, make sure to leave at least two months between applications so that they don’t red flag your account. This will not mean an automatic decline, but it could reduce the amount of credit for which you are approved.

Apply online or over the phone. Terms are Net 15 for the Wex Fleet Card, and Net 15 or revolving for the Wex FlexCard.

To qualify for either card, you need a business entity in good standing with Secretary of State. You also need your EIN and D-U-N-S numbers. Plus you must have a business address which matches everywhere, and all necessary business licenses, if applicable. You’ll need a business bank account, and your business phone number must have a listing on 411. Apply online or over the phone, at (800) 395-0812 (then select option 3).

The Wex Fleet Card

You must be in business for at least one year, with a strong business credit history. In addition, you will have to provide your Social Security number for informational purposes. But if a pull on your personal credit concerns you, contact their Credit Department before applying. Also, they want you to have a good PAYDEX score of 80 or better.

However, if you are in business less than four years or your business credit history is too sparse for the approval to hinge on it, they will require a Personal Guarantee or a deposit of $500 to secure the card.

With this card, you will need to pay it off in full each month.

The Wex FlexCard

There is no minimum time in business requirement. However, you must provide a Personal Guarantee.

Get a rebate of up to 3 cents per gallon on gasoline. Pay no annual fee. You can carry a balance with this card, if necessary.

Brex

Another great card to help you save more as you spend is the Brex card. It is a particularly good card for startups.

Brex is a business money management system that integrates with your accounting software. It allows you to track expenses and, depending on the level of service you choose, can also help with paying bills and controlling spending.

The easiest way to use Brex for both managing finances and building business credit is to open a Brex Cash account. Brex is not a bank, but rather a banking alternative. They have a partnership with the FDIC and your funds are secure.

Everyone that opens a Brex cash account gets a corporate card. It works just like a debit card, drawing from your Brex Cash balance daily. However, unlike a debit card, Brex reports these payments to Dun & Bradstreet, Experian, and Equifax every month, thus helping build your business credit score.

Since this card is secured by the balance in your Brex cash account, and limited to that balance, you do not have to worry about underwriting.

This card offers rewards in terms of points that can be redeemed for travel, cryptocurrency, cash back, statement credits, gift cards, and more. There are even virtual card options for online spending. Brex integrates with common accounting programs including Quickbooks, Xero, NetSuite, and Gust.

Since the card is paid off monthly, you do not pay interest. There is no fee for standard service, but you can upgrade to premium at a cost. Currently premium accounts start at $49.99 and offer more expense management options. And you can even use rewards points to pay for it.

Terms

This card is paid daily from your balance of money deposited into a Brex Cash account. No minimum balance is necessary.

Brex does not offer balance transfers from other cards to Brex, due to not requiring a personal guarantee. However, they will perform balance transfers within Brex accounts.

Qualifying

To qualify for a Brex card, you need a business entity in good standing with Secretary of State. You also need your EIN and D-U-N-S numbers. Plus you must have a business address which matches everywhere, and all necessary business licenses, if applicable. You’ll need a business bank account,

In addition, you will have to provide your Social Security number on your application, for informational purposes. But if a pull on your personal credit concerns you, talk to a representative before applying.

Apply online.

Protect Your Business During Economic Uncertainty: Takeaways

While our economy is in flux, your main focus should be to maintain and grow your business’s assets. Good business credit will help your business now and, in the future, when economic uncertainty starts to diminish.

The post Protecting Your Business Finances During Times of Economic Uncertainty appeared first on Credit Suite.

4 Mistakes to Avoid When Setting Up With the Business Credit Bureau

Lenders pull business credit reports and scores from a business credit bureau. However, not every business has a business credit report at all, let alone a credit score. Business credit, in stark contrast to consumer credit, does not start building automatically.

Avoid These Mistakes When It comes to Your Business Credit Profile

With consumer credit, as soon as you use your first credit card you have a credit report. If you continue to use credit responsibly, that report will include a strong credit score. The same is not true of business credit, and that leads us to mistake number one.

#1: Assuming You Are Automatically Set Up With the Business Credit Bureau

Just owning a business does not ensure you have a business credit profile. There are some things you have to be intentional about to ensure this happens. The first step is setting up your business with a Fundable foundation to ensure that it is recognized as a separate entity from you as the owner. This has to be done before you can even get credit in the name of your business.

Then, a business credit profile can be established with the bureaus.

How Do You Set Up a Business to Be Fundable?

In addition to a D-U-N-S number, you need to be sure your business has:

Separate contact information
An EIN
A dedicated business bank account
A professional website
And its own email address

This list is not exclusive, but it is a great start. Additionally, you’ll need to be incorporated. Operating as a sole proprietorship or partnership does not help you get set up with any business credit bureau.

Why Does a Fundable Setup Matter?

If your business is not set up to be Fundable, the information on the credit report may not be accurate. Furthermore, if your business is not set up to be a separate entity from you the owner, payment experiences may not go to business credit bureaus at all.

