Tag: Business

Top 5 Business Credit Card 0 APR Balance Transfer Options

Looking for a business credit card 0 APR balance transfer option? We put together a list of our top 5 picks to help you quickly and easily find the best option for your business.

Check out how our reliable process will help your business get the best business credit cards.

What Are the Best Business Credit Card 0 APR Balance Transfer Options?

It’s important to note that 0% balance transfers are often promotional or introductory. Things change, and we work hard to keep this information up to date, but be sure to check with each of these business credit card 0 APR balance transfer options specifically to ensure you have the most current information.  For now, here are our top picks.

Mechanics Bank Visa

The Mechanics Bank Visa Business Card has no annual fee. The 0 APR on balance transfers is for the first 20 billing cycles.  Then it increases to  11.99 to 20.00% based on creditworthiness. There is a 3% balance transfer fee or $5, whichever is more.

 

 

 

 

 

PNC Visa Business Credit Card

With PNC Visa Business Credit Card, you earn 5 points per $1 spent on qualifying purchase.  The 0% APR on balance transfers is for the first 9 billing cycles when the balance is transferred in the first 90 days.  There is no annual fee.

 

 

 

 

 

Synovus Business Travel Rewards

This card boasts a 0% APR for the first 6 months and the same for purchases. There is no annual fee.

 

 

 

 

Busey Bank Platinum Card

This platinum card also has no annual fee. The 0% introductory APR on balance transfers and purchase lasts for the first 20 billing cycles. After that, the rate increases from 13.49% to 23.49%, based on creditworthiness at the time the account is opened.  It will vary with the market based on Prime Rate.

 

 

 

Business Credit Card 0 APR Balance TransferBremer Bank Platinum Card

The Bremer Bank Platinum Card offers similar benefits to Busey. The 0% introductory APR for purchases and balance transfers is good for the first 20 billing cycles. Then, it increases to 13.49% to 23.49% depending on your creditworthiness when you open the account. Of course, it will vary with the market based on the Prime Rate.

 

 

How Business Credit Card 0 APR Balance Transfer Options Can Help You Manage Your Business Finances

If you have a high interest balance, you can transfer that balance to a 0% interest rate card and save a lot of money. Not only that, but you can also pay the balance off more quickly.  There are a few things to remember about this however.

First, be aware that there is typically a balance transfer fee, and it can be steep.  If there is a 3% transfer fee and you transfer $5,000, you will actually have an initial balance of $5,150. That may not seem like a lot, but if you do not pay off the balance before the 0% APR ends, and you end up transferring the balance to yet another card, those fees can add up. Watch the dates and be aware of fees.

Check out how our reliable process will help your business get the best business credit cards.

Another thing to consider is that many cards will not let you transfer a balance that meets your limit.  They will have a separate limit for balance transfers.  For example, if your credit limit is $2,000, your balance transfer limit may only be $1,800.

A 0 APR balance transfer card can be a powerful business finance tool, but it must be wielded carefully.  If not, it can actually do more harm than good. For more info on business credit cards and other financing options for your business, contact us today.

The post Top 5 Business Credit Card 0 APR Balance Transfer Options appeared first on Credit Suite.

How to Get Business Funding for Your Side Hustle and Make More Money!

Millions of people work a side hustle these days. There are tons of options. Companies like Uber, Lyft, DoorDash, Instacart and more have blown the market wide open and helped create a gig economy of temp workers. However, many still choose to work on their own to make money on the side.

The Hustle and Bustle of a Side Hustle

People choose to make money on the side in all kinds of ways. Some examples include:

  • House cleaning
  • Washing and detailing automobiles
  • Making jewelry
  • T-shirt making
  • Baking
  • And more

The thing is, running a hustle on the side isn’t free. Even though often the overhead is relatively low, there are going to be costs. Selling online requires fees. Shipping costs are an issue if you sell a physical product. Even services oriented hustles like cleaning will require supplies.

How Do You Fund a Side Hustle?

There are a number of options when it comes to funding for this type of work.

Check out how our reliable process will help your business get the best business credit cards.

Bootstrapping

In the beginning, bootstrapping is the obvious choice. Basically, this is when you do it yourself. By definition, a side hustle is something you do in addition to your regular job. So, it can make sense to invest an initial amount to get started from funds already available to you. Then, continue to use most of your proceeds to purchase more of what you need for the hustle. Hopefully, eventually you break even and then produce a profit.

If you want to expand with newer or better equipment, say a new embroidery machine, baking molds, or a new vinyl cutting machine, consider asking friends and family.  They can make great birthday or holiday gifts. You could also ask them to borrow the money,  or even sell them equity so they become angel investors if it grows into more than just something you do on the side.

Personal Credit

If you have good personal credit, you may be able to find good terms on a credit card to fund what you need short-term. Still, financing a business with personal credit means using a high percentage of your credit limits. This is called high credit utilization, and it can lower your personal credit scores.

What if You Decide to Turn Your Side Hustle Into More?

If you decide your hustle is strong enough to take on a life of its own, consider setting it up as a separate business. Even if you keep your day job, doing this opens up many more funding opportunities.

How to Set Up Your Side Hustle to Be Eligible for Business Accounts

Once you see your side hustle taking off, go ahead and name it. Your state may require for every business name to be unique, so check with the Secretary of State’s office. Get a business phone number and list it in the 411 directory. Then, get an EIN using the business name, phone number, and a physical business address where you can receive mail. You can do this for free at IRS.gov. Note: Do not use a P.O. Box or an UPS box as your business address. You can use a virtual address, but some lenders will not accept those.

You also need a separate, dedicated business bank account. Even if you aren’t bringing in a lot yet, this is still a good idea. You will need to report the income to the IRS, and this will help you keep track. Beyond that, if you want to apply for vendor accounts and other forms of business credit, this is often a requirement.

Also, if you want to be able to take credit card payments, you will need a merchant account. You cannot get a merchant account, without a business bank account.

These are just the first steps in setting up a side hustle to be eligible for business funding.

Check out how our reliable process will help your business get the best business credit cards.

Pay Attention to Details

As you do this, don’t neglect the details. Small inconsistencies can cause big problems. For example, if you use an ampersand in your business name when you get your EIN, be sure to use the ampersand and not the word “and” when you open your business bank account.

This type of seemingly small detail can cause big problems when you apply for business funding later on.

Funding With the Big Dogs

Taking these simple steps in the beginning will ensure you are ready to roll when the time comes to expand and grow your hustle. It takes funding to do that, and these steps will help you qualify for funding in the name of the business.

One of the easiest ways to start is to apply for business vendor credit. But first, use the business information you set up to apply for a D-U-N-S number from Dun & Bradstreet. You can apply and get one for free on their website.

Then, you can apply for credit from vendors in the name of your business. This will allow you to  buy items needed to fill orders before you get paid. Items like jewelry-making supplies or tools and materials for handyman work can be bought ahead of time using vendor credit. You won’t have to wait to take orders. It can also make it possible to pay for advertising materials, like ad designs and banners, or even print ads.

You can’t just start applying for business accounts with any vendor you want right away and expect approval, however.  If there are vendors that offer personal accounts and sell what you need, that is fine. However, it’s wise to work with some vendors that will extend net accounts in your business’s name, and report them to the business credit reporting agencies like Dun & Bradstreet, Experian, or Equifax.

Then you build business credit for your hustle.  Business credit opens up many more funding opportunities for the future.

Business Vendor Accounts

There are a few vendors that will do this even if your business credit score isn’t great, or is currently non-existent. They use other factors to determine creditworthiness. This includes whether your business is set up the way described above, as well as time in business, and more.

