Presto! Turn Your Commercial Fleet into a Turo Fleet

Is it Magic? No, it’s Turo!

One of the inevitable side effects of having a fleet of vehicles is they do nothing for you if they’re idle. In fact, you lose money on them, as you need to pay for parking. Plus, of course, they’re depreciating every single day. Turo is a company that can help you turn idle vehicles into cash cows – no magic wand necessary.

But first, you need to get the vehicles – and here’s how you do ALL that.

Building Your Commercial Fleet While You Build Your Business and Its Credit

Your business doesn’t start off with good business credit already built. In much the same way, you probably didn’t start with any vehicles. Or, at least, not with business vehicles you wanted to keep. And even if you bought your business fully created, you can still build it to greater heights. For all three goals, it pays to work in an orderly fashion. Step by step, it all works together.

Building business credit means getting vendor accounts. Starting with vendor credit accounts is a proven way to start building business credit. But we don’t include vendors just because they report to the business CRAs. We include them because they have quality products you can use, and great customer service. They are more than a means to an end!

Building Business Credit the Right Way

Let’s start with building business credit. You can’t start with high limits. First build starter trade lines that report (vendor credit). Then you’ll have an established credit profile. Then you’ll get a business credit score. With an established business credit profile and score you can start getting high credit limits.

Use your credit. Pay on time, like you should with personal credit. These vendors we’ll show you will report to the business CRAs. And you’ll build a good business credit score.

But Wait: What is Starter Vendor Credit?

These trade lines are creditors who will give you initial credit when you have none now. These vendors often offer terms such as Net 30, instead of revolving. So if you get an approval for $1,000 in vendor credit and use it all, you must pay the money back in a set term. Such as, within 30 days on a Net 30 account. But there are some revolving accounts still considered to be starter vendors.

Vendor Credit Accounts

You must pay net 30 accounts in full within 30 days. And you must pay net 60 accounts in full within 60 days. Unlike with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To start your business credit profile the RIGHT way, you need approval for vendor accounts that report to the business CRAs. Once that’s done, you can then use the credit, pay back what you used. Then the account is on report to Dun & Bradstreet, Experian, or Equifax, or some combination.

Once it reports, then you have trade lines, an established credit profile, and an established credit score. With an established business credit profile and score, you can then get approval for more credit under your EIN. For vendor credit, you can usually leave your SSN off the application. Because this credit isn’t offered through a bank. Then the credit issuer pulls your EIN credit, sees a solid profile and score, and as a result can approve you for more credit. Keep in mind, credit through a bank will demand your SSN. It’s an anti-money laundering requirement under federal law.

Vendor Credit Cards

Vendor credit cards will kick off business credit building for your business. Once you’ve added payment experiences from three vendors, and they have sent reports to business CRAs like Dun & Bradstreet, you can start qualifying for fleet credit. Make sure business credit cards don’t report on your personal credit.

Every step and every credit provider is designed to help your business. It’s meant to help you qualify for business credit cards you will actually use. This isn’t building for the sake of building, and it isn’t just to increase a number. These credit providers are going to have what your business needs to succeed.

Business Credit

Keep in mind, business credit is independent of personal. Applying for it often won’t harm your personal credit scores, although it can if you offer a PG and then fail to pay. An inquiry will also impact personal credit. Too many inquires can hurt your ability to get an approval. Building this asset can only help your business. You can help your future business right now.

Vendor Credit Benefits

You need 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.

Getting a Vendor to Pull Credit Under your EIN

There is no Social Security requirement for starter vendor credit. This is unlike bank loans and bank cards. So leave the field blank. Don’t fill in any other number. It’s a violation of two Federal laws.

A blank field will force them to pull your business credit under your EIN. But note: some creditors will still want an SSN for verification purposes. You should present your SSN in this situation. But make sure you aren’t agreeing a PG or personal credit check.

Demolish your funding problems with 27 killer ways to get cash for your business.

Building Business Credit – What You Really Need to Know

You won’t get a Visa or a MasterCard (bank credit cards) right away. You need to have credit to get more credit. Start building trade lines to get the big payoff. Getting initial credit is the hardest part. The vast majority of trade vendors who issue credit don’t report it to the business CRAs. So, you MUST find sources which actually report.

Using Business Credit Vendors

Check out three of our favorite starter vendors:

Wex Fleet
Marathon
76

All three come from Wex.

Wex Fleet

They report to Experian and D&B. They offer universal fleet cards, heavy truck cards, and universally accepted business fleet cards. Their cards have features supporting a small business. This includes a rewards program. Before applying for several accounts with WEX Fleet cards, leave enough time between applying so they don’t red flag your account for fraud.

If you don’t get an approval based on business credit history, or been in business for at least a year, then a $500 deposit is necessary 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 number with IRS
Business address- matching everywhere.
D-U-N-S number
Business license (if applicable)
And a business bank account
Business phone number with a listing on 411

Marathon

Marathon Petroleum Company provides transportation fuels, asphalt, and specialty products throughout the US. Their product line supports commercial, industrial, and retail operations. This card reports to Dun & Bradstreet and Experian. Remember: before applying for several accounts with WEX Fleet cards, leave enough time 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
Business license (if applicable)
And 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.

76

Phillips 66 Company owns 76. It has more than 1,800 retail fuel sites in the United States. This card reports to: D&B and Experian. Keep in mind: before applying for several accounts with WEX Fleet cards. make sure to leave enough time between applying so they don’t red flag your account for fraud.

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 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 using a personal guarantee. if you’ve been in business less than a year. Apply online or over the phone. Terms are Net 15. You can used this card at any P66, 76, or Conoco fueling location. Let’s move onto fleet credit.

Demolish your funding problems with 27 killer ways to get cash for your business.

Fleet Credit

Fleet credit comes after starter vendors. It comes from places like Gulf and Exxon. You use it to:

Buy fuel
Maintain vehicles of all sorts
Repair vehicles

Even businesses which don’t have big fleets can still benefit. These are usually gas credit cards.

You may need to have a minimal time in business. If your business doesn’t have enough time in business, you may be able to instead offer a personal guarantee or give a deposit to secure the credit. Now that you’ve got a bunch of cards to support your fleet, it’s time to look at vehicle financing to buy the fleet!

Vehicle Financing

Chances are you didn’t buy personal vehicles outright. In the same way, financing is a great way to get a vehicle now, without having to wait until you can pay cash and drive it off the lot. With a fleet car, your choices are usually buying or leasing. Providers include banks like Bank of America or the financing arm of the 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 neophytes won’t be able to meet. Lenders will want to see you have the income to support the purchase. Consider Ford Commercial Vehicle Financing.

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. You can get a loan or a lease.

Ford may ask for a personal guarantee if you do not get an 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
Business license (if applicable)
And a business bank account
Strong business credit history
Must have a good Experian business credit score

Ally Car Financing Through 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 number with IRS
Business address- matching everywhere
D-U-N-S number
Business license (if applicable)
And a business bank account
Bank reference
Fleet financing references

If you use a PG, Ally 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 the same things as you need for an Ally Commercial Line of Credit. This is except for a bank reference and fleet financing references. There is no time in business requirement. Apply in person only. The dealer will say if you get approval or must provide a PG. Now that you’ve got the cars and the cards, let’s explore Turo.