#2: Assuming There Is Only One Business Credit Bureau

There are many business credit bureaus. The three main ones are Dun & Bradstreet, Experian, and Equifax. Among the others, FICO SBSS is gaining popularity. Not all of them function the same way when it comes to setting up a profile with them either. It’s different for each one.

Many of them don’t really require anything from you. But, you still have to have your business set up properly. Then, when your creditors report payments, they are reflected accurately.

Dun & Bradstreet

D&B is the oldest and largest credit reporting agency. Go to D&B’s website and look for your business. Don’t see it? It’s probably because you do not yet have a D-U-N-S number. You MUST apply for a D-U-N-S number from them. If you do not have one and your creditors report payments, your business will not be recognized in the D&B system regardless of how your business is set up. This number is how D&B gets your company into their system. You can get one for free.

Once you have a D-U-N-S number, you’ll need at least 3 payment experiences before they assign a PAYDEX score. A payment experience is just a reported purchase from a business, which reports to a credit reporting agency.

Experian

Experian will assign your business an identification number called a BIN after you have a payment experience reported to them. Just be sure your business is set up to be Fundable. Then when you have business creditors that report to them, your business will be in the system.

Equifax

Equifax assigns companies an Equifax ID. It doesn’t appear that you will need to sign up for or request one.

#3: Assuming You Already Have a Business Credit Profile With a Business Credit Bureau at All

Suppose you have been in business for a while. Maybe you are just now figuring out what business credit is. Maybe you thought you had credit in the name of your business, when actually what you have is business funding that you got based on your personal credit.

Where do you start if this is the case?First, look for your business credit profile from each of the main credit reporting agencies, starting with D&B. Of course, if you do not have a D-U-N-S number you will not be in their system.It is POSSIBLE that you may be in the Experian or Equifax system. but you’ll want to check your information closely and request corrections to any mistakes.

Business Credit Monitoring

The next question is, how do you do this? You can go through the business credit bureaus directly, but it can be costly. Credit Suite offers business credit monitoring with all three of the most commonly used business credit reporting agencies, for a fraction of the cost.

Once you see your reports, or lack thereof, you can be proactive in either correcting errors or establishing initial reports. What sort of errors are you looking for? In addition to payment experiences being reported incorrectly, you need to look at your actual business information.

Make sure your business contact information is up-to-date and accurate. If you already have an EIN, ensure that it is attached to your business and is correct. One big issue a lot of small business owners run into is inconsistency in the name of the business.

Something as small as using an ampersand in one place and the word “and” in other places can cause big problems. Ensuring your business name is correct and consistent everywhere, including on your business credit reports, is crucial also.

#4: Ignoring FICO SBSS as a Business Credit Bureau

This score is becoming increasingly common. It stands for FICO Liquid Credit Small Business Scoring Service. Unlike your personal FICO, the SBSS reports on a scale of 0 to 300. The higher the score the better. In general, most lenders demand a score of at least 160.

The thing is, you don’t really “set up” your business with FICO SBSS. The scoring model for this score is very different from other business credit scoring models. However, that does not mean you are helpless.

How Does FICO SBSS Calculate Business Credit Score ?

The score itself isn’t readily accessible. The formula for calculations is proprietary, and they guard it well. The information is not public. Of course, this means you can go into a lender totally blind as to what your FICO SBSS credit score may be.

With other credit reports from business credit reporting agencies, you can actually get a copy of your credit report and know where you stand. In contrast, the FICO SBSS can be different from lender to lender.

How Does a Lender Get Your FICO SBSS Score?

After you fill out a loan application and turn it in with all necessary documents, the lender processes this information and sends it to FICO with a request for your SBSS score. At this time, the lender can ask for certain factors in the score to carry more weight than others. Your score can vary depending on how a lender weighs each factor .

A score variation can happen if a lender puts more weight on your personal credit score or your business credit. Similarly, they could choose to weigh annual revenue as more important than payment history. It is their choice.

FICO then searches business credit information from business credit agencies including D&B, Experian, and Equifax. As a result, your score with these bureaus affects your FICO SBSS.

What Can You Do?

Even though there is no real way to set up your business with FICO SBSS, you can definitely work to affect the score. Establish your business with the other business credit bureaus. Keep your personal and business credit in good order. Then, if a lender chooses to use that score, regardless of how much weight they put on each factor, you should be good.

You Must Be Intentional When it Comes to Your Profile with Any Business Credit Bureau

You aren’t powerless. The great thing about business credit is that it does not just carry you off before you know what is happening. In contrast, you have to intentionally jump in. The first step is to set you business up to be Fundable. Then, get a D-U-N-S number. After that, find accounts that report and get started building your business credit score. Check out our business credit builder for a step-by-step guide to building the strongest business credit score possible for your business.

The post 4 Mistakes to Avoid When Setting Up With the Business Credit Bureau appeared first on Credit Suite.