These are not revolving accounts. Rather, they are net accounts, meaning you will have to pay off the total balance at the end of the net term period. However, this can be a way to get the materials you need to run your business before your customer pays you. You can expand and grow your side hustle without depleting cash reserves, or even if you have no cash reserves.

Building Business Credit

The fun part about doing it this way, instead of just funding your business with your personal credit, is that you can build on those initial vendor credit accounts and eventually have even stronger business credit. All you need is 3 to 5 initial accounts reporting to be able to apply for more advanced accounts.

Check out how our reliable process will help your business get the best business credit cards.

Other Funding Options

After you are bringing in money regularly, and your income is somewhat predictable, you may also be able to finance your new business with purchase order financing or a merchant cash advance.

For both of these kinds of financing, you get slightly less than the full value of any outstanding invoices, but you get it a lot faster!

If you have a business account with PayPal or Square, you may qualify for a loan from them that does not take credit score into account.

Another great option when it comes to funding a side hustle as it grows is the Credit Line Hybrid.

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. You can get 0% business credit cards with stated income, and many of these report to business CRAs. That means you can build business credit at the same time. You get access to even more cash, and with no personal guarantee. You need a good credit score or a guarantor with good credit to get an approval. In this case, that is a FICO score of at least 680. There are no financials required.

The Sky’s The Limit

Your side hustle can be as large or as small as you want to make it. You can keep your day job, or you can grow it into a full time gig and be your own boss. Regardless, you’ll need funding to make it happen.

The post How to Get Business Funding for Your Side Hustle and Make More Money! appeared first on Credit Suite.

Top Questions About the Business Loan Underwriting Process Answered

Loan underwriting is the process lenders use to determine the  risk that a borrower will not repay a loan. A higher risk of non-payment means higher interest rates or denial.

Business Loan Underwriting is a Little Different

When it comes to business loan underwriting, underwriters are looking at the owner’s information as well as information related to the business itself. This is more complicated and usually takes longer.

Here are some common questions about the process, and some tips to make things go as smoothly as possible.

Question #1: What Are Underwriters Looking For?

Loan underwriting is not a game of “gotcha. “ Lenders want to make good loans. After all, that’s how they make a profit. They need to see not only that your business can repay the loan, but that there is a high probability you will repay the loan. They also want to see how you will handle repayment if something unexpected happens. Do you have a plan for making payments if things don’t go as planned?

Learn business loan secrets and get money for your business.

Underwriters are asking themselves these questions when they review your application. If you know what they’re looking for, you can include all the information needed on the front end.

Each lender has different criteria when it comes to underwriting small business loans. There really isn’t a standard that applies to every lender. Still, generally lenders are looking at the same types of things when they look at your business. But be aware, they may not weigh all factors the same.

How to Answer Question #1 Most Effectively

  • Provide all requested information.
  • Have financials professionally prepared by an accountant and reviewed by a tax attorney.
  • Fill out the application thoroughly and carefully.

Question #2: What Will I Need to Provide to the Underwriter?

Generally, loan underwriting requires you to provide:

  • Basic personal information, such as your name, address, and Social Security number
  • Your business name or doing business as (DBA) name
  • Your Employer Identification Number (EIN)
  • A copy of your business plan
  • Information about collateral if you’re applying for a secured loan
  • Details about your business, including time in business, annual revenues, number of employees, and more
  • Financial records, including tax returns, bank statements, and/or pay stubs (both personal and business)

How to Answer Question #2 Most Effectively

Write your business plan long before you apply for a loan. Have a mentor or the local Small Business Development Center help you. Also, gather records requested and review the details for accuracy.

Question #3: How Will the Underwriter Use the Data I Provide?

The data you provide for loan underwriting will be used to do the following.

Verify Business Revenue

If there isn’t enough revenue to support debt payments, you aren’t getting the loan. Most lenders have a ratio that helps them calculate how much they are willing to lend to your business.  That is, if they approve the application.

Generally, approval for any amount over 10% of your annual revenues is not likely.  This is especially true for traditional lenders. Of course, it depends heavily on whether you have any other business debt.

Learn business loan secrets and get money for your business.

Verify Personal Credit Score

With traditional lenders, your personal credit score is going to be part of every loan decision. In fact, in some cases it will determine whether or not they will pursue your loan application at all.

Banks generally look for scores in the 700s, though some will go as low as 680. The SBA has a minimum threshold around 650. In contrast, online lenders will go as low as 600 or even 500 in some cases.

If you get approval, the lower your personal credit score, the more expensive the financing. You may also have to provide a personal guarantee or sign off on a UCC blanket lien if your personal credit scores are particularly low.

Verify Collateral

Not all lenders require collateral, but most banks and the SBA do. While the SBA doesn’t always require that you fully collateralize a loan, they will require any collateral you may have available.

Online lenders will often apply a general lien on business assets. Also, most will require a personal guarantee on small business loans.

Determine Personal Equity in the Business

Underwriters may want to see how much money you have invested in the business. Lenders want you to have some personal skin in the game. If the business defaults, you have something to lose too.

In addition, lenders may use the data to determine a number of ratios that can help them in the decision making process.

Debt Service Coverage Ratio

This is a calculation of your business’ income and the total amount of business financing you already have. It is calculated as Business Income/ Business Debt.  If your ratio is below 1.25, it will be difficult to get more financing.

Debt-to-asset Ratio (total debt/ total assets)

This is especially important to underwriting if there isn’t a collateral requirement. It shows whether you have enough assets to cover the loan in the event you default. For example, do you have enough equipment or property to liquidate and cover the loan if you can’t make payments. A ratio of more than 1:1 is favorable.

Loan-to-value Ratio

This only applies if there is a collateral requirement. Lenders really want to see that your collateral is worth at least 20% more than you want to borrow. That’s why you need a down payment of around 20% to buy a new car or purchase a new house.  The lender wants to make sure you meet this ratio.

How to Answer Question #3 Most Effectively

Since you now know the formulas often used in the loan underwriting process, you can have your accountant do the math. It doesn’t make any sense to apply if the numbers aren’t in your favor.  If you are close, it may be worth a shot.

Running the numbers can also give you an idea of what may be required in terms of a personal guarantee or collateral.  This is helpful information to have before you apply.

Question #4: What Are the Dealbreakers?

There are a number of issues that an underwriter may uncover that may can mean “end game” for your loan application.  If you know of any of these issues before you apply, definitely disclose them. Knowing ahead of time will allow the underwriters to take note of mitigating factors as they go. If they come across any of these on their own, it is probably game over.

Learn business loan secrets and get money for your business.

  • Recent business cash advances or loans that are discovered but not disclosed in the month to date bank activity
  • An excessive amount of negative days in the bank activity printout
  • A criminal background history
  • Undisclosed tax liens or those not in a payment plan
  • A recent bankruptcy (within the last 6 months) or any open bankruptcy
  • Unsatisfied excessive or large judgments
  • Less than 50% ownership (depending on the lender)
  • A major drop in revenue
  • Negative landlord references
  • An undisclosed default or a restructured business loan or cash advance

How to Answer Question #4 Most Effectively

Check the documents you’re providing and make sure they’re complete. Material omissions, such as new loans that are not yet on record, need to be disclosed.

That way, the loan manager has all of the information and won’t penalize you for omissions.

Data Drives Loan Decisions

You provide the data to lenders that the underwriters use to make the loan decisions. It is imperative that the data you provide is as complete and accurate as possible. If they find inconsistencies, it is very likely they will simply deny the loan.

Something as small as using an ampersand in your business name in one place, and the word “and” in another, can cause enough doubt to deny a loan.