Demolish your funding problems with 27 killer ways to get cash for your business.

What’s Turo, Anyway?

Turo is a peer-to-peer car sharing marketplace. You can book any car you want, wherever you want it, from a community of trusted hosts across the US, Canada, and the UK. Guests choose from a unique selection of nearby cars. Hosts earn extra cash to offset the costs of car ownership.

How Do Turo, Business Credit, and Business Ownership Work Together?

There are going to be times when some of the vehicles your fleet aren’t in use. This could happen if there’s a personnel change, or if an employee with an older vehicle gets an upgrade to a newer one. This could be a perk accompanying a promotion. Or an employee with a vehicle could be out for parental leave. But no matter how or why any vehicles are idle. you can be making money from them.

Turning the Idle Vehicles in Your Fleet into Moneymakers

Turo says you can make an average of $620 per month per vehicle. This comes from 2019 stats for hosts with twelve or more trips and “at least average quality metrics”. You can set your own price and availability dates. Make 70% of the price, or 80% if you can prove you have your own insurance and waive Turo’s coverage. Turo offers an array of coverage options with different percentages and deductibles. So you can choose what appeals most to you. Liability insurance comes from a policy issued to Turo by Liberty Surplus Insurance Corporation. They’re a member of the Liberty Mutual Group.

Bringing Out the Best in Your Vehicles to Make the Most Money

There are ways to make more money and get your vehicle out there to more riders, more often. Turo offers tips on taking better photographs of your car and listing your car’s options. as riders may be searching for things like all-wheel drive or air conditioning, etc.

Working with Turo

Turo will provide guidance on how to write better descriptions, and otherwise make a vehicle more appealing to riders. There is even a section on writing a business plan. Also – earnings go through Turo so you will get a 1099. And even making a few hundred per month per vehicle is a VAST improvement over letting a vehicle idle while you pay for parking and it depreciates! To end, let’s touch on personal guarantees for financing.

Vehicle Financing

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

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.

No PG 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 you won’t need to provide a personal guarantee for this type of financing if you have:

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.

Turo, Business Credit, and Growing Your Business: Takeaways

Use business credit to buy everything you need to run a fleet, from fuel to service. And use auto financing to buy the vehicles. Plus, you can make money with the idle vehicles in your fleet! Turn your fleet into a regular, reliable moneymaker – without having to pull any rabbits out of your hat. Let’s get together and talk about getting started.

The post Presto! Turn Your Commercial Fleet into a Turo Fleet appeared first on Credit Suite.

Commercial Loan for Real Estate Financing

What is a Commercial Loan for Real Estate Financing?

Commercial real estate (CRE) is income-producing property with just business (rather than residential) purposes. Examples include retail malls, professional offices such as for dentists, office buildings and complexes, and auto dealerships. Financing, including the acquisition, development, and construction of these properties, often comes from commercial real estate loans. These are mortgages secured by liens on the commercial property. So this is a commercial loan for real estate financing.

What is a Commercial Loan for Real Estate All About?

Commercial real estate loans are often made to business entities.

These include developers, corporations, limited partnerships, and funds and trusts. These entities are often formed for the specific purpose of owning commercial real estate.

But such a business entity may not have a financial track record or any credit rating. In that case the lender may require the principals or owners of the entity to guarantee the loan.

Hence a person (or group of people) puts their property on the line. In case of loan default, the lender can recover from them.

If the lender does not require this type of guarantee, and the property is the only means of recovery in the event of loan default, this debt is a non-recourse loan. It means the lender has no recourse against anyone or anything other than the property.

What are Typical Commercial Loan Terms for Real Estate?

Unlike residential loans, terms for commercial lending typically range from 5 years (or less) to 20 years. The amortization period is often longer than the term of the loan.

Amortization is an accounting technique. Its use is to periodically lower the book value of a loan or intangible asset over a set period of time.

A lender, for example, might make a commercial loan for a term of eight years, with an amortization period of 30 years. Here, the investor would make payments for eight years, of an amount based on the loan being paid off over 30 years.

Then one final balloon payment of the entire remaining balance on the loan follows.

The length of the loan term and the amortization period affect the rate the lender charges. Depending on the investor’s credit strength, these terms may be negotiable.

But in general, the longer the loan repayment schedule, the higher the interest rate.

Learn business loan secrets and get money for your business.

What are Loan-to-Value Ratios in a Commercial Loan for Real Estate?

LTV is a calculation measuring the value of a loan against the value of the property. A lender calculates LTV by dividing the amount of the loan by the lesser of the property’s appraised value, or its purchase price. For example, the LTV for a $80,000 loan on a $100,000 property would be 80% ($80,000 ÷ $100,000 = 0.8, or 80%).

Borrowers with lower LTVs will qualify for more favorable financing rates than those with higher LTVs. This because they have more equity (i.e., a stake) in the property. It works out to be less risk from the lender’s perspective.

Commercial loan LTVs tend to fall into the 65% to 80% range. While some loans may be made at higher LTVs, they are less common. The specific LTV will often depend upon the loan category

What is Debt-Service Coverage Ratio?

DSCR compares a property’s annual net operating income (NOI), to its annual mortgage debt service. This includes principal and interest. It measures the property’s ability to service its debt. You calculate it by dividing the NOI by the annual debt service.

For example, a property with $150,000 in NOI and $100,000 in annual mortgage debt service, would have a DSCR of 1.5 ($150,000 ÷ $100,000 = 1.5). The ratio helps lenders determine maximum loan size. That has a basis in the cash flow generated by the property.

What Does it Mean to Have a DSCR of Less than One?

A DSCR of less than 1 means a negative cash flow. For example, a DSCR of .93, means there is only enough NOI to cover 93% of annual debt service. In general, commercial lenders look for DSCRs of at least 1.25. This is to ensure adequate cash flow.

A lower DSCR may be okay for loans with shorter amortization periods, and/or properties with stable cash flows. Higher ratios may be required for properties with volatile cash flows. These include, for example, hotels. This is because hotels do not have long-term (i.e., more predictable) tenant leases, which other types of commercial real estate have.

What Sorts of Interest Rates and Fees Do You Typical Pay with Commercial Real Estate Financing?

Interest rates on commercial loans tend to be higher than on residential loans. Commercial real estate loans also often involve fees adding to the overall cost of the loan. These include appraisal, legal, loan application, loan origination, and/or survey fees.

Some costs must be paid up front before loan approval or rejection. Others apply annually. A commercial real estate loan may have restrictions on prepayment. The intention is to preserve the lender’s anticipated yield on a loan.

If investors settle the debt before the loan’s maturity date, chances are good they will have to pay prepayment penalties. See investopedia.com/articles/personal-finance/100314/commercial-real-estate-loans.asp.

Learn business loan secrets and get money for your business.

What are Some Types of Commercial Real Estate Loans?

You can invest in real estate with an SBA 7(a) loan, or an SBA 504 loan. Conventional bank loans are another option, as are hard money loans. Joint venture loans allow parties to share the risk and returns from commercial property investment, without having to formally enter into a real estate partnership.