Get a Credit Card Statement Credit with These 4 Dynamite Business Credit Cards

Did You Know There Are Credit Cards Where You Can Get a Credit Card Statement Credit?

What is a statement on a credit card? A credit card statement credit—often in the form of a signup bonus—is a popular way for business credit cards to give you perks. It’s a great win-win. For the credit card company, it’s a bookkeeping matter. They don’t have to issue a check and they don’t have to keep track of points. For you, it’s money off your credit card statement balance. And who doesn’t want that?

Keep in mind: all business credit card terms can and do change. As a result, be sure to check the credit issuer’s website before choosing a business credit card. Check out our top choices.

#4. Get a $150 Credit Card Statement Credit from the Marriott Bonvoy Business Card

With the Marriot Bonvoy Business Card, you can earn up to $150 back in statement credits on eligible purchases made in the first 3 months. You can also earn sextuple points on eligible purchases at hotels participating in the Marriott Bonvoy program.

APR on purchases will be a variable rate, 15.74%—24.74%, based on creditworthiness. There is a $125 annual fee.

#3. Get a $150 Statement Credit in the form of 2% Cash Back with a Cash Back Bonus: TD Business Solutions Credit Card (Visa)

With the TD Business Solutions Credit Card, you can earn $150 cash back as a statement credit when you spend $1,000 in the first 90 days. Earn up to 2% cash back rewards when you redeem them into an eligible TD Bank Deposit Account. Get 1% cash back on purchases. There are no cash back limits. A 13.99%, 18.99% or 23.99% APR is based on creditworthiness for purchases and credit card statement balance transfers.

Pay no annual fee, but there is a 3% foreign transaction fee. Since every business needs a bank account, opening a deposit account at TD Bank could be a good idea. The minimum spend should be easy to achieve, but the reward bonus isn’t as big as ones you can get from other banks. Plus, you can often get a higher percentage of cash back from several other providers, without having to open a bank account.

#2. Get a $250 Credit Card Statement Credit from the American Express Blue Business Cash Card

With the American Express Blue Business Cash Card, you can earn a $250 credit on your remaining statement balance. So, this is for after you spend $3,000 in purchases on in the first 3 months. It has a 0.0% introductory APR on purchases for the first 12 months. After that APR is variable, from 13.24%—19.24%, based on creditworthiness. Plus, there is no annual fee.

#1. Get a $300 Credit from the Business Advantage Travel Rewards World Mastercard®

We saved the best for last. With the Business Advantage Travel Rewards World Mastercard®, you can earn 30,000 online bonus points after spending at least $3,000 in the first 90 days. You can redeem your points for a $300 credit card statement credit towards travel or dining-related purchases.

It has a 0% Introductory APR on purchases for the first 9 billing cycles. After the intro APR offer ends, a variable APR of 12.24%—22.24% will apply. This card has no annual fee.

Bonus: Get a Statement Credit with Conditions from Spark 2X Miles

With Spark 2X Miles, you can earn unlimited double miles on every purchase. Plus, earn a 50,000 miles bonus when you spend $4,500 in the first 3 months. Pay a $0 intro annual fee for the first year, then $95 after.

You can get a credit card statement credit in one of two ways. One is if you use your card to complete the Global Entry application and pay the $100 application fee. The other ways is to complete the TSA Pre✓® application and pay the $85 application fee. Credit will appear within two billing cycles. It will apply to whichever program you apply for first. You can only get one statement credit per account every four years.

You are eligible for one $100 statement credit per account, OR one $85 statement credit per account. This is for every 4 years in connection with the Global Entry or TSA Pre® program application fee.

Also, to apply the credit, your account must be open and in good standing. You cannot get a statement credit for fees charged to a Spark Miles Select card, or any Capital One card that is not a Spark Miles card. And you cannot get a statement credit for fees paid for with PayPal®.

Bonus: Get a Choice of Statement Credit Amounts from the Business Platinum Card® from American Express

With the Business Platinum Card® from American Express, you have a choice of statement credit types and amounts.

You can get a $400 statement credit on purchases from Dell Technologies. Or earn a $360 statement credit on purchases from Indeed. Another option is a $150 statement credit for subscriptions from Adobe Creative Solutions. And another choice is a $120 statement credit for wireless telephone service purchases.

Other perks include quintuple points on flights and prepaid hotels. You can also get credits and bonuses for airline and other travel costs.

Pay a 0.0% intro APR for the first 12 months, on purchases eligible for their ‘Pay Over Time’ program, then a 14.24%—22.24% variable APR.

But this card, as you would expect from platinum, has a $695 annual fee. We put this one a bit ahead of the Delta card (see below) because there are more and larger statement credit options. Plus they don’t seem to award statement credits on a quadrennial basis. If you travel a lot for business, and if you need to impress clients, then this one may be worth your while. But an annual fee that runs over 1/3 of a typical monthly mortgage payment is an extremely high hurdle to get over.