This is why building fundability is so important. Underwriters want to see your business is established as a separate entity from you, the owner. They need to see accurate and consistent information. Consequently, providing this from the beginning will make their job easier and save you a lot of time and frustration.

The post Top Questions About the Business Loan Underwriting Process Answered appeared first on Credit Suite.

How to Get Business Funding for Your Side Hustle and Make More Money!

Millions of people work a side hustle these days. There are tons of options. Companies like Uber, Lyft, DoorDash, Instacart and more have blown the market wide open and helped create a gig economy of temp workers. However, many still choose to work on their own to make money on the side.

The Hustle and Bustle of a Side Hustle

People choose to make money on the side in all kinds of ways. Some examples include:

  • House cleaning
  • Washing and detailing automobiles
  • Making jewelry
  • T-shirt making
  • Baking
  • And more

The thing is, running a hustle on the side isn’t free. Even though often the overhead is relatively low, there are going to be costs. Selling online requires fees. Shipping costs are an issue if you sell a physical product. Even services oriented hustles like cleaning will require supplies.

How Do You Fund a Side Hustle?

There are a number of options when it comes to funding for this type of work.

Check out how our reliable process will help your business get the best business credit cards.

Bootstrapping

In the beginning, bootstrapping is the obvious choice. Basically, this is when you do it yourself. By definition, a side hustle is something you do in addition to your regular job. So, it can make sense to invest an initial amount to get started from funds already available to you. Then, continue to use most of your proceeds to purchase more of what you need for the hustle. Hopefully, eventually you break even and then produce a profit.

If you want to expand with newer or better equipment, say a new embroidery machine, baking molds, or a new vinyl cutting machine, consider asking friends and family.  They can make great birthday or holiday gifts. You could also ask them to borrow the money,  or even sell them equity so they become angel investors if it grows into more than just something you do on the side.

Personal Credit

If you have good personal credit, you may be able to find good terms on a credit card to fund what you need short-term. Still, financing a business with personal credit means using a high percentage of your credit limits. This is called high credit utilization, and it can lower your personal credit scores.

What if You Decide to Turn Your Side Hustle Into More?

If you decide your hustle is strong enough to take on a life of its own, consider setting it up as a separate business. Even if you keep your day job, doing this opens up many more funding opportunities.

How to Set Up Your Side Hustle to Be Eligible for Business Accounts

Once you see your side hustle taking off, go ahead and name it. Your state may require for every business name to be unique, so check with the Secretary of State’s office. Get a business phone number and list it in the 411 directory. Then, get an EIN using the business name, phone number, and a physical business address where you can receive mail. You can do this for free at IRS.gov. Note: Do not use a P.O. Box or an UPS box as your business address. You can use a virtual address, but some lenders will not accept those.

You also need a separate, dedicated business bank account. Even if you aren’t bringing in a lot yet, this is still a good idea. You will need to report the income to the IRS, and this will help you keep track. Beyond that, if you want to apply for vendor accounts and other forms of business credit, this is often a requirement.

Also, if you want to be able to take credit card payments, you will need a merchant account. You cannot get a merchant account, without a business bank account.

These are just the first steps in setting up a side hustle to be eligible for business funding.

Check out how our reliable process will help your business get the best business credit cards.

Pay Attention to Details

As you do this, don’t neglect the details. Small inconsistencies can cause big problems. For example, if you use an ampersand in your business name when you get your EIN, be sure to use the ampersand and not the word “and” when you open your business bank account.

This type of seemingly small detail can cause big problems when you apply for business funding later on.

Funding With the Big Dogs

Taking these simple steps in the beginning will ensure you are ready to roll when the time comes to expand and grow your hustle. It takes funding to do that, and these steps will help you qualify for funding in the name of the business.

One of the easiest ways to start is to apply for business vendor credit. But first, use the business information you set up to apply for a D-U-N-S number from Dun & Bradstreet. You can apply and get one for free on their website.

Then, you can apply for credit from vendors in the name of your business. This will allow you to  buy items needed to fill orders before you get paid. Items like jewelry-making supplies or tools and materials for handyman work can be bought ahead of time using vendor credit. You won’t have to wait to take orders. It can also make it possible to pay for advertising materials, like ad designs and banners, or even print ads.

You can’t just start applying for business accounts with any vendor you want right away and expect approval, however.  If there are vendors that offer personal accounts and sell what you need, that is fine. However, it’s wise to work with some vendors that will extend net accounts in your business’s name, and report them to the business credit reporting agencies like Dun & Bradstreet, Experian, or Equifax.

Then you build business credit for your hustle.  Business credit opens up many more funding opportunities for the future.

Business Vendor Accounts

There are a few vendors that will do this even if your business credit score isn’t great, or is currently non-existent. They use other factors to determine creditworthiness. This includes whether your business is set up the way described above, as well as time in business, and more.

These are not revolving accounts. Rather, they are net accounts, meaning you will have to pay off the total balance at the end of the net term period. However, this can be a way to get the materials you need to run your business before your customer pays you. You can expand and grow your side hustle without depleting cash reserves, or even if you have no cash reserves.

Building Business Credit

The fun part about doing it this way, instead of just funding your business with your personal credit, is that you can build on those initial vendor credit accounts and eventually have even stronger business credit. All you need is 3 to 5 initial accounts reporting to be able to apply for more advanced accounts.

Check out how our reliable process will help your business get the best business credit cards.

Other Funding Options

After you are bringing in money regularly, and your income is somewhat predictable, you may also be able to finance your new business with purchase order financing or a merchant cash advance.

For both of these kinds of financing, you get slightly less than the full value of any outstanding invoices, but you get it a lot faster!

If you have a business account with PayPal or Square, you may qualify for a loan from them that does not take credit score into account.

Another great option when it comes to funding a side hustle as it grows is the Credit Line Hybrid.

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. You can get 0% business credit cards with stated income, and many of these report to business CRAs. That means you can build business credit at the same time. You get access to even more cash, and with no personal guarantee. You need a good credit score or a guarantor with good credit to get an approval. In this case, that is a FICO score of at least 680. There are no financials required.

The Sky’s The Limit

Your side hustle can be as large or as small as you want to make it. You can keep your day job, or you can grow it into a full time gig and be your own boss. Regardless, you’ll need funding to make it happen.

The post How to Get Business Funding for Your Side Hustle and Make More Money! appeared first on Credit Suite.

The post How to Get Business Funding for Your Side Hustle and Make More Money! appeared first on Buy It At A Bargain – Deals And Reviews.

When Large Loans for Business Are Right for Small Business Owners

Will Large Loans for Business Work for Your Business?

For business owners looking to scale, the old adage often rings true: “It takes money to make money.” You need funding to hire team members, manufacture products, buy equipment and cover marketing or administrative costs. All that adds up fast, leaving business owners on the hunt for financing. But when it comes to determining the size and kind of loan that is right for your business, you need to weigh long-term impact with short-term rewards. You need to determine if large loans for business will work for you.

Large loans for business loans tend to be $500,000 or more.  They may be a good option for entrepreneurs who need revenue but want to maintain ownership of their small business.

According to Matt Schulz, chief credit analyst at LendingTree, “Finding investors or partners can work, too. However, those partnerships can come with a lot of baggage.” He adds, “For those who are interested in maintaining control over their business, a business loan might be preferable to adding more cooks in the kitchen.”

Here’s when to consider a large business loan for your small business and what you need to know before taking out the loan.

Consider taking out large loans for business when…

You need to buy new equipment

Whether you’re upgrading existing equipment or buying new tools, using large business loans to fund the initial purchase can be a good option, if you know the risks.