You can get a commercial mortgage from Freddie Mac, or Fannie Mae. You can try credit unions, or even life insurance companies. Another option is HUD. See stacksource.com/commercial-mortgage-rates.

You can try an online marketplace loan, AKA a soft money loan. Here, interest rates are still higher than conventional bank loans. But they are lower than loans from hard money lenders. For the most part, online marketplaces match borrowers with shorter-term loans. These run from six months to a few years. See fortunebuilders.com/commercial-real-estate-financing-basics.

What Do Most Lenders Look for When Checking if You Qualify for Commercial Loan for Real Estate Financing?

This depends on the lender and the type of financing. What they check can include available collateral, borrower creditworthiness, and certain financial ratios dependent on characteristics of the property.

Borrowers may have to provide several years of financial statements and income tax returns. Lenders may also want to see financial statements indicating cash flow for the property to be financed. See reonomy.com/blog/post/commercial-real-estate-financing.

Check Out a Commercial Loan for Real Estate Financing from Credit Suite

Did you know Credit Suite offers commercial real estate financing? It ranges from $100,000 – $20,000,000. You can use this financing for refinancing a property, even if you are doing a cash-out refinance. Maximum LTV is 70%.

Loan-to-values range from 55 – 65%, depending on the purpose of the loan. Plus your clients can also get SBA loans. Renovations get loan to value of up to 60%.

Credit Suite has funding programs available including conventional property financing, money for investment properties and hard money loans, bridge loans and loans for the purchase of commercial real estate.

Get Commercial Real Estate Financing for All Types of Buildings!

Credit Suite offers financing for many different, even unique property types. Get funding for offices, industrial offices (this includes general or medical/dental), industrial facilities, light manufacturing buildings, and self-storage facilities.

With our commercial real estate financing, you can also get funding for mixed use properties, commercial condos, auto dealerships, light auto services, and day cares.

And you can even get funding for assisted living facilities, entertainment venues, multi-family properties, retail warehouses, and more.

Learn business loan secrets and get money for your business.

Check Out Details on Credit Suite’s Commercial Loan for Real Estate Financing Program

Approval amounts go up to $20,000,000. Bad credit is okay. Use the real estate as collateral. You will need to provide bank statements. A commercial real estate loan is a big step, let’s take it together.

A Commercial Loan for Real Estate Financing: Takeaways

Commercial real estate financing is for buying properties used solely for commercial purposes. Loan terms tend to be shorter than with residential loans. Plus there are added fees such as an appraisal of the property. You can get a commercial real estate loan from the SBA, HUD, conventional lenders, etc. Credit Suite offers a commercial loan for real estate financing for up to $20,000,000. Check out our terms.

The post Commercial Loan for Real Estate Financing appeared first on Credit Suite.

Commercial Loan for Real Estate Financing

What is a Commercial Loan for Real Estate Financing? Commercial real estate (CRE) is income-producing property with just business (rather than residential) purposes. Examples include retail malls, professional offices such as for dentists, office buildings and complexes, and auto dealerships. Financing, including the acquisition, development, and construction of these properties, often comes from commercial real … Continue reading Commercial Loan for Real Estate Financing

Separate Commercial and Consumer Credit in a Recession Phase

It’s a recession phase. You may have a new small business, or are now connected because you invested in one. Or maybe you have suddenly become an owner or a manager. No matter what, here is why you need to separate your commercial and consumer credit. This is especially vital during any recession phase. And yes, that includes during the coronavirus pandemic.

Separate Your Commercial and Consumer Credit and Protect Your Personal Assets During a Recession Phase

Small business credit is credit in a small business’s name. It doesn’t link to an owner’s personal credit, not even if the owner is a sole proprietor and the sole employee of the small business.

Consequently, an entrepreneur’s business and personal credit scores can be very different.

The Advantages When You Separate Your Commercial and Consumer Credit

Given that business credit is distinct from personal, it helps to secure a small business owner’s personal assets, in case of litigation or business insolvency. This truly matters most during a recession phase.

Also, with two distinct credit scores, a small business owner can get two different cards from the same vendor. This effectively doubles buying power.

Another benefit is that even new ventures can do this. Going to a bank for a business loan can be a recipe for disappointment. But building business credit, when done properly, is a plan for success.

Consumer credit scores depend on payments but also various other factors like credit use percentages.

But for business credit, the scores truly merely hinge on if a small business pays its debts on time.

Separate Your Commercial and Consumer Credit: The Recession Phase Process

Building small business credit is a process. It does not occur without effort. A company has to proactively work to build business credit.

However, it can be done readily and quickly, and it is much faster than developing personal credit scores.

Vendors are a big component of this process.

Undertaking the steps out of sequence leads to repetitive denials. No one can start at the top with company credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Separate Your Commercial and Consumer Credit and Build Small Business Fundability Even in a Recession Phase

A company needs to be fundable to lending institutions and vendors.

Therefore, a small business needs a professional-looking website and email address. And it needs to have website hosting from a supplier such as GoDaddy.

In addition, company telephone and fax numbers must have a listing on 411. You can do that here: http://www.listyourself.net.

Additionally, the company phone number should be toll-free (800 exchange or similar).

A company also needs a bank account dedicated purely to it, and it has to have all of the licenses essential for operating.

Licenses

These licenses all have to be in the particular, appropriate name of the small business. And they must have the same small business address and phone numbers.

So keep in mind, that this means not just state licenses, but possibly also city licenses.

Learn more here and get started with building small business credit with your company’s EIN and not your SSN. Get money even in a recession!

Separate Your Commercial and Consumer Credit by Dealing with the Internal Revenue Service During a Recession Phase

Visit the Internal Revenue Service web site and get an EIN for the small business. They’re free of charge. Pick a business entity like corporation, LLC, etc.

A small business may begin as a sole proprietor. But they absolutely need to switch to a type of corporation or an LLC.

This is to decrease risk. And it will maximize tax benefits.

A business entity matters when it involves taxes and liability in case of litigation. A sole proprietorship means the business owner is it when it comes to liability and taxes. No one else is responsible.

The best thing to do is to incorporate. You should only look at a DBA as an interim step on the way to incorporation.

Separate Your Commercial and Consumer Credit and Start Off the Business Credit Reporting Process During a Recession Phase

Begin at the D&B web site and get a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a business in their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the small business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.

In this way, Experian and Equifax have something to report on.

Starter Vendor Credit

First you need to build tradelines that report. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start to get credit for numerous purposes, and from all sorts of places.

These sorts of accounts have the tendency to be for things bought all the time, like marketing materials, shipping boxes, outdoor workwear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who give you starter credit when you have none now. Terms are in most cases Net 30, versus revolving.

So, if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.

Details

Net 30 accounts have to be paid in full within 30 days. 60 accounts must be paid completely within 60 days. Compared to revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you used.