Bonus: Get a $100 Credit Credit from Delta SkyMiles® Reserve Business American Express Card

With the Delta SkyMiles® Reserve Business American Express Card, you can get a $100 statement credit after you spend $4,000 in the first 3 months. Also, Basic Card Members can get a statement credit for a five-year membership every 4 years after applying for Global Entry ($100). Or get a statement credit every 4.5 years after applying for TSA Pre✓® (up to $85) through any Authorized Enrollment Provider.

APR on purchases will be a variable rate, 15.74%—24.74%, based on creditworthiness.

But there is a ridiculously high $550 annual fee! The statement credit is nice, but it is not worth it.

Takeaways

The business credit cards we reviewed offer statement credit deals running from $85 to $400. Annual percentage rates run from 0% t0 24.74%, with many cards offering a 0% introductory APR for a limited time. Some cards offer monetary bonuses, often dependent upon spending a minimum amount during a short window of time. And always check a provider’s website for the latest and most accurate details on any business credit card that interests you.

The post Get a Credit Card Statement Credit with These 4 Dynamite Business Credit Cards appeared first on Credit Suite.

Leveraging Business Credit for Business Growth

Here at Credit Suite, we always talk about building business credit. There are several ways to do that. However, we feel the best way is to work through vendor credit tiers. This allows you to add accounts to your business credit portfolio as you qualify. By doing this, you build your business credit score while building your business credit portfolio, allowing you to access funding as you go. This, in turn, promotes business growth.

Using Business Credit for Business Growth

Is business credit really necessary? If most business loans require a personal guarantee and report to your personal credit report regardless, then what’s the point?

The point is, you can leverage business credit to grow your business faster than if you rely on personal credit alone. Did you know that even before you qualify for a business credit card, you can get vendor credit? Not only are vendor credit accounts a proven way to start building business credit, but you can use them to get quality products that you need. Of course, that is essential to business growth.

How Can Vendor Accounts Help with Business Growth?

If you have access to credit with vendors, you can grow your business in ways you may have never imagined. Consider the following example.

A contractor is hired to remodel a kitchen. The supplies are going to cost money, but the client isn’t going to pay until the job is done. The contractor has business credit with vendors. He can use those accounts to purchase the supplies, allowing him to take the job and pay his suppliers after his customer pays. This is just one example of how vendors can help a business grow.

Building a Business Credit Portfolio for Business Growth

Think of a business credit portfolio as a “cash flow pool.” It is the total of all the business credit accounts you have. This includes:

Vendor accounts
Lines-of-credit
Business credit cards
Business Loans
And more

These accounts allow you to better manage cash flow. You can cover cash flow gaps off-season, if yours is a seasonal business. You can stack cash and pay off your invoices at the end of the month.

Start with tier 1 vendors to get initial accounts. This is the beginning of your business credit portfolio. As your business credit score gets stronger, you can add vendors from tier 2, tier 3, and tier 4, until you have access to advanced vendors and business credit cards.

As you do this, your terms will get better also. While tier 1 vendors may offer net terms as low as 15 days, advanced vendors may offer terms up to 90 days or more, or even full revolving terms.

Leveraging Business Credit to Grow Using Advanced Vendors

Advanced vendors offer credit to businesses that have strong business credit. However, they do not report your payments. Still, they are pivotal to running a thriving business. Unlocking access to these vendors is a little-realized benefit of a strong business credit score.

Use Your Business Credit to Get Access to More Credit

Good business credit will make SBA loans more accessible, and SBA loans have great rates and terms. It will help you to get good terms with new vendors, and of course you’ll be able to get even more credit cards.

With better business credit, you can afford cars, trucks, sprinter vans, supplies, and inventory. As you go along, you’ll enjoy improved credit limits. Also, you’ll pay lower rates and have longer amortization, because you’re spreading out payments over time.

Business Credit Helps You Tackle the Unexpected So Your Growth Isn’t Stunted

This is another way you can leverage business credit for fast growth. Emergencies are going to happen, and they can definitely stunt business growth. Save your funding for growth, and not emergencies.

By using business credit to scale and grow your business, you will have cash flow available to handle unexpected expenses.

It’s Okay to Use Personal Guarantees for Business Growth

A well-rounded business credit portfolio can include both PG and non-PG financing. In general, personal guarantees should be avoided, but sometimes you just can’t avoid them. That’s okay.

Try to negotiate for limited personal guarantees over unlimited ones. The stronger your business credit score, the easier this will be in most cases. Limited guarantees have a cap on how much you are personally responsible for.

If a personal guarantee will help you qualify for funding or credit cards, and you wouldn’t qualify without it, then it can be a smart decision to offer one in some cases. That’s just more business credit you can leverage for fast growth.

The post Leveraging Business Credit for Business Growth appeared first on Credit Suite.

3 Types of Collateral Loans to Fund Your Business Now

Collateral loans can allow you to get better rates and terms on business funding. Prime assets for collateral include inventory, equipment, real estate, and investments. Often, the asset you are financing itself can be used as collateral. As a result, you can get what you need without depleting cash reserves.