“It’s important to understand that large business loans often require collateral,” Schulz explains. “If you’re using the loan to buy new equipment, the equipment may be the collateral for that loan.”

That means you may have to surrender your new tools if you can’t pay the bills. But using equipment as the collateral tends to be less risky than offering other parts of the business (or even personal assets) instead.

It’s time to move into a bigger space

Owning your own office has its advantages, including potential tax breaks and the ability to customize the space. But it can also come with a hefty price tag. Especially if you want to own a storefront in a popular retail space with a lot of foot traffic.

Enter commercial real estate loans. On average, this financing option covers 60% to 90% of the property’s value, up to $1 million. Since you’ll own the property, your equity will build over time. Plus you’ll have the benefit of an asset that is likely to grow in value. Like a loan for equipment, a commercial real estate loan is secured by the actual property. This means you may lose the real estate if you fall behind on your payments. But you can always consider renting the space if your own business doesn’t take off like you planned.

You want to buy an existing business

If you’re looking to buy a competitor or buy into a franchise, large loans for business can provide the capital you need to make the purchase. When it comes to how much you can qualify for, , you’ll need to provide the lender with a business valuation. Typically, the stronger the valuation, the more funding you’ll receive.

Use the loan for items secured by collateral, like office space or equipment, or for intellectual property. But a loan not secured by collateral will be harder to qualify for and have more restrictions. You may also have to lean more on your personal credit score and business cash flow to prove to the lender that you can pay them back.

Three key points to remember when you take out large loans for business

  1. Large business loans are harder to secure

Per a recent survey, business applications were up 69% in April 2021 compared to the previous year. But those new businesses will have to temper their lending expectations. Large loans for business are often reserved for businesses in operation for at least three years. Strong cash flow, profit and loss statements and credit history also play an important part in getting these loans. .

“If you’re just getting your business off the ground,” Schulz explains, “a personal loan or a small business credit card is a better choice. They may not be as sizable as your typical large business loans, but they’re available to companies that are just getting started.”

As large business loans are harder to qualify for than some other funding options, it may take more time and effort to get them.

“Larger banks may be more willing to give larger loan amounts than smaller banks,” Schulz says. “As with any loan or any type of financial transaction, shopping around is really important. That first offer that you’re given may not be the best one you can get, so take your time.”

  1. Many large loans for business require collateral

As mentioned above, large business loans are risky for lenders. To reduce that risk, lenders tend to require collateral.

You can offer equipment, invoices, office buildings and even personal assets as collateral. Lenders can legally seize these items if you fail to make timely payments. It’s particularly risky to offer personal assets like your house as collateral. Because if the business struggles, you could lose both the business and your home at once.

So while they’re difficult to find, not all loans will require collateral.

“You can find large business loans without collateral,” Schulz says, “but the loans might be smaller and the interest rates possibly higher.”

  1. Large business loans come with large risk

The higher the business loan, the higher the risk that comes with it. Paying back $2,000, even if it requires help from personal assets, might not break you financially. But trying to come up with $450,000 could.

Business owners should consider this with care, , especially in tumultuous economic times like what we’ve experienced in the last year following the coronavirus pandemic.

“In any economy, it is risky to take on debt,” says Shulz. “In a volatile, wildly unpredictable economy like ours today, it can be even more challenging.

“The best advice is some of the oldest: Know thyself. If you are comfortable with the risk that comes with taking on a large business loan and think that it could be an important tool to help take your business to the next level, go for it. Just be sure to shop around and know the details of the loan before you sign on the dotted line.”

Ana Gotter is a business and financial writer with years of experience creating content on topics including personal loans, financial planning, business management, and business finances.

The post When Large Loans for Business Are Right for Small Business Owners appeared first on Credit Suite.

Does a High PAYDEX Drive Down My Business Insurance Premiums?

Did YOU Know That Your Business Credit Score Can Affect the Cost of Your Business Insurance?

A business credit score tends to not be necessary to apply for an insurance policy. But insurers may ask to access your business data after you apply. High credit scores correspond with low premiums and vice versa. That doesn’t mean you should ignore financials in favor of improving your credit score. Rather, if you improve your company’s credit history by paying down debt or working on payables management, then this could help you save money on business insurance premiums.

Get Ready Before You Apply

Getting ready to apply for business insurance is like preparing to apply for financing. You need to know certain details about your business. If you must have certain coverage before signing a lease or contract, understanding the required coverage will also be key before applying. Doing your due diligence beforehand will save you time and maybe even money.

Part of due diligence is looking for an agent. Make sure you work with an agent who understands your business needs and the best options for you. Then the process can go much more smoothly. It is best practices to find an agent specializing in your industry. Their expert advice can be helpful in the process.

Your Credit Could Affect What You Pay for General Liability Insurance

Data your insurer uses revolves around correlation. Poor credit tends to mean a higher risk. Insurance is all about probability, and the data shows a higher chance of frequent claims and overdue payments, when insurers cover someone with bad credit.

What If You Don’t Have Business Credit Yet?

Having no business credit score won’t prevent you from buying general liability insurance. And it won’t keep you from getting a decent premium. But a good business credit score might get you solid discounts. So, it makes sense to start building PAYDEX and other business credit scores.

Are Your Business Insurance Premiums Affected by What’s in Your Business Credit Reports?

Many business owners have no idea their insurance rate is affected by their credit report. But let’s consider personal credit for a moment. And, since Experian business scores (in part) come from personal credit scores, it does apply to your business credit.

Statistics show that people with high personal credit scores file fewer claims than those with low credit scores, and those with higher scores are less likely to have traffic accidents and traffic violations. Additionally, history in a credit report can show if a business or an individual will pay insurance premiums on time or at all. For that reason, federal law lets insurance companies look at items from your credit report. Carriers do not have to tell you they are using your credit report.

How Insurers Use Your Business Insurance Credit Score

Rates are based on a narrow set of information in your credit report. Carriers can only use those specific types of information; this information together is your insurance credit score. The insurance credit score does not include your FICO score.

The score does include items like the pattern of monthly bill payments, collection activity, total number of outstanding loans, and total number of credit cards. Under the law, your rates cannot increase if you do not have enough credit history to calculate a credit score. If you want to see what your personal insurance credit score is, you can buy a copy of the report from True Credit, a division of Transunion.

It’s smart to review your insurance credit report and make certain everything in it is correct. It is important that you do this to get the best rate you can find.

Using Insurance Credit Scores for Business Insurance

Only some items on your business credit report are considered when you apply for business insurance. The insurance credit score only considers areas of your credit report which apply to the insurance industry. It is against the law to deny an insurance policy based on a lack of credit history.

The items your business carrier will look at include:

  • Number of business credit cards
  • Number of outstanding loans and other debt
  • Average time in which your company pays its monthly bills
  • Collection activity, if any; and
  • Length of credit history

Items that insurance companies CANNOT use when checking an insurance credit report include:

  • Amount of credit available
  • Number of credit inquiries in your company’s credit file
  • Type of credit history or not enough credit history to develop a score
  • Types or issuers of credit cards and debit cards your business carries

Does it Matter So Much if You Don’t Think You Need a Lot of Insurance?

It matters because you can’t get by with no business insurance! Every small business owner needs certain insurance policies to protect them in case the worst happens.

Differing industries will have different degrees of risk. Examine your risks and put together a business insurance plan based on that information. Shop around and find the right carrier for your small business. There are nine basic types of business insurance every small business may need to protect a business.

#9. General Liability Insurance

Every business needs general liability insurance. It will cover:

  • third-party bodily injury
  • third-party property damage
  • advertising injury (accusations of libel, slander, copyright infringement, etc.)