To begin your business credit profile properly, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit – It Helps

Not every vendor can help in the same way true starter credit can. These are vendors that grant approval with marginal effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

As you get starter credit, you can also start to get credit from retailers. This is to continue to confirm you are trustworthy and pay on time. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

Uline

Uline is a true starter vendor. You can find them online at www.uline.com. They offer shipping, packing, and industrial supplies, and they report to Dun & Bradstreet and Experian. You MUST have a D-U-N-S number and an EIN before starting with them. They will ask for your company bank information. Your business address must be uniform everywhere. You need for an order to be $50 or more before they’ll report it. Your first few orders may need to be prepaid initially so your business can get approval for Net 30 terms.

How to apply with them:
Add an item to your shopping cart
Go to checkout
Select to Open an Account
Select to be invoiced

Crown Office Supplies

Crown Office Supplies is an additional true starter vendor. You can find them online at https://crownofficesupplies.com. They sell a variety of office supplies and take helping clients seriously. They state, “just starting your business, or maybe have an existing business, but you have a question regarding office supplies… we are here to help!” And they report to Dun and Bradstreet, Experian, and Equifax.

There is a $99.00 yearly fee, though they do report that fee to the business credit reporting bureaus. For other purchases to report, the purchase needs to be at least $30.00. Terms are Net 30.

Here’s how to qualify:
Your business entity must be in good standing with the applicable Secretary of State
You must have an EIN and a D-U-N-S number
Business address (it has to match everywhere)
Business license (if applicable)
A corporate bank account
Business must be at least 60 days old
Membership fee is $99 per year upon approval

Apply online.

Grainger Industrial Supply

Grainger Industrial Supply is also a true starter vendor. You can find them online at www.grainger.com. They sell hardware, power tools, pumps and more. They also do fleet maintenance. And they report to D&B. You must have a business license, EIN, and a D-U-N-S number.

To qualify, you need the following:
A business license (if applicable)
An EIN number
A company address matching everywhere
A company bank account
A D-U-N-S number from Dun & Bradstreet

Your corporate entity must be in good standing with the applicable Secretary of State. If your business doesn’t have established credit, they will require additional documents. So, these are items like accounts payable, income statement, balance sheets, and the like.

Apply online or over the phone.

Accounts That Don’t Report

Non-reporting trade accounts can also be helpful, even in a recession phase. While you do want trade accounts to report to at least one of the CRAs, a trade account which does not report can still be of some value.

You can always ask non-reporting accounts for trade references. And also credit accounts of any sort ought to help you to better even out business expenses, thus making budgeting easier. These are providers like PayPal Credit, T-Mobile, and Best Buy.

Store Credit

Store credit comes from a variety of retail companies.

You must use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications.

Fleet Credit

Fleet credit is from companies where you can purchase fuel, and repair and take care of vehicles. You must use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the small business’s EIN.

Learn more here and get started with building small business credit with your company’s EIN and not your SSN. Get money even in a recession!

Cash Credit

These are businesses like Visa and MasterCard. You must use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

These are often MasterCard credit cards.

Separate Your Commercial and Consumer Credit and Monitor Your Business Credit

Know what is happening with your credit. Make certain it is being reported and take care of any errors ASAP. Get in the practice of taking a look at credit reports. Dig into the particulars, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the business credit reporting agencies. See: www.creditsuite.com/monitoring.

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business.

Update Your Record

Update the information if there are errors or the information is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm . For Experian, go here: www.experian.com/small-business/business-credit-information.jsp . So for Equifax, go here: www.equifax.com/business/small-business.

Learn more here and get started with building small business credit with your company’s EIN and not your SSN. Get money even in a recession!

Separate Your Commercial and Consumer Credit and Fix Your Business Credit During a Recession Phase

So, what’s all this monitoring for? It’s to contest any mistakes in your records. Mistakes in your credit report(s) can be fixed. But the CRAs often want you to dispute in a particular way.

Get your company’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report inaccuracies typically means you send a paper letter with duplicates of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always send copies and keep the originals.

Fixing credit report errors also means you specifically detail any charges you challenge. Make your dispute letter as clear as possible. Be specific about the issues with your report. Use certified mail to have proof that you mailed in your dispute.

Dispute your or your business’s Equifax report by following the directions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute errors on your or your business’s Experian report by following the instructions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B’s PAYDEX Customer Service telephone number is here: www.dandb.com/glossary/paydex.

A Word about How to Separate Your Commercial and Consumer Credit During a Recession Phase

Always use credit smartly! Don’t borrow beyond what you can pay off. Keep track of balances and deadlines for repayments. Paying punctually and in full does more to raise business credit scores than pretty much anything else.

Growing company credit pays off. Good business credit scores help a business get loans. Your loan provider knows the business can pay its debts. They understand the business is authentic.

The business’s EIN attaches to high scores and lenders won’t feel the need to ask for a personal guarantee. This is particularly helpful during a recession phase.

Separate Your Commercial and Consumer Credit in a Recession Phase: Takeaways

Business credit is an asset which can help your company for many years to come. Learn more here and get started toward building company credit. The COVID-19 situation will not last forever!

The post Separate Commercial and Consumer Credit in a Recession Phase appeared first on Credit Suite.

How to Get a Commercial Line of Credit Right Now

Covid-19 has turned the world topsy turvy. There is no way around it. Most businesses need a little extra financial cushion at the very least. Most need much more than that. What happens in this post COVID-19 economy is literally unfolding as we watch. A commercial line of credit could be just the thing to keep your business going during a recession.

Get a Commercial Line of Credit Fast

The thing is, most business owners need money right now. That means you need the fastest, most cost-effective commercial line of credit that you can get. Why a line of credit rather than a loan? There are a few reasons, but one main reason.

Commercial Line of Credit vs. Loan

The most basic definition of a commercial line of credit is that it is a revolving credit, similar to a credit card. You have a limit and continuous access to that limit while making payments only on the portion you use each month.

For example, if you have a $10,000 line of credit, you can use however much of those funds you need each month for whatever you want, unless your lender issues some sort of restriction. If you use $2,000, then when you get your statement you will have to pay $2,000 plus the interest, rather than a payment plus interest on the entire amount of the loan.

If you were to pay $1,000, then spend another $500, you would pay on the $1,500 balance the next month. Your payments change as your balance changes. Just like with a credit card.

What is the advantage of a line of credit over a term loan? Flexibility, hands down. With a line of credit, you do not have to repay or pay interest on any amount that you do not use. You have access to the funds as needed, but you do not have to repay the entire amount unless you use the entire amount.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Commercial Line of Credit vs. Credit Cards

Now, you’re probably thinking that credit cards are super easy to get, and they work the same way. It’s revolving credit. You only use what you need. You only pay back what you need.

Why is one better than the other? In some cases, a credit card may be the better option. This is a choice to make based on several different factors.

The main difference between the two that most borrowers need to know is that a line of credit typically has a lower consistent interest rate. However, there are no perks like 0% interest or cash back that you sometimes see with credit cards.

Another benefit with a credit card is that it is typically unsecured credit, meaning you do not have to have collateral. Many credit lines do require security, or collateral.

Middle Ground: Credit Line Hybrid

There is middle ground between unsecured and secured credit, and between a commercial credit line and credit cards. It’s called a credit line hybrid. A credit line hybrid is revolving, unsecured financing that allows you to fund your business without putting up collateral, and you only pay back what you use. It’s quickly accessible, lower interest, and high limit. It’s the best of both worlds.