What is Collateral?

According to Investopedia, collateral is:

“…an asset that a lender accepts as security for a loan. Collateral may take the form of real estate or other kinds of assets, depending on the purpose of the loan. The collateral acts as a form of protection for the lender. That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses.”

Now, here are some examples of collateral loans.

#1 Inventory

You can use the inventory you want to sell as collateral for a loan to buy the inventory!

Inventory Financing

Inventory collateral loans can be in the form of a revolving line of credit or a short-term loan. The funds can purchase products for resale. In fact, the products typically serve as the collateral for the loan.

Of course, there may be restrictions on the type of inventory you can use. For example This not allowing cannabis, alcohol, firearms, or perishable goods is common. Also, there can also be revenue requirements or a minimum FICO score.

Kickfurther

Interestingly, Kickfurther is a combination of inventory financing and crowdfunding. With this platform, you get financing from supporters and fundraise directly to them. They buy through what’s called a Consignment Opportunity.

Consequently, your customers own the products they help fund. That is, until they are sold by the brand. As soon as the products sell, the customer earns payments. Kickfurther also offers an online store for businesses to market and sell their products. It is possible to get funding for up to $2 million in inventory.

Payback terms will vary. However, at the end of each sales period you submit sales reports and provide payment for inventory sold. Furthermore, you must provide a monthly accounting of current inventory levels.

#2 Equipment

There are several ways to use equipment to get collateral loans.

Equipment Financing

These are collateral loans you can use to purchase hard assets for your business. Terms for equipment financing through Credit Suite are as follows:

Companies must have at least one year in business
You can get approved even with challenged credit
You won’t need financials to secure equipment financing
Approvals take as little as 24 hours

Equipment Leasing

In contrast, you can also lease equipment rather than buy it outright. Often, you will put down less money than you would if you were buying. In addition, you may be able to negotiate flexible terms with an equipment lease.

Even better, it’s easy to upgrade equipment after your lease ends. Of course, this is helpful if your equipment is something like a computer which quickly becomes obsolete.

Terms for equipment leasing through Credit Suite are:
Personal credit score of 640 or above
Provide lenders with any requested details on the equipment you are getting
Up $10,000,000 in equipment financing possible

Equipment Sale-Leaseback

You can also use equipment you already own as collateral. Basically, you sell equipment to a lender for cash, and then lease it back from them. As a bonus, this lets you unlock Section 179 tax savings and depreciate your entire equipment purchase in the first year.

Of course, term lengths and the amount you can finance will vary. First, you need at least one larger piece of higher value equipment to qualify. Then, you can get funding in as little as 3 weeks. Generally, a lender just wants to be sure your equipment does not have any liens against it.

Investments

If you have investments, you can use them to gain access to funding for your business through collateral loans without worrying about credit scores.

IRA Financing

IRA financing allows you to invest a portion of your retirement funds into your business. The result is, you gain more control over the performance of your retirement plan assets. At the same time, you get access to the working capital you need for business growth.

Usually, you will work with a CPA who will help you. You can cash out the lesser of half or $50,000 from an account that qualifies. If applicable, the CPA you work with will structure a self-directing IRA for the remaining funds.

Stocks Financing

Some lenders will make loans using securities as collateral. You can use the funds for almost any purpose. This includes buying real estate or investing in a business. The only restrictions to this kind of lending are other securities transactions, like buying shares or repaying a margin loan.

Also, you continue to earn interest on the stocks, and rates can be as low as 1.6%.

Bonds Financing

Typically, bonds financing is available through large financial institutions and private banks. In general, those that look for these kinds of loans want to make a large business acquisition. Or, they may want to execute large transactions like real estate purchases. In this type of funding, the borrower’s investment portfolio helps the lender determine how much to loan.

Most investment-grade corporate, treasury, municipal, and government agency bonds are fair game. You keep all the interest and appreciation from your securities. To qualify, all the lender will require is a copy of your two most recent securities statements.

If your stocks or bonds have a value over $25,000, you can get approval. Even bad personal credit isn’t an issue.

Bonus: 401(k) Financing

To be fair, this is not a loan. You will not have to pay an early withdrawal fee or a tax penalty. The plan, rather than the individual, owns the trade or business through its company stock investments. Since it isn’t a loan against your 401(k), there’s no interest to pay. Instead, this is actually a change of ownership.

Still, it is business funding you can get using investments, so it bears mentioning.

Officially, the name for this type of funding is a 401(k) Rollover for Working Capital program. The IRS calls it a Rollover for Business Startups (ROBS). Per the IRS, a ROBS qualified plan is a separate entity with its own set of requirements.