The type of your business, its size, assets, and corporate structure will determine the amount of coverage you need. But this policy won’t cover motor vehicles.

#8. Commercial Property Insurance

If you have a physical address, you should carry commercial property insurance to cover losses of business or personal property. This type of policy usually covers damage to the structure and inventory or property within it from damage from storms, fire, theft, or vandalism. Dovetailing with commercial property insurance, it might also make sense to look at a business owners’ policy (BOP) depending on the size and assets of your business.

Insurance companies will sometimes offer a BOP to small and medium-sized businesses. A BOP policy will usually combine general liability, property insurance, and business interruption coverage. You can often add riders to such a policy. It can be more affordable to bundle the coverage you already need.

#7. Business Interruption Insurance

If property sustains damages, you may not be able to keep your business open during repairs. Hence business interruption insurance can help cover financial losses. It can cover your employee payroll, taxes, operating expenses, debt repayment, and sometimes the cost of a temporary location. Many business owners used business interruption insurance during the height of the Covid-19 pandemic when they had to close their doors.

#6. Workers’ Compensation Insurance

If you hire employees to work in your business, you’re legally required in most states to get workers’ compensation insurance. Workers’ comp protects you and your employees if they’re injured or become ill at work. It can cover an employees’ medical expenses and lost wages while recuperating. If an employee agrees to accept workers’ compensation as part of their hiring package, they often waive the right to sue you for an incident at work.

#5. Commercial Auto Insurance

If you use a vehicle for business purposes, then you need commercial auto insurance. Because if you get in an accident while doing business-related work, your personal car insurance may not cover it. Some insurers will require separate policies for dump trucks and semis.

#4. Product Liability Insurance

If you manufacture or sell any type of product, you can be held liable if that product injures someone, damages their property, or makes them sick. Product liability insurance can help cover associated medical costs, replacement of the purchased product, and even legal fees and settlement costs if your business is sued. Distributors and sellers can be the subject of product liability lawsuits, so, they should consider this form of coverage.

#3. Cyber Liability Insurance

If your business is the subject of a data breach and customer information was accessed or stolen, cyber liability insurance can:

  • Notify anyone impacted by the breach
  • Give them credit monitoring
  • Cover the costs of informing the public (if necessary)

Some insurers call this data breach insurance. Anyone who stores customer information electronically should get it, as your general liability policy won’t cover this.

#2. Professional Liability Insurance

If you run a business where you offer professional advice or are responsible for completing projects—such as a doctor, lawyer, or architect—you need to carry professional liability insurance. It’s also called errors and omissions insurance. This policy can protect you and your business if you’re accused of negligence (or were negligent), missed deadlines, undelivered services, or breach of nondisclosure/copyright insurance. Doctors and other professionals often must carry a specialized type of professional liability—malpractice insurance. But even plumbers, realtors, and event planners can use professional liability coverage.

#1. Commercial Umbrella Insurance

At times, it can be more affordable for a small business to purchase an umbrella policy, instead of increasing the limits of an underlying policy. An umbrella policy may also cover business risks that an underlying policy excludes. Hence, if the policy limits of your general liability policy are exhausted, umbrella insurance can step in to cover whatever remains. But umbrella policies can’t and won’t cover everything.

Does a Home-Based Business Need Insurance?

You may be wondering if any of this can apply to you. You may not have a physical business location. But your homeowners’ insurance will only cover some of any damage to business property. And most if not all the other insurance policies apply, too.

Other Types of Insurance to Consider

A small business may do well to consider key person insurance. With key person insurance, if there’s one person—this could be you—key to the operation of your business, the business won’t grind to a screeching halt if that key person were out for a long time (say, with Covid). This coverage can help cover any associated monetary losses for a certain time until your business replaces this person, or they return to work.

Two other types of consider are commercial crime insurance, and equipment breakdown coverage. Crime insurance can protect your business if you’re robbed (even by an employee). It can help cover financial losses other types of insurance may not. Equipment breakdown covers damage to or the loss of your A/C systems, boilers, furnaces, and computers and other electronics, if damaged by power surges or they break down.

If you’ve got employees, then you may be thinking about offering employee benefits. Often, depending on the size of your business, you must provide disability insurance, health insurance, and other insurance, like life insurance, to help protect your employees. But with good business credit, you may be able to save on all these types of insurance.

Finally, Pay Attention to Your Policy

It’s best practices to take time to revisit your policy, especially if you change parts of your business and need new coverage. Experts say you should search every three years or so for a new policy. This is to make sure you’re not only staying current on your coverage but getting the best rate.

Business Insurance and Business Credit: Takeaways

The strength of business credit scores like PAYDEX can affect the price of your policies. Insurance carriers tend to look at open debts and collections, and how quickly your business pays its bills. Paying on time and keeping accounts out of collections can help both your business credit scores and what you’ll pay for premiums—for any type of business insurance.

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When Large Loans for Business Are Right for Small Business Owners

Will Large Loans for Business Work for Your Business?

For business owners looking to scale, the old adage often rings true: “It takes money to make money.” You need funding to hire team members, manufacture products, buy equipment and cover marketing or administrative costs. All that adds up fast, leaving business owners on the hunt for financing. But when it comes to determining the size and kind of loan that is right for your business, you need to weigh long-term impact with short-term rewards. You need to determine if large loans for business will work for you.

Large loans for business loans tend to be $500,000 or more.  They may be a good option for entrepreneurs who need revenue but want to maintain ownership of their small business.

According to Matt Schulz, chief credit analyst at LendingTree, “Finding investors or partners can work, too. However, those partnerships can come with a lot of baggage.” He adds, “For those who are interested in maintaining control over their business, a business loan might be preferable to adding more cooks in the kitchen.”

Here’s when to consider a large business loan for your small business and what you need to know before taking out the loan.

Consider taking out large loans for business when…

You need to buy new equipment

Whether you’re upgrading existing equipment or buying new tools, using large business loans to fund the initial purchase can be a good option, if you know the risks.

“It’s important to understand that large business loans often require collateral,” Schulz explains. “If you’re using the loan to buy new equipment, the equipment may be the collateral for that loan.”

That means you may have to surrender your new tools if you can’t pay the bills. But using equipment as the collateral tends to be less risky than offering other parts of the business (or even personal assets) instead.

It’s time to move into a bigger space

Owning your own office has its advantages, including potential tax breaks and the ability to customize the space. But it can also come with a hefty price tag. Especially if you want to own a storefront in a popular retail space with a lot of foot traffic.

Enter commercial real estate loans. On average, this financing option covers 60% to 90% of the property’s value, up to $1 million. Since you’ll own the property, your equity will build over time. Plus you’ll have the benefit of an asset that is likely to grow in value. Like a loan for equipment, a commercial real estate loan is secured by the actual property. This means you may lose the real estate if you fall behind on your payments. But you can always consider renting the space if your own business doesn’t take off like you planned.

You want to buy an existing business

If you’re looking to buy a competitor or buy into a franchise, large loans for business can provide the capital you need to make the purchase. When it comes to how much you can qualify for, , you’ll need to provide the lender with a business valuation. Typically, the stronger the valuation, the more funding you’ll receive.

Use the loan for items secured by collateral, like office space or equipment, or for intellectual property. But a loan not secured by collateral will be harder to qualify for and have more restrictions. You may also have to lean more on your personal credit score and business cash flow to prove to the lender that you can pay them back.