Who Qualifies for this Type of Commercial Line of Credit?

Who qualifies for a credit line hybrid? Well, if you have a personal credit score of at least 685, you’re off to a good start. In addition, you can’t have any liens, judgments, bankruptcies or late payments. Furthermore, in the past 6 months you should have less than 5 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards. It’s also preferred that you have established business credit as well as personal credit.

If you do not meet all of the requirements, it’s okay. You can take on a credit partner that meets each of these requirements. Many business owners work with a friend or relative to fund their business. If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding.

What are the Benefits of This Type of Commercial Line of Credit?

There are many benefits to using a credit line hybrid. First, as already mentioned, it is unsecured. That means you do not have to have any collateral to put up. Next, the funding is “no-doc.” You do not have to provide any bank statements or financials.

Not only that, but typically approval is up to 5x that of the highest credit limit on the personal credit report. Furthermore, frequently you can get interest rates as low as 0% for the first few months, allowing you to put that savings back into your business.

The process is pretty fast, especially with a qualified expert to walk you through it. One other benefit is this. With the approval for multiple credit cards, competition is created. That means it’s likely if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months.

Private Lenders: Another Way to Get a Commercial Line of Credit Fast

Private lenders generally operate online. They typically offer lines of credit to those with credit scores that are lower than what is generally required by traditional banks. In addition, often you can get the funds within a few days of application, rather than a few weeks. Here are a few examples.

Kabbage

Kabbage offers a credit line of up to $150,000 with no credit score required. The catch is that the interest rate is between 32 and 108%. The business must have been in existence for at least one year and have revenue of at least $50,000.

Due to the extremely high interest rate, this is really only an option for those businesses that cannot get financing due to a low or nonexistent credit score and need something immediately.

StreetShares

The credit line that StreetShares offers goes up to $100,000 for those who have a business credit score of at least 600. You also have to have been in business for at least one year, and have at least $25,000 in revenue. It requires weekly repayment.

This is a good option for smaller businesses that are okay in the credit department but have trouble meeting higher revenue criteria. Also, the interest rate minimum is lower than some. The low end at 9%.

OnDeck

If you have a credit score of at least 600 you can get a credit line of up to $100,000 with OnDeck . The interest rate is a little higher than some that require a higher credit score minimum. It ranges from 13.99 to 39.99 percent.

Again, due to the higher interest rate, this should only be an option if you cannot meet the higher credit score requirement with a lender that offers a lower interest rate.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Lending Club

The credit line at Lending Club goes up to $300,000. It requires a credit score of 600, at least one year in business, and $50,000 or more in revenue. The repayment term is 25 months. In addition, they require collateral for limits over $100,000.

This is a good option for those who meet the requirement as there is a higher limit available with collateral, and the interest rate can go as low as 6.25%. Also, the repayment terms are more manageable.

Credit Card Options

Of course, while not the perfect solution, credit cards are an option. You have to be careful, and you want to research to ensure you get the best rates and terms possible. Here are some to start with.

Brex Card for Startups

The Brex Card has no yearly fee. Also, you will not need a personal guarantee. However, this card does not work for every industry.

To determine creditworthiness, Brex checks a company’s cash balance, spending patterns, and investors. Rewards include 7x points on rideshare and 4x on Brex Travel. Also, you can get triple points on restaurants and get double points on recurring software payments. Get 1x points on everything else.

Capital One® Spark® Classic for Business

The Capital One® Spark® Classic for Business is another good one to consider. It has no annual fee, but there is also no introductory APR offer. The regular APR is a variable 24.49%. However, you can get unlimited 1% cash back on every purchase for your company and there is no minimum to redeem.

While this card is within reach if you have fair credit scores, beware of the APR. If you can pay promptly, and completely, it’s a good deal.

Ink Business Unlimited℠ Credit Card

The Ink Business Unlimited℠ Credit Card has no annual fee and a 0% introductory APR. After that expires, the APR is a variable 14.74 to 20.74%.

Earn unlimited 1.5% cash back rewards on every purchase made for your company and get $500 bonus cash back after spending $3,000 in the initial 3 months from account opening. Rewards rewards for cash back, gift cards, travel and more using Chase Ultimate Rewards®. You will need superb credit to get approval for this card.

Blue Business® Plus Credit Card from American Express

The Blue Business® Plus Credit Card from American Express has no no annual fee and either, and it also has a 0% introductory APR for the first year. After that, the APR is a variable 14.74 to 20.74%.

Get double Membership Rewards® points on everyday business purchases like office supplies or client dinners. This applies to the first $50,000 spent each year. You get 1 point per dollar after that. Your credit has to be really good to qualify.

American Express® Blue Business Cash Card

Another one to check out is the American Express® Blue Business Cash Card. It is identical to the Blue Business® Plus Credit Card from American Express. However its rewards are in cash instead of points. You get 2% cash back on all eligible purchases up to $50,000 per calendar year. After that, it’s 1%.

There is no yearly fee, and there is a 0% introductory APR for the first one year. Afterwards, the APR is a variable 14.74 to 20.74%. You will need awesome credit to qualify for this card.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Capital One ® Spark® Cash for Business

The Capital One® Spark® Cash for Business card is another great option. It has an introductory $0 annual fee for the first year. After that, it costs $95 per year. There is no introductory APR deal. The regular APR is a variable 18.49%.

You can get a $500 one-time cash bonus after spending $4,000 in the first 3 months from account opening. Also, you get unlimited 2% cash back. YOu can rRedeem any time without any minimums. You will need fabulous credit scores to qualify.

Discover it® Business Card

Another good one is the Discover it® Business Card. It has no yearly fee. There is an introductory APR of 0% on purchases for twelve months. Then, the regular APR is a variable 14.49 to 22.49%.

You get unlimited 1.5% cash back on all purchases, with no category restrictions or bonuses. Also, they double the 1.5% Cashback Match™ at the end of the first year. There is no minimum spend requirement either.

You can download transactions easily to Quicken, QuickBooks, and Excel. This one also requires great credit scores.

The thing with credit cards is, you have to be so careful. As with all debt, payments must be made on time. However, the higher interest rates make this a little harder than it typically is with a commercial line of credit.

A Commercial Line of Credit Can Help You Right Now

In this post COVID world, most business owners need money fast. A commercial line of credit is the best way for that to happen, especially if you can get a credit line hybrid. Truly, with the ability to use a credit partner, virtually everyone can access this type of funding. It’s low interest, high limit, fast access to the funds you need to make sure your business thrives regardless of the state of the economy.

The post How to Get a Commercial Line of Credit Right Now appeared first on Credit Suite.

How to Get a Commercial Line of Credit Right Now

Get to Know Experian Commercial

What is Experian Commercial all about? What are details about its most important scores? Check out the details on this major business credit reporting agency. Plus, find out how to improve your business credit scores with Experian. And learn how to monitor your scores for 90% less than it would cost at that business CRA. Understanding and improving your business credit scores is more important than ever in a recession. With Experian, there is a lot you can do to keep your scores high.