Credit Suite 401(k) Rollover for Working Capital program highlights:

Low rates, often less than 5%
Your 401(k) will need to have more than $35,000 in it
Can often get up to 100% of what’s “rollable” within your 401(k)
The lender will want to see a copy of your two most recent 401(k) statements
You can get 401(k) financing even with severely challenged personal credit
The 401(k) you use cannot be from a business where you are currently employed
It must be from older employment
You cannot be currently contributing to the plan

Collateral Loans Can Open Up a World of FundIng With Terms and Rates that Can’t Be Beat

Honestly, collateral loans open up a whole world of funding you may not be able to get otherwise. One benefit is, it’s typically available regardless of credit history. Better yet, the terms and rates can’t be beat. If you have the option, depending on the need and the situation, collateral loans may just be what you are looking for.

The post 3 Types of Collateral Loans to Fund Your Business Now appeared first on Credit Suite.

How to Open Separate Business Bank Accounts Even with a Bad ChexSystems Report

If you have a bad ChexSystems report, it can be hard to open a separate business bank account. Having separate business bank accounts is vital to Fundability. If you have issues on your ChexSystems report, these options may work for you.

LendingClub Tailored Business Checking
BBVA Business Connect Checking
Bluevine
Nearside
Novo Bank

Why You Need Separation for Business Bank Accounts

There are a number of reasons for this. The most obvious is the IRS. They want to see business funds and personal funds separated. It’s much easier to provide this information if your accounts are already separate.

Also, your business banking history is important when it comes to Fundability. Not only that, but many lenders require a separate business bank account. They actually make it a requirement for funding approval.

This may be the most surprising reason however. The opening date of your business bank account can affect time in business. Some lenders consider the date the business account opens to be the date the business began. For example, say you opened your business a year ago. Then, 6 months ago you opened a business bank account. Some lenders may consider your business to have begun 6 months ago, not a year ago.

The longer your business banking history, the better your borrowing potential is. More than that, many funding options require at least a year in business. As you can see, you shouldn’t wait to open a bank account for your business.

What’s the Catch?

Here’s the thing. Opening a business bank account may not be so easy if your personal banking history isn’t great. Most banks use ChexSystems when determining whether they are going to let someone open an account.

As a result, your ChexSystems report can affect your ability to open business bank accounts. If you have an issue on your report, you may have a hard time opening a business account at a bank that uses ChexSystems.

Issues may include NSFs, closed accounts, and overdrafts. Many people have no idea ChexSystems even exists until they cannot get a loan or open an account because of it..

Don’t Let ChexSystems Destroy Your Fundability

The best thing is to avoid overdrafts, NSFs, and closing accounts. But, what if it’s too late? What if you already have a bad ChexSystems report? There are some banks out there that offer business bank accounts without taking ChexSystems into account.

5 Business Bank Accounts That Do Not Use ChexSystems

1. LendingClub Tailored Business Checking

LendingClub has a monthly fee of $10 that is waived if the average monthly balance is at least $5,000
Unlimited fee-free transactions
No ATM fees regardless of the ATM you use and unlimited refunds for fees charged by other banks
Available nationwide

3. BBVA Business Connect Checking

BBVA has no monthly fee
Up to five free withdrawals and/or processed checks in-branch per month, $1 after that
Up to two free in-branch deposits per month, $4 after that
Other transactions not mentioned are unlimited and free
No ATM fees from BBVA either in or out of network
Third-party ATM fees waived within the Allpoint network.
Available in Alabama, Arizona, California, Colorado, Florida, New Mexico, Texas.

4. Bluevine

Bluevine offers a $0 minimum opening deposit
No monthly service fees or NSF fees
No minimum deposit or balance requirements
50% APY interest rates for accounts over $1,000
No ATM fees at 38,000+ MoneyPass® locations nationally

5. Nearside

Nearside has no monthly minimums
No NSF fees
Cashback rewards and perks.

6. Novo Bank

Novo has no monthly fees or minimum balance requirements
Free transfers, mailed checks, and incoming wires
Refunds all ATM fees

Information You May Have to Provide to Open Business Bank Accounts

Each lender will have their own process for approving you to open a business bank account. However, here is some general information you need to be able to provide just in case.

Business Information

Depending on how your business is set up, you’ll need to be prepared to provide a copy of incorporation papers and EIN. If you are not incorporated or do not have an EIN, you may still be able to open an account. However, you need to incorporate and get an EIN for Fundability purposes.

Personal Information

They may also ask for your social security number, a state issued ID, a U.S. address and a U.S. phone number. If you are incorporated, they will typically use these for identification purposes only in an effort to prevent fraud.

Business Bank Accounts are Non-Negotiable

For your business to be Fundable, you need a separate business bank account. It is necessary to get funding from many different vendors and lenders. Beyond that, it is also necessary to get a merchant account. You must have a merchant account to accept credit card payments. Studies show people spend more when they can use credit, so it’s pretty important to have this option. Even if it isn’t something you need now, you likely will eventually.

If you have had issues with your personal bank account, these banks can help. Open your separate business bank account and start building positive business banking history. The future of your business depends on it.

The post How to Open Separate Business Bank Accounts Even with a Bad ChexSystems Report appeared first on Credit Suite.