Three key points to remember when you take out large loans for business

  1. Large business loans are harder to secure

Per a recent survey, business applications were up 69% in April 2021 compared to the previous year. But those new businesses will have to temper their lending expectations. Large loans for business are often reserved for businesses in operation for at least three years. Strong cash flow, profit and loss statements and credit history also play an important part in getting these loans. .

“If you’re just getting your business off the ground,” Schulz explains, “a personal loan or a small business credit card is a better choice. They may not be as sizable as your typical large business loans, but they’re available to companies that are just getting started.”

As large business loans are harder to qualify for than some other funding options, it may take more time and effort to get them.

“Larger banks may be more willing to give larger loan amounts than smaller banks,” Schulz says. “As with any loan or any type of financial transaction, shopping around is really important. That first offer that you’re given may not be the best one you can get, so take your time.”

  1. Many large loans for business require collateral

As mentioned above, large business loans are risky for lenders. To reduce that risk, lenders tend to require collateral.

You can offer equipment, invoices, office buildings and even personal assets as collateral. Lenders can legally seize these items if you fail to make timely payments. It’s particularly risky to offer personal assets like your house as collateral. Because if the business struggles, you could lose both the business and your home at once.

So while they’re difficult to find, not all loans will require collateral.

“You can find large business loans without collateral,” Schulz says, “but the loans might be smaller and the interest rates possibly higher.”

  1. Large business loans come with large risk

The higher the business loan, the higher the risk that comes with it. Paying back $2,000, even if it requires help from personal assets, might not break you financially. But trying to come up with $450,000 could.

Business owners should consider this with care, , especially in tumultuous economic times like what we’ve experienced in the last year following the coronavirus pandemic.

“In any economy, it is risky to take on debt,” says Shulz. “In a volatile, wildly unpredictable economy like ours today, it can be even more challenging.

“The best advice is some of the oldest: Know thyself. If you are comfortable with the risk that comes with taking on a large business loan and think that it could be an important tool to help take your business to the next level, go for it. Just be sure to shop around and know the details of the loan before you sign on the dotted line.”

Ana Gotter is a business and financial writer with years of experience creating content on topics including personal loans, financial planning, business management, and business finances.

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Hot Topic: Brex for Money Management and Building Business Credit

Brex is a money management tool for businesses. They offer many services, but the big draw for startups and small businesses is the option for a business credit card that reports to Experian and Dun & Bradstreet, thus helping them build a strong business credit score.

Who Is Brex Really For?

They offer a number of services that can help many businesses manage their finances in a more streamlined, efficient manner. But, what types of business do they work best for? Will they work for your business?

What Brex is Meant to Do

This 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. This is the purpose.

Start by opening a Brex cash account. This is not a bank, but they do have a partnership with the FDIC to ensure your funds are secure.

Check out how our reliable process will help your business get the best business credit cards.

Everyone that opens a cash account gets a corporate card. It works similar to how a debit card does, drawing from your cash balance daily. However, unlike a debit card, they report these draws as payments on your account to Dun & Bradstreet.  In turn, your business credit score grows. This is, assuming your business is set up properly to have an established business credit profile.

Since this card is secured by the balance in your cash account, and limited to that balance, you do not have to worry about underwriting. However, since the balance in the cash account is money you already have, it cannot really be an option for funding your business. Rather, it’s a way to manage the funds you already have and use them to build business credit.

Brex for Funding

There is also another option if you qualify. They do offer a more traditional card. This option offers limits that will go up to 20x higher than that of a typical corporate card. Instead of checking your personal credit score, they base approval and credit limits on business financial information, including available cash, spending patterns, and more. This means it may be more accessible to those that do not have a great credit score.

If you qualify for this card, you will have to pay your entire balance monthly.  This is a step up from paying daily as you go, like with the cash card. It’s more like net financing.  You cannot carry a balance from month to month, but it is more flexible than the cash card because you are not limited to the balance in your cash account.

Both cards offer nice rewards in terms of points that you can redeem for a number of things like:

Also, you can get cards for your team members and set individual spending limits. This is a major plus for managing spending. There are even virtual card options for online spending. Brex integrates with common accounting programs including Quickbooks, Xero, NetSuite, and Gust, among others.

Since you pay the card off from month to month, there is no interest. There is also no fee for standard service, but you can upgrade to premium service at a cost. Currently premium accounts start at $49.99 and offer more expense management options.  You can use rewards points, if you have them, to pay for premium service.

Using Brex to Build Business Credit

While Brex is a fabulous option for managing business finances, it doesn’t really work for business funding when it comes to startups.  Here’s why. The corporate credit card that most startups qualify for only has a limit up to the amount of cash you have in your cash account.

Of course, that’s not a bad thing for managing financing or building business credit. There are no fees, and your positive payment history goes to two of the big three business credit reporting agencies. It’s a win-win.

Check out how our reliable process will help your business get the best business credit cards.

However, you are only able to use funds you already have on hand. Payment is taken from your cash account daily, and you cannot carry a balance. This means that, while this card is a great tool for helping you build business credit and managing funds you already have, it doesn’t actually help you get additional funds for your business.

The corporate charge card isn’t a bad deal and can help with cash flow management and funding. However, it’s more of a starting point if you cannot qualify for a true business credit card. It’s a stepping stone to get another account reporting to business credit, so that you can qualify for more funding in the future.

Brex Online Reputation

The Better Business Bureau has Brex rated at an A+. They have 4 reviews, all which are bad, and 3 complaints over the course of 4 years they have been in business. That isn’t terrible, but it is concerning that all of the bad reviews are pretty recent. One is related to a bonus offer, and the other 3 are customer service related. You should definitely be aware, but this is a very small number of negative issues being reported for the 4 years they have been in business.

TrustPilot has many more reviews and gives them an excellent rating at 4.8 stars. The small percentage of negative reviews on TrustPilot tend to be from those who did not qualify for accounts. Those who have accounts and use the system seem to be happy.

Check out how our reliable process will help your business get the best business credit cards.

Is Brex Right for Your Business?

The answer to this question really depends on what you are looking to accomplish. If you need a system that helps you manage funds in real time, this is a great option.  It’s also an option if you are having trouble getting approval for business credit cards.  It’s worth a shot to see if you qualify for the corporate charge card.

If your sole purpose is to build business credit, Brex can help, but you can’t do it with Brex alone. Your business has to be fundable, which can take time. Also, you need more accounts reporting than just one. Brex can be a part of this, but you need more.

Business credit building is a process. There are a number of steps, starting with how your business is set up and going all the way through applying for the right accounts at the right time.  A system like the Business Credit Builder can walk you through the whole thing, saving you a lot of time and frustration.

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How to Choose the Best NAICS Code for Your Business

The Best NAICS Code for Your Business is Out There—and Within Reach

You may have heard of NAICS codes and SIC codes. And you may also have heard about how they can mark your business as low or high risk.

Today, let’s look at choosing the best NAICS code for you and how to do so easily. Since SIC codes are on their way out, we won’t look at them. But the principle is the same.

It’s a question of risk. More on that in a moment.

Some Background

The North American Industry Classification System has industry codes to define establishments based on what they do most of the time. The codes sort businesses to gather, analyze, and then publish statistical data on the US economy.

For example, if your company is a salon, the code might be 812112, which is for beauty salons. But that’s not quite right if you have a nail salon, which should use 812113 instead.

For salons, there are only a few possible codes, corresponding to various services. A salon offering services for hair, nails, and permanent makeup could choose from three codes.

Which Coding System do Banks and Business Credit Reporting Agencies Use?

Lenders, banks, insurance companies and business CRAs use SIC and NAICS codes. They want to see if your business is in a high-risk industry. So you could get a denial for a loan or a business credit card based on your business classification. Some codes can trigger automatic turn-downs or higher premiums. Or your business might receive reduced credit limits.