So in particular, Experian reports on both business and personal credit. In fact, they blend the two. And this is virtually always what happens with startup ventures. Therefore, by keeping your personal credit scores high, you can directly influence your business credit scores.

Business Credit and Experian Commercial

Let’s look at business credit, even in a recession. Business credit is credit which is in a business’s name. So it is not tied to the owner’s creditworthiness. Instead, business credit scores mainly depend on how well a company can pay its bills. Hence, consumer and business credit scores can vary dramatically. So this is true for Experian as well.

Consider the main credit reporting agencies. There are three large business credit reporting agencies. So they are Dun & Bradstreet; Equifax; and Experian. There is also a FICO SBSS business score. But let’s concentrate on Experian Commercial today. Knowledge is power. And at no time is that more important than during a recession.

What Sort of Data Does Experian Commercial Use?

Experian, like the other business credit reporting bureaus, focuses on providing quality data and analytics. They offer this info to businesses to help them better assess risk. They have a massive consumer and commercial database. So they manage it to help businesses get the best and most up to date info. Experian extracts significant extra value with this data. So they do so by applying their own proprietary analytics and software.

Experian uses both consumer and business credit information to gauge risk.

“By combining personal and commercial credit information in one report, Experian provides a complete picture of the creditworthiness of small businesses”.

See: experian.ae/en/credit-services/index.

Experian PLC is listed on the London Stock Exchange (EXPN). And it is also in a constituent of the FTSE 100 Index.

Keep your business protected with our professional business credit monitoring. Save money even during a recession.

Experian Commercial: The Experian Intelliscore Plus℠ Score

Now let’s look at Experian’s Intelliscore Plus business credit score. For Intelliscore Plus, business credit scores range from 0 to 100. So 0 represents a high risk and 100 represents a low risk. The 0 to 100 part is a percentile score. It shows the percentage of businesses scoring higher or lower than the business under review.

Intelliscore Plus is widely used. Many large financial institutions around the world use it. So do more than half of the top 25 property and casualty insurers. And so do most major telecommunications and utility firms. Industry leaders in transportation, manufacturing, and technology also use Intelliscore Plus as their main risk indicating model.

Intelliscore Plus has more than 800 aggregates or factors. These affect business credit scores. There are scores on the millions of businesses in the Experian database. It is a percentile score.

What does Intelliscore Plus measure? It is a highly predictive score. It provides a detailed and accurate reflection of a business’s risk. Intelliscore Plus blends commercial data with the consumer data for the business owner or guarantor.

The Intelliscore Plus℠ Analytical Approach

Check out various Intelliscore Plus analytical approaches. Intelliscore Plus uses three separate analytical approaches to provide risk insights for small businesses.

The Emerging Market Model

The first analytical approach is business data including an emerging market model. That one is designed for microbusinesses.

The Blended Model

The second analytical approach is a blended one. This model incorporates business and consumer credit information on the owner or guarantor. Experian uses a cascading approach when combining the differing data sources.

The Consumer Data Only Model

So this third analytical approach is a consumer data only model. It is for startups because they have no business history.

For more information on these three analytical approaches, see: experian.com/content/dam/marketing/na/assets/bis/business-information/brochures/intelliscore-plus-v2-product-sheet.pdf

Get to Know the Data in an Intelliscore Plus℠ Report

So, which data is in an Intelliscore Plus report? The report contains key information like business address, how long a business has been in Experian’s database, etc. It also has legal filings and collections that may impact business performance. There is a summary of the number of trades, amount of credit extended, etc. And there is a summary of the owner or guarantor’s consumer credit account performance. This includes bank cards, revolving, auto lease, and real estate accounts.

More Data Details

More data includes business credit information like the number of days beyond terms. There’s also the Intelliscore Plus score and the business’s risk class. The report also has owner account information and derogatory information like collections, etc.

For more information on Intelliscore Plus reports, see: bci2experian.com/wp-content/uploads/2017/01/2013-06-Enhanced-Risk-Assessment.pdf

Keep your business protected with our professional business credit monitoring. Save money even during a recession.

Experian Commercial: The Experian Financial Stability Risk Score

Check out the Experian Financial Stability Risk Score (FSR). The FSR predicts the potential of a business going bankrupt or defaulting on its obligations. The score identifies the highest risk businesses by making use of payment and public records. These records include severely delinquent payments of 61 or more and 91 or more days. They also include high utilization of credit lines; tax liens; judgments; collection accounts; industry risk; and short time in business, etc.

The Financial Stability Risk Score shows a 1 to 100 percentile score, plus a 1 to 5 risk class. The risk class puts businesses into risk categories. So the highest risk is in the lowest 10% of accounts.

For more information on the Financial Stability Risk Score, see: experian.com/content/dam/marketing/na/assets/bis/business-information/brochures/financial-stability-risk-score-ps.pdf

What if you have a score of 66 to 100? And you have a risk class of 1? Then it means there is a low risk of default or bankruptcy. But what if you have a score of 1 – 3? And you have a risk class of 5? Then it means there is a high risk of default or bankruptcy.

Experian Commercial: Derogatory Data

So, how long does derogatory data stay in Experian’s database? Trade data stays on your report for 36 months. So does bank, government, and leasing data. Uniform Commercial Code filings stay on your report for 5 years. So note: Uniform Commercial Code filings are in support of loans.

Judgments, collections, and tax liens all stay on your report for 6 years and 9 months. And bankruptcies stay on your report for 9 years and 9 months.

For more information on derogatory data in Experian Commercial reports, see: experian.com/small-business/how-long-credit-report

Experian Commercial: Improving Your Company’s Experian Reports

To improve your credit terms, you should be looking at improving your company’s Experian reports. Also make sure vendors are reporting your payments. The more vendors which report a positive credit history to the credit reporting agencies, the better. Because then the higher your business credit rating will be. And this is not just the case with Experian.

So improving your scores is pretty straightforward. Always pay your bills early or on time and pay them in full. Try to maintain a balance at about 20 to 30% of your limits or less. Do not close positive accounts. And try to avoid derogatory report entries like tax liens.

This advice works just as well for personal credit as for business credit. Because Experian reports on both – and blends them – doing the same good things for both types of credit is helpful. Because it will help you even more.

Keep your business protected with our professional business credit monitoring. Save money even during a recession.

Experian Commercial: Business Credit Monitoring

To improve your Experian business credit scores, you should be looking into Experian business credit monitoring. Experian offers monitoring services. So these prices are current as of June 2020. Business Credit Advantage costs $189 per year. You can monitor business credit for one year. And you’ll get alerts of changes.

Business Credit Score Pro costs $249 per month. So it gives you access to multiple business credit reports. And Profile Plus costs $49.95 for a single report. So a Credit Score Report costs $39.95. With that one, you will get a credit summary report with a score. Or you can monitor your business credit with us for 90% less.

Experian Commercial: Takeaways

So Experian gathers diverse data to attempt to understand risk. And Experian works to predict a business’s chance of going delinquent on payments or bankrupt. They combine business and personal credit info for business owners or guarantors. This provides a more detailed picture of risk.