What to Consider When Choosing the Best Option for Your Video Conference Meeting Needs

When it comes to choosing a video conference meeting option for your business, you need to consider a number of factors. These are factors that all businesses need to think about, regardless of type or size. Consider the following:

What will your budget allow for?
What are you already using that may work?
How many people does a standard video conference meeting for your business have in attendance?
What features do you need?
What features do you not need?

Answering these questions before you start your search will make it much easier to decide. Let’s look at the top options.

Slack

Slack upped its game in the video conference meeting arena over the years. It’s pretty basic, but if you already have it and use it for other things, definitely give it a shot for video conferencing. There is no need to add something else if what you have will already work. However, if you find it just doesn’t fit the bill, you have plenty to choose from. Also, don’t get Slack just for video conferencing. That isn’t it’s main selling point.

Prices start at $8 per month for the standard plan that includes video calls along with unlimited chat archive and priority support.

BlueJeans

Now part of Verizon as of April 2020, the cute name is still hanging on. It bills itself as “the meetings platform for the modern workplace,” and the name comes from the desire of the founders to make it as comfortable and casual as possible. They focus on instant connections. The platform uses a mobile or desktop app straight from the browser. There is no download requirement.

After the acquisition, Verizon lowered prices and added a lot of new features. There is background noise cancellation, integration both with conference room systems that are hardware based and options like Microsoft Teams, Slack, and Facebook Workplace. There are also plenty of collaboration tools including screen sharing and whiteboarding.

There’s a free trial. After that, there are 3 plan options that you can pay monthly or annually if you want a 20% discount. The standard plan is $12.49 per meeting host per month and supports up to 50 in attendance. It also supports 5 hours of meeting recording, but does not integrate with message apps like Slack. Prices and features go up from there.

Webex

The big pull for Webex is the virtual whiteboard feature. It also has crisp audio, but is known for usability issues. It can be a good fit, but with options like the virtual whiteboard Miro that you can use while you are on a call, it’s really not necessary for most to use Webex solely on the basis of the whiteboard option.

Prices start at $14.95 per host per month for up to 50 people per meeting and 5GB of cloud storage.

Teams

This option is top notch for Google users. Its deep integration with other Google apps can be useful. Just create a meeting in Google Calendar and get a link that you and other attendees can click to join the call instantly.

Live captioning is also a big plus on the accessibility side. It works well for English, but not so much for any other languages that may be on a call.

It’s free for up to 100 participants for up to 60 minutes. For more than that, packages start at $6 per month as part of Google Workspace Basic.

Zoom

Zoom is arguably the best known video conference meeting option in this post-COVID era. It was making headway before, but when the world was sent home to work where possible, Zoom was thrust into the spotlight virtually overnight.

It boasts a wealth of features, including free 1:1 calls with no time limit. Group calls are free for up to 100 people for up to 40 minutes. Then, the paid plans allow up to 1,000 on a call at one time. The best part is that Zoom is super reliable. Even with a bad connection, it can usually keep the video going.

Those on a call can text chat with the whole group or talk individually. Screen sharing, call recording, and advance scheduling are also part of the package.

Zoom is free for up to 40 minutes if you have 100 people or fewer on the call. The pro plan is $14.99 per month per host.

Make Your Choice Wisely

One thing you do not want, if you can help it, is to get everyone used to one option then have to switch. Also, don’t think about which one is best for just right now, but which one works now and will keep working into the future as your business grows. Consider each one carefully in light of the questions above, do your own research, then take the leap. And remember, if you are already using video conferencing, you may already have what you need. Don’t fix it if it isn’t broken.

The post Top 5 Video Conference Meeting Options for Your Business appeared first on Credit Suite.

5 Cash Flow Based Lending Options to Take Your Business to the Next Level

Cash flow based lending options can be great for fast funding. Both PayPal and Square offer these types of options. Credit Suite has similar options as well, including:

Revenue Based Lending
Purchase Order Financing
And Accounts Receivable Financing.

Using these types of funding allows you to get the funds you need based on income and without good credit. Repayment is typically based on cash flow as well, meaning the more you make, the faster you repay the loan.

Cash Flow Based Lending Options Can Help You Fund Your Business Fast

Cash flow based lending options are those that are extended based on a company’s expected cash flows. This refers to the amount of cash that goes in and out of a business within a specific period of time. The amount of cash flow is what lenders use to make approval decisions. Repayment comes from this amount as well.

Typically, you will need to have a few years in business to qualify. You may also need to meet a certain minimum credit score requirement. Mostly, you will need to prove historical cash flow, and present your accounts receivables and accounts payables. This is how the lender will determine how much to loan to your business.

There are a number of cash flow based lending options available. Some service providers offer this type of funding, such as PayPal and Square. There are also funding types through other lenders that are closely related, such as those that rely on your accounts receivable or open invoices.

Here’s a little about each one to help you decide if this type of funding is right for you.