The IRS will use the code you pick, to see if your business tax returns are comparable to other businesses in your industry. If your tax deductions do not reasonably resemble other businesses in your industry, your business could be subject to an audit.

Furthermore, some companies get a high-risk label when they do not choose the right code. But if you get how the classification system works, then you can choose the right business NAICS code on your first try.

Avoiding High Risk Codes

The riskiest businesses tend to be cash-intensive. Or they can be businesses with a higher chance of personal injury or property damage.

The NAICS keeps a list of high-risk and high-cash industries. Industries on the list include casinos, pawn shops, and restaurants. Before you choose a code, look over the list.

But keep in mind, that list of high-risk and high-cash industries is from 2014 and may be incomplete or even out of date. Per the NAICS, there are no plans to update it at this time.

OSHA also requires injury and illness reports from certain high-risk industries.

None of three salon codes are on the list. But this doesn’t mean they shouldn’t be. After all, salons harbor any number of hazards. Wet floors from dripping towels can make a floor slippery. Curling irons and hair dryers are sometimes too close to wash basins. Shampoos, dyes, and nail polish remover can cause allergic reactions. And a rough masseur can injure a customer’s back.

But the other side of the risk coin is occupations which are cash intensive businesses. A pawn shop might not have much of a specific risk of injury at all. But the large amounts of cash normally associated with one mean that it’s a tempting target for thieves.

More Reasons a Business May Be High Risk

Experian in particular tends to mark certain industries as high risk when they aren’t cash-intensive. And they have no physical plant where anyone can get hurt (such as is the case with purely online businesses). So, what gives?

There are a few reasons.

  • Traditionally late-paying industries and/or a high risk of payment default. For example, single family home builders in the late 2000s were going bankrupt, and considered a high risk for extending credit.
  • Industries with a low barrier to entry. There may not be an education requirement, or maybe no licensing is necessary. There may not even be any regulations governing the industry. As a result, people go into these businesses who really don’t know what they’re doing. Hence they can go out of business just as easily as they go in. Think of the number of consultants and life coaches you see these days, maybe even among your friends. Often, those businesses don’t stick around. Even if they do, if the industry is so glutted, they might not make too much money.

Conducting an NAICS Code Search

Here’s how to get a code for your company:

  • Go to naics.com for the NAICS code list
  • Use the NAICS search function and their business activity code lookup
  • Select the NAICS number with the closest fit—if there is no good fit, expand your search. Also click on the code name to open it for more information

Can You Perform an NAICS Code Lookup by Company Name?

Yes, you actually can. Keep in mind, it’s not exactly a list of companies by NAICS code. Which makes sense, as the NAICS would probably prefer selling something like that. However, if you go to the NAICS Company Lookup Tool, you get a few options. 

You can look up a company if you have their name and ZIP code, or you have their name and D-U-N-S number, or their name and complete address.

As a result, I was able to look up Apple’s NAICS codes (their headquarters in Cupertino, California has a ZIP code of 95041. Hence if you were Tim Cook, and were asking, “What is my NAICS code?”—that would be how you would get it. But they won’t let you conduct more than one search without paying.

Choosing a Business Code: Back to Our Example for a Moment

For our salon example, it’s hard to say which code is best. Chance are they are all equally risky. Of course you want to be honest when picking a code. But if more than one code could apply, it’s okay to choose a code which will not get you denied by lenders.

If you make your own conditioner and the like, that may turn out to be a better code, 325620. That way, you may be able to still operate your real salon business without being considered risky.

A better code can be the difference between business funding—and no funding.

But Does Risk REALLY Matter That Much?

It matters less than you may think. If traditional lenders will say no, then it’s time for some internet sleuthing. A quick Google search for business loans for salons pulls up over seven million hits. You don’t have to get money from a traditional lender.

But check a few things, e.g.:

  • Do they lend to independent salons or just to larger franchises?
  • What does the Better Business Bureau say about them?
  • Is your local Chamber of Commerce and/or industry association familiar with them? If so, what do they say?

And then proceed as you wish. If you’ve found a reputable lender and they don’t care about SIC and/or NAICS codes, then the codes kind of don’t matter….

Codes and Fundability™

Your NAICS code is a part of the calculus of fundability™ of your business. Lower-risk codes will tend to be better. But if your business has several other positive fundability™ factors, the code matters less. A well setup business with $2 million in sales every month should be able to get money no matter what their code is.

The Best NAICS Code For Your Business: Takeaways

Choosing the wrong code could end up costing your business and get you labeled as high-risk. This could directly impact your insurance premiums. It could affect your financing ability, even your credit limit recommendations. This small error of selecting the incorrect code could have a big impact on your business in the future. Always do your research before choosing.

Here are some examples of industries considered high risk.

Restricted Industries (automatic decline):

  • Ammunition or Weapons Manufacturing; wholesale and retail.
  • Finance: Federal Reserve Banks, foreign banks, banks, bank holding companies
  • Gaming or Gambling Activities
  • Pawn shops
  • Political campaigns, candidates, or committees
  • X-rated products or entertainment

High-Risk Industries (subject to stricter underwriting guidelines):

  • Computer and software related services.
  • Dry cleaners
  • Entertainment (adult entertainment is considered restricted).
  • General contractors
  • Gasoline stations or convenience stores (also known as c-stores)
  • Healthcare: specifically nursing homes, assisted living facilities, and continuing care retirement centers.
  • Hotels or motels

More High-Risk Industries

  • Jewelry, precious stones, and metals; wholesale and retail
  • Limousine services
  • Long distance or “over-the-road” trucking.
  • Real estate agents/brokers
  • Real estate developers or land sub-dividers
  • Restaurants or drinking establishments.
  • Travel agencies

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Speed Your Way to Success: How to Find Business Credit for Your Gig Economy Job

Get Business Credit for the Gig Economy

The gig economy is a booming market. With more and more people working as independent contractors, entrepreneurs, or freelancers, many are looking for ways to streamline the process of securing business credit. In this blog post we’ll discuss how you can use business credit cards to speed up your way to success in the gig economy.

The Gig Economy and Business Credit

Business credit is good for any type of business. You don’t have to be a large company. And even gig economy workers can start businesses.

What is the Gig Economy?

The gig economy means jobs for a short-term engagement, for a specified time, say, 6 weeks.

Temping is nothing new, but now it’s on steroids. In a gig economy, temporary, flexible jobs are commonplace. Companies tend to hire independent contractors and freelancers, versus full-time employees. At times, this can be difficult for workers due to less employment stability. Working conditions aren’t always the best.

Gig Workers Going in a Different Direction

Workers for places like GrubHub, DoorDash, Uber Eats, Relay, GoPuff, and Instacart might not want or be able to unionize or wait for legislation or otherwise try to change their working conditions. What’s the solution? Become your own business!

How Do You Become Your Own Business When You’re Just One Gig Worker?

If a car sharing service doesn’t say you’re an employee, then you can set yourself up as a corporation on an LLC. Yes, even a single person can do either. By delivering as a corporation and not an individual, you can build business credit.

Building Business Credit

Incorporating is the only way to go (chances are, you will want to start an S corporation and not a C corporation). It creates a separate business entity which can help give you a degree of tax and liability protection. But at the very least, it’s highly likely that your insurance company will still ding your personal auto insurance, if you get into an accident while driving.

Why Create an S Corporation?

It will carry lower risks. But owners must report business profits on their personal tax returns. However, you can save on Social Security and Medicare taxes. An S Corporation owner has protection from personal liability for the corporation’s business decisions or actions. Corporate decisions can include whether to take a certain delivery job at all.