But derogatory data will stay on your Experian business credit reports for years. You can improve your Experian Commercial report by acting to better manage your finances.

And as you improve your personal credit scores with Experian, that will directly affect your business credit scores. Responsible financial stewardship is not just a good idea; it will likely save you money! So with better scores come better rates. Plus, you will have more choices. You will not have to settle for the one and only loan or credit card you can get.

Monitoring your business credit reports with Experian will also help you improve your reports. We offer competitively priced monitoring of your Experian business credit reports.

The post Get to Know Experian Commercial appeared first on Credit Suite.

Do You Understand Your Commercial Credit Report?

Lenders often look at your commercial credit report in addition too, or in lieu of, your personal credit score. As you know, they use the information on the report to help them decide if your business is a good credit risk, or a bad one.

Your Commercial Credit Report Can Affect the Fundability of Your Business

So, why is it important to understand your commercial credit report? The answer is, because what your commercial credit report says greatly affects the fundability of your business. Of course, there are many factors that affect fundability, and it is important to understand each of them. However, there are many pieces to the fundability puzzle and it is best to understand each one individually.

Keep your business protected with our professional business credit monitoring.

Commercial Credit Report: Dun & Bradstreet

Dun & Bradstreet offers six different reports. Truly, the one utilized most often by lenders is the PAYDEX. Honestly, this is probably because it is the one most like the consumer FICO score. You see, it measures how quickly a company pays its debt on a scale of 1 to 100. For reference, lenders like to see a score of 70 or higher. To put it in perspective, a score of 100 reveals the firm makes payments ahead of time. A rating of 1 shows they pay 120 days late, or more.

Together with PAYDEX, they offer the following scores and reports.

Delinquency Predictor Score

As you might imagine, this rating determines the chance the company will not pay, will be late paying, or will come file for bankruptcy. For scoring, the range is 1 to 5, with 2 being a good score.

Financial Stress Score

Not surprisingly, this is a measurement of the pressure on a firm’s balance sheet. It shows the possibility of a closure within a year. The range is 1 to 5, and a 2 is good.

Supplier Evaluation Risk Rating

This is a ranking that predicts the odds of a firm surviving one year. Similarly, it ranges from 1 to 9, with a 5 being a good score.

Credit Limit Recommendation

As the name implies, this is a recommendation for the amount of debt a company can handle. Financial institutions usually use it to establish how much credit to extend.

D&B Credit Rating

This is an estimation of overall business risk on a scale of 4 to 1, where a 2 is considered good. The smaller the number the better. The rating is given as a combination of numbers and letters, which together show a company’s net worth.

Consequently, if there isn’t enough data on a business to assign a regular rating, an alternative score is assigned. This is called a credit approval score. It is based on the number of employees. They will use any data they have available to calculate this alternative rating. That means, a company can control this to a point by ensuring D&B has all of the information they need.

Commercial Credit Score

Along with the PAYDEX, Dun & Bradstreet releases a commercial credit report in three components. Each part shows how likely the business is to default on expenses or become seriously late on payments.

Commercial Credit Score

On a range of 101 to 670, the commercial credit score anticipates the likelihood of a firm making late payments. A rating of 101 indicates it is very likely that the company will be late with payments. Likewise, a score of around 500 is good.

Commercial Credit Percentile

For this measurement, the scale runs from 0 to 100. It shows the chance of delinquency too. However, it determines this probability versus other companies in the Dun & Bradstreet system. A rating of 1 is the highest possible probability in relation to other companies. The majority of loan providers consider a rating of 80 or higher to be an advantage.

Commercial Credit Class

In contrast to the other reports, this is an approach of dividing businesses into classes based on the chance of delinquency. Firms in class 1 are the least likely to be overdue. Likewise, if you are in class 2, that’s still good.

What Goes into the D&B Commercial Credit Report Ratings Calculation?

The exact formula used by Dun & Bradstreet to calculate their ratings is proprietary. What we do know is what information they look for and where they get it. The initial source of this information is the business itself.

A business must submit a financial statement to D&B before getting a full rating. Without that, a business gets a limited rating based on the number of employees. For example, the rating would be 1R if the business has 10 employees or more. But it’s 2R if they have fewer than 2 employees.

With no financial statement, a composite credit appraisal can still be issued. However, a business is only eligible for a rating up to a 2 in this case. They are ineligible for a 1 rating without a financial statement.

Businesses can also submit trade references to Dun & Bradstreet themselves. The catch is, it costs money to do so. Furthermore, there is no guarantee it will result in a score increase. Anyway, if you are properly building business credit it will happen for free.

Keep your business protected with our professional business credit monitoring.

Besides getting data from the business, Dun & Bradstreet also accesses public records. They look for liens and bankruptcies, and anything to show creditworthiness, or a lack thereof. They also partner with the Small Business Finance Exchange to access data from their records.

Commercial Credit Report: Experian Business Credit Scores

Experian gathers data from a lot of the same sources as Dun & Bradstreet. As a result, their reports are similar. There are a few key differences in sources, calculation, and also presentation however.

Intelliscore Plus

Experian uses the Intelliscore Plus credit score, which shows a statistics-based credit risk. The result is, it is a highly predictive score that can help users make well-informed credit decisions.

The Intelliscore scores range from 1 to 100, with a higher score indicating a lower risk class.

Score Range Risk Class

Low Risk	76-100
Low-Medium Risk	51-75
Medium Risk	26-50
High-Medium Risk	11-25
High Risk	1-10

Exactly How Does Experian Compute the Intelliscore Rating?

One of the things Intelliscore is most known for is the list of specific key factors they use that can indicate how likely a business is to pay its debt. In fact, over 800 variables go into the Intelliscore Plus calculation. Many of them are from the general information all credit agencies look at. However, some are unique to Experian. Here’s a breakdown.

Payment History

As you might imagine, this is your current payment status. That means, it shows how many times accounts have become delinquent. It also shows how many accounts are currently delinquent, as well as the overall trade balance.

Frequency

Frequency shows how many times your accounts have gone to collections. In addition, it notes the number of liens and judgments you have. Also, it shows any bankruptcies related to your business or personal accounts.

It also incorporates information about your payment patterns. Were you regularly slow or late with payments? Did you decrease the number of late payments over time? That affects your score.

Monetary

This specific factor focuses on how you use credit. For example, how much of your available credit are you utilizing right now? Do you have a high ratio of late balances when compared with your credit limits?

Of course, if you are a new business owner, a lot of this information will not exist yet. Intelliscore Plus handles this by using a blended model to identify your score. This means your personal credit score becomes part of determining your business’s credit score.

Experian’s Blended Score

Surprising to some, the blended score is a one-page report that provides a summary of the business and its owner. A combined business-owner credit scoring model works better than a business or consumer only model. In fact, blended scores have been found to outperform consumer or business scores alone by 10 – 20%.