#1: PayPal Working Capital Loan

You can get a loan from PayPal if you already have a PayPal business account. There is no personal guarantee requirement, and loan amounts and eligibility depend on your sales via PayPal. Also, applying will not result in a credit check.

To be eligible, you must:

Have a PayPal Premier or Business account for 90 days or more
Process at least $20,000 in annual PayPal sales if you have a Premier account, or at least $15,000 in annual PayPal sales if you have a Business PayPal account
Pay off any existing PayPal Working Capital loan

Repayment is automatic as a percentage of each PayPal sale. As a result, the amount you repay each day changes with your sales volume. The more you sell, the more repayment progress you’ll make that day. On days without sales, you’ll make no payments. Yet, there is a minimum repayment requirement every 90 days.

Depending on the loan terms you choose, you have to pay at least 5% or 10% of your total loan amount, that’s the loan plus the fixed fee, every 90 days. The 5% minimum applies to loans estimated to take 12 months or more to be repaid, based on your business’ past PayPal sales and other factors. The 10% minimum applies to loans that should only take 12 months or less to repay.

#2: Square

You can get similar business loans through Square, and they also will not affect your personal credit score. Eligibility is based on a variety of business factors, including its payment processing volume, account history, and payment frequency. Square will send a customized offer to users based on their card sales through Square, up to $250,000. There is no interest per se. Rather, you’ll pay an ongoing flat fee.

The fixed fee is the difference between the total owed amount and the initial loan amount. The fixed fee will never change, regardless of how quickly or slowly you pay off the loan. Just like PayPal, if sales are up one day, you pay more. Consequently, if you have a slow day, you pay less. A minimum of 1/18 of the initial balance must be repaid every 60 days.

They don’t require collateral for business loans of $75,000 or less. In contrast, for loans over $75,000, they take a security interest in your business assets. Then they will file a UCC statement with the Secretary of State where your business is organized. There is no personal guarantee requirement.

#3: Business Revenue Lending

With a similar basis for getting funding, business revenue lending is another of the cash flow based lending options.

It involves raising capital from investors, who then get a percentage of the enterprise’s ongoing gross revenues in exchange for money invested. Investors get a regular share of business income until the agreed upon amount is paid. Often, this amount is a multiple of the principal investment. It is usually between 3 – 5 times the original amount.

Since repayment of the loan is based on revenues, the time it takes to repay the loan will fluctuate. The faster revenue grows, the quicker you’ll repay the loan, and vice versa. The percentage of monthly revenues committed to repayment can be as high as 10%. Monthly payments will fluctuate with revenue highs and lows and will continue until you pay the loan in full.

Terms for the Credit Suite business revenue lending program are:

Collateral Required: Consistent revenue verifiable through bank statements
Loan Amounts: $5,000-$500,000
Term: 3-36 months
Factor: 1.10-1.45%
Credit Requirements: 500 credit score or higher
No recent bankruptcies
Business must earn annual revenue of $120,000 or more per year
You must be in business for a year or more
The business must do over 5 small transactions each month
Or bring in at least $15,000 monthly revenue with 6 months’ time in business
Financial services industries are prohibited
6 months business bank statements required with application

#4: Account Receivable Financing

AR financing is another of the cash flow based lending options available. It allows you to use outstanding account receivables as your collateral for business financing. You can get as much as 90% of receivables advanced, and you get the balance after the invoice is paid in full.

Terms for Credit Suite account receivable financing are:

Collateral Required: Account receivables
Loan Amounts: $10,000- $10 million
Term: Up to 95% of receivables can be advanced within a week.
Rates: Starting at prime rate 2%
Credit Requirements: Minimum 500 FICO score
Receivables must come from another business or government agency, not an individual
Business must be open for at least 1 year to qualify
Medical receivables must have $1 million in annual sales or more
Breakdown of existing receivables and a sample invoice required with application

#5: Purchase Order Financing

PO financing is also closely related. This is funding to a business with a large purchase order or contract, but the business is unable to fulfill it. A lender loans the money to complete the order, and charges a percentage for the service. The company can then fulfill its order or contract.

The difference between purchase order and accounts receivable financing is, purchase order financing involves a company lending you money to fulfill purchase orders. Accounts receivable financing involves a company buying outstanding invoices. However, when you get to the center of it all, both are based on cash flow.

Credit Suite purchase order financing requirements:

For approval, lenders will typically review your outstanding purchase orders that need to be filled. They want to be sure the purchase orders are legit and the suppliers you are dealing with are credible.

If so, then you can get approval regardless of personal credit history. Rates tend to range from 1-4%. Furthermore, in some instances, you can get 95% of your purchase order in advance.

Cash Flow Based Lending Options Can Help Take Your Business to the Next Level

The beautiful thing about cash flow based lending is, you can get funds even without a strong credit score. If you are making the sales, you can get the money. That makes it easier to fulfill orders and keep making sales, which in turn allows you to grow your business bigger and stronger than ever.

The post 5 Cash Flow Based Lending Options to Take Your Business to the Next Level appeared first on Credit Suite.