You pay taxes only on the money you earn from the business, recorded as personal income. The business itself is not taxed. Since you’re both an owner and an employee, you pay taxes based only on your compensation. Hence you don’t pay Social Security or Medicare twice, like owners of unincorporated businesses must.

Why Create an LLC?

A limited liability corporation carries lower risks. But business profits go on your personal tax returns, which can result in you paying high taxes. You also pay an employment tax on the net income of the business.

An LLC isn’t a separate structure (per the IRS). Yet as an LLC member you have protection from personal liability for the company’s business decisions or actions. If the LLC goes into debt or is sued, your personal assets are usually exempt. LLCs tend to be for groups of professionals, like doctors’ practices and law firms.

Why Not Both?

You can create an LLC and have it become the sole shareholder of an S corporation. Get the benefits of an LLC’s informality, and the tax benefits of an S corporation. It is best practices to talk to a professional before making either move. For business credit building, becoming an S corporation is the way to go. The only question is whether its sole shareholder is you or an LLC.

Fundability for the Gig Worker

Fundability is the ability of your business to get funding. You’ll need (among other things):

  • An EIN from the IRS
  • A D-U-N-S number from Dun & Bradstreet
  • An NAICS code (485310—Taxi Service or 485320—Limousine Service will work)
  • A separate business bank account

Most of the credit providers we’re listing today will require all of these.

Gig Economy Business Credit

A driver’s expenses include:

  • Fuel and maintenance
  • Possibly buying a vehicle (if yours breaks down or you want a separate one just for your gigs)
  • Registration fees and taxes
  • Phone (hardware, purchased apps if necessary, data plan)
  • Computer (to best manage all expense figures, etc.)

Did you know you can buy ALL these things with business credit?

Building Gig Worker Business Credit

Your driving business doesn’t start off with good business credit already built. Orderly, speedy building business credit means getting vendor accounts. Starting with vendor credit accounts is a proven way to start building business credit.

Building Business Credit: The Process

Gig Economy Credit SuiteUse your business credit and pay on time, just like you should with personal credit. These vendors we’ll show you will report to the business credit reporting agencies. And you’ll build a good business credit score. These trade lines are creditors who will give you starter vendor credit when you have none now. And, they’ll report positive payment experiences to the business CRAs. So use the credit, pay back what you used, and the account goes on report to Dun & Bradstreet, Experian, or Equifax.

Once reported, then you have trade lines, an established credit profile, and an established credit score.

You MUST have 3 or more vendor accounts reporting to move onto more credit with higher limits and better terms, more reporting accounts are even better. It will take 30—90 days for those accounts to report, 60 days on average. Do NOT apply for tier 2 credit without having 3 or more accounts first.

Using Business Credit Vendors

Check out three of our favorite starter vendors to help your driving business:

  • 76
  • Wex Fleet
  • Marathon

All three come from Wex.

76

Phillips 66 Company owns 76. This card reports to: D&B and Experian. Before applying for multiple accounts with WEX Fleet cards, make sure to leave enough time in between applying so they don’t red-flag your account for fraud.

To qualify, you need the following:

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

Your SSN is necessary for informational purposes. If concerned they will pull your personal credit talk to their credit department before applying. You can give a $500 deposit instead of a personal guarantee if you’ve been in business under a year. Apply online or over the phone. Terms are Net 15. Use at any P66, 76, or Conoco fueling location.

Wex Fleet

Wex reports to Experian and D&B. They offer universal fleet cards and universally accepted business fleet cards with a rewards program. Before applying for multiple accounts with WEX Fleet cards, leave enough time in between applying, so they don’t red-flag your account for fraud.

Wex Fleet Card

If you’re not approved based on business credit history, or been in business for at least a year, then you must give a $500 deposit or a PG. Apply online or over the phone. Terms: Net 15 (Wex Fleet Card), Net 22, or revolving (Wex FlexCard).

To qualify, you need:

  • Entity in good standing with Secretary of State
  • EIN
  • Business address (matching everywhere)
  • D-U-N-S number
  • Business license (if applicable)
  • A business bank account
  • Business phone number with a listing on 411

Marathon

Marathon Petroleum Company provides transportation fuels and specialty products supporting commercial, industrial, and retail operations. This card reports to Dun & Bradstreet and Experian. Remember: before applying for multiple accounts with WEX Fleet cards, leave 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
  • Business address (matching everywhere)
  • D-U-N-S
  • Business license (if applicable)
  • A business bank account
  • Business phone number with a listing on 411

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 PG if you’ve been in business less than a year. Apply online or over the phone. Terms are Net 15. Let’s move onto what’s called fleet credit.

Fleet Credit

Fleet credit comes with and after starter vendors. Use it to:

  • Buy fuel
  • Maintain vehicles of all sorts
  • Repair vehicles

Even if you just have one vehicle, you can still benefit. Fleet credit works for everything from luxury cars to minivans. These are often gas credit cards.

There may be a minimal time in business requirement. If your business can’t meet this requirement, you may be able to, instead:

  • Offer a personal guarantee or
  • Give a deposit to secure the credit

Now that you’ve got cards to support a vehicle, and your business credit is looking good, it’s time to look at vehicle financing to buy a vehicle!

Vehicle Financing

Vehicles financing is a great way to get a vehicle ASAP. With a fleet car, choices are usually buying or leasing. Providers include banks like Bank of America or the financing arm of a manufacturer, like Chrysler Capital.

Using Business Credit for Vehicle Financing

You can even finance a vehicle purchase or lease through our Business Credit Builder. These offers are in Tier 4. So they have certain requirements that business credit beginners just won’t be able to meet. Lenders want to see that you have the income to support the purchase. Consider Ford Commercial Vehicle Financing.

Ford Commercial Vehicle Financing Via 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 do not get approval on the merit of your application. Apply at the dealership. Ford reports to D&B, Experian, and Equifax.

To qualify, you need:

  • Entity in good standing with Secretary of State
  • EIN
  • Business address- matching everywhere
  • D-U-N-S
  • Business license (if applicable)
  • A business bank account
  • Strong business credit history

You must have a good Experian business credit score.

Ally Car Financing Via Credit Suite

Ally provides personal financing. But they will also report to business credit bureaus. If your 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 Car Financing: Ally Commercial Line of Credit

To qualify, you need:

  • Entity in good standing with Secretary of State
  • EIN
  • Business address- matching everywhere
  • D-U-N-S
  • Business license (if applicable)
  • A business bank account
  • Bank reference
  • Fleet financing references

If you use a personal guarantee, they will not report to the personal credit bureaus unless the account defaults.

Ally Car Financing: 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
  • Fleet financing references

There is no minimum time in business requirement. Apply in person only, dealer will advise if approved or PG is necessary.

One More Thing About Vehicle Financing

With commercial vehicle financing, business owners may have to personally guarantee vehicle loans. If you are a co-borrower, the loan will tend to report to your personal credit report. Starting off by giving a personal guarantee means you can get money and get your vehicle now instead of later.

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

No PG (Personal Guarantee) Financing

With no PG financing, you can get higher limits and better terms. Continue to build exceptional business credit and pay your bills on time. In general, the following will eliminate the need to provide a personal guarantee for this type of 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. And with well-built business credit, you’ve got a hugely positive assurance to provide.

Takeaways

Gig economy workers can build business credit to stabilize their employment situation and plan for the future. Use business credit to finance your delivery job in the gig economy and make it easier and more affordable to work as a flexible gig worker.

The post Speed Your Way to Success: How to Find Business Credit for Your Gig Economy Job appeared first on Credit Suite.