Experian Financial Stability Risk Score (FSR)

FSR predicts the potential of a business going bankrupt or not paying its debts. Consequently, this score identifies the highest risk businesses by using payment and public records. They look at a number of factors, some of which include:

high use of credit lines
severely late payments
tax liens
judgments
collection accounts
risk industries
length of time in business

Commercial Credit Report: The Equifax Service Credit Rating

Similarly, Equifax shows three different points on its commercial credit report. These include:

Equifax Payment Index

Similar to PAYDEX, Equifax’s payment index is a measurement on a scale of 100. It shows how many of your small business’s payments were made on time. Like the others, it uses data from both creditors and vendors. However, it’s not meant to anticipate future behavior. That is what the other two scores are for.

Equifax Credit Risk Score

This score shows the likelihood of your company becoming severely delinquent on payments. Scores range from 101 to 992 and include an evaluation of:

Keep your business protected with our professional business credit monitoring.

Available credit limit on revolving credit accounts, including credit cards
Company size
Proof of any non-financial transactions (like merchant invoices) which are late or were charged off for two or more billing cycles
Length of time since the opening of the earliest financial account

Equifax Business Failure Score

Equifax’s business failure score takes a look at the risk of your business shutting down. Similar to others, it runs from 1,000 to 1,600 and bases its scoring on these factors:

Total balance to total current credit limit in the past three months
The amount of time since the opening of the oldest financial account
Your small business’s worst payment status on all trades in the last 24 months
Proof of any non-financial transactions, like merchant invoices, which are late or are on a charge off for two or more billing cycles

For the credit risk and the business failure scores, a rating of 0 means bankruptcy.

Equifax Scores

A positive Equifax score for your business is as follows:

Payment Index 0 to 10
Credit Risk score 892 to 992
Business Failure score 1400 to 1600

Are These the Only Agencies Where You Can Get a Commercial Credit Report?

Actually, there are multiple other agencies that will issue a commercial credit report. It’s just that these three are the most commonly used. Still, there has been an increase in the use of another option recently. It’s the FICO SBSS.

Commercial Credit Report: What is the FICO SBSS?

The FICO SBSS is the business variation of your personal FICO credit report. Unlike your personal FICO, the SBSS reports on a scale of 0 to 300. The higher the score the better. However, the majority of loan providers demand a rating of least 160.

How Do They Come Up with The FICO SBSS Score?

Surprisingly, it is significantly different from other business credit scoring designs. The SBSS utilizes your corporate credit score and personal credit rating. It also makes use of monetary details like business assets and income. As you can see, the goal is to give an overall financial picture rolled into one rating.

Unfortunately, business owners cannot access their FICO SBSS by themselves. There is a proprietary formula for score computations. Furthermore, they do not make that data public. As a result, you go into lending institutions blind as to what your FICO SBSS credit rating might be.

Complicating things even more, lenders can choose how certain factors are weighted in the calculation of your score. This means your FICO SBSS could actually be different from one lender to the next. For example, one lender could put more weight on your business payment history, while another could lean more on your personal credit score.

How Does Your Commercial Credit Report Affect Overall Fundability?

As I said before, overall business fundability is an intricate web woven out of your business information, business credit, organization, personal credit, public records and more. Your business credit, though only one part, is a large part of the fundability puzzle. This means, you need to know what your commercial credit report says, why it says it, how it is affecting the fundability of your business, and how to make changes when necessary.

The post Do You Understand Your Commercial Credit Report? appeared first on Credit Suite.

Discover the Three Ratios That Are Used to Determine Commercial Lending

If you do not recognize exactly how to assess as well as provide the building correctly to a business genuine estate loan provider, obtaining cash for your industrial job can be fairly an obstacle. Prior to offering your residential or commercial property to a possible lending institution it is essential to identify one of the most potential proportions that the lending institution is mosting likely to make use of in choosing to offer you the cash.

Since of the dimension of the finances, there is a boosted danger with industrial actual estate fundings. Thousands of thousands to countless bucks are lent on industrial homes and also jobs. An industrial lending institution intends to ensure that she or he will certainly obtain their cash back from the created earnings of the residential or commercial property.

If they will certainly lend the cash on a task, many loan providers will certainly utilize the adhering to 3 proportions to establish.

The very first proportion is the financial debt insurance coverage proportion or DCR. The DCR relates to the building itself as well as just how much revenue it is creating contrasted to the financial debt solution, or just how much cash is paid in the direction of the home mortgage on a regular monthly basis. It is shared by the web operating earnings split by the complete financial debt solution.

The financial debt solution is established by the home mortgage terms, such as passion price, size of the financing, as well as exactly how usually a repayment is made. Lots of loan providers need a DCR over 1.2 in order to consider it a fairly secure financial investment. A lending institution does not desire to lending cash on a task that is not able to cover its financial debt solution.

The 2nd proportion is the loan-to-value proportion. If you can obtain a loan-to-value proportion of 75%, then that is normally an excellent number.

Take into consideration that a bonus offer if you can obtain even more than 75% of the worth lent to you. Loan provider’s standards as well as policies might vary significantly relying on just how much they agree to run the risk of on the job.

The 3rd proportion is the financial debt proportion. The financial debt proportion is revealed by splitting month-to-month real estate costs by gross regular monthly revenue.

Numerous business lending institutions will certainly not approve a financial obligation proportion higher than 25%. A financial debt proportion better than 25% stands an excellent possibility of having budget plan troubles.

The reduced financial debt proportion you have, the most likely you will certainly have the ability to obtain financing for your smaller sized business job.

Prior to coming close to any kind of lending institution, it is truly essential to examine these proportions by yourself. They concern your certain offer for which you wish to obtain funding. By doing the proportion evaluation by yourself, you can much better establish if funding will certainly be hard or very easy to acquire, relying on the nature of the job as well as its degree of threat.

It might be an excellent suggestion to speak to a number of possible lending institutions and also ask their fundamental requirements as well as standards that they adhere to in reviewing residential properties. You might locate that some lending institutions are much more traditional than others.

By recognizing your residential or commercial property, you can much better fit a lending institution to your certain requirements. Keep in mind that personal lending institutions can be very handy with those dangerous offers that public loan providers will certainly not also think about. Make certain that you are well outfitted with the appropriate info and also sustaining paperwork regardless of what lending institution you come close to.

The initial proportion is the financial obligation protection proportion or DCR. The 2nd proportion is the loan-to-value proportion. The 3rd proportion is the financial obligation proportion. Several industrial lending institutions will certainly not approve a financial debt proportion better than 25%. Prior to coming close to any kind of lending institution, it is truly essential to assess these proportions on your very own.

The post Discover the Three Ratios That Are Used to Determine Commercial Lending appeared first on ROI Credit Builders.

Discover the Three Ratios That Are Used to Determine Commercial Lending

If they will certainly lend the cash on a task, many loan providers will certainly utilize the adhering to 3 proportions to establish.

The 2nd proportion is the loan-to-value proportion. If you can obtain a loan-to-value proportion of 75%, then that is normally an excellent number.

The 3rd proportion is the financial debt proportion. The financial debt proportion is revealed by splitting month-to-month real estate costs by gross regular monthly revenue.

The reduced financial debt proportion you have, the most likely you will certainly have the ability to obtain financing for your smaller sized business job.

The post Discover the Three Ratios That Are Used to Determine Commercial Lending appeared first on ROI Credit Builders.