Is It Too Good to Be True? An In-Depth Kabbage Review

As a general rule, if something seems too good to be true, it is. Kabbage offers fast, flexible financing. Approval is easy to obtain, and in most cases, you can have funds in just a few minutes. In addition, their minimum eligibility requirements are much easier to meet than some others. Wondering if Kabbage is right for you? Our in-depth Kabbage review can answer that.

Is Kabbage Right for You? Find Out in Our Complete Kabbage Review

Kabbage is one of several lending companies online. It provides small business funding in the form of a line of credit. Now, I reveal the details about this online lending option in my in-depth Kabbage review.

Kabbage Review: Basic Background

Kabbage is a venture funded company that is backed by investors which include SoftBank Capital, Thomvest Ventures, Reverence Capital Partners, Mohr Davidow Ventures, the UPS Strategic Enterprise Fund, ING, BlueRun Ventures, Santander InnoVentures, Scotiabank, and TCW/Craton.

The company offers perks for its customers. These include specials from Dun & Bradstreet, UPS, Vonage, and Adobe Creative Cloud among others.

Find out why so many companies use our proven methods to get business loans.

Kabbage Review: What You Need to Know about Kabbage Loans

First, they offer lines of credit. This means it is revolving credit you can use as needed. For most, amounts of up to $250,000 are available. You can qualify in as little as 10 minutes. Furthermore, terms are 6, 12, or 18 months. You have to be in business for more than one year, and your business revenue has to be $50,000 annually or $4200 per month over the last 3 months.

Kabbage Review: Credit Reporting and Score Requirements

In the course of this Kabbage review, I could not find anything concrete about a credit score requirement or credit reporting. I did find other reviewers that had contradicting information. For example, one claimed there was no minimum interest rate requirement. In contrast, another claimed that the minimum interest rate for application approval is 500. Another put the minimum at 560. Whatever the case, it appears that their minimum required credit score is much lower than others in the field. In addition, one reviewer stated that they do not report on-time payments to the credit agencies, but they may report late or missed payments.

The only thing concrete I could find from Kabbage themselves is that they do a one-time hard credit pull. A hard credit check will affect your credit score. Also I found this information in the FAQs on the Kabbage website. It wasn’t just out there on a top page.

Kabbage Review: Approval and Receipt of Funds

Kabbage links to your bank or merchant accounts to understand your cash flow and decide what amount you can afford to borrow. Their lines of credit range from $1,000 to $250,000.

For lines of credit up to $200,000, if they are able to automatically get business information and verify your bank account, they can approve a loan in minutes. Amounts over $200,000 must have a manual review. Sometimes, mistakes happen during the sign-up process. Also, they may send small deposits to help confirm your banking information for security purposes. In these cases, it may take longer to get access to funds.

Once everything is settled, they send funds to the account of your choice. If you choose to have your funds deposited to a PayPal account, it takes just a few minutes. However, loans that go to a business checking account can take up to three days to be deposited. It just depends on your bank.

They retain access to your account. This means they can review your revenue faster than other lenders. Still, it also means they have access to your account for the duration and beyond unless you take action.

If you make a draw using the dashboard or app, you have to take a minimum of $500. In contrast, if you use your Kabbage card there is no minimum draw.

Kabbage Review: Interest Rate vs. Fees

Kabbage uses a monthly fee model rather than an annual percentage rate. Fees range from 1.5 – 10%. This sounds fabulous, of course, but you need to look a little closer. First, the fee amount is based on business performance factors. This is similar to how traditional lenders assign interest rates, so not really a big deal.

The problem comes in with how the fee is actually applied. They are forthright about this on their site, but you do have to dig around and do some research to fully understand it. They offer a calculator to help you. Use it. I gave it a shot, and according to the calculator on the Kabbage website, a $30,000 loan paid out over 6-months at a 3% fee would result in a total of $33,300 total being paid back. If you do the math on that, you are paying back an effective 11% interest rate, if it were interest and not a fee.

Three percent of $30,000 is $900. You pay that $900 fee each month for the first two months, and the $375 per month for months 3-6. While I could not find an explanation on the reduction in fee over the last 4-months, it could have to do with the reduction in principal. The issue is, you end up paying way more in fees than it may appear until you dig a little deeper. With fees going up to 10%, it is imperative that you use the calculator to get a true understanding of loan cost on the front end.

Kabbage Review: What Does Kabbage Say About the Issue?

Here is how Kabbage explains it on their site:

“Kabbage’s maximum rate for each month is 10%. Third party partners may occasionally charge up to an additional 1.5% for each month. Every month you’ll pay back 1/6 of the total loan (for 6 month loans), 1/12 of the loan amount (for 12 month loans), or 1/18 of the total loan (for 18 month loans) plus the monthly fee. Your actual fee rate if qualified is based on a review of your revenue and credit history. For more details, read about our Rates & Terms.”

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Kabbage Review: Does Kabbage Make Loans to Everyone?

The short answer is no. They state that they do not extend credit to those businesses dealing in “marijuana, CBD, firearms, gambling, financial institutions, lending or non-profit organizations.” However, there is a footnote on firearms that states only specific businesses dealing in firearms are excluded. Consequently, some firearms dealers are eligible. If this is you, be sure to do your due diligence.

Speaking of Due Diligence: Ratings and Reviews

I never write reviews without checking out the reviews of others. Consequently, this Kabbage review is no different. I find it wise to start at the Better Business Bureau. Kabbage has an impeccable BBB file. They have been accredited since 2014. In addition, they have an A+ rating. Also, there are over 180 reviews and they are overwhelmingly positive. As a result, they have a rating of 4.5 stars. Most of the positive reviews were noting how fabulous customer service is.

The one negative review I found, though I admittedly stuck to the ones in the most recent year, was related to the person not fully reading the information on the website or asking questions. There are 49 complaints on their BBB file, which are separate from reviews. With complaints, Kabbage can respond. From what I can see, they responded each time and either made the situation right, or they answered the issue with how the customer simply did not understand the process as it was clearly written on the website.

In addition to the BBB, I looked at other review sites when conducting my Kabbage review. Other sites had more negative information. Virtually all of the negative reviews were related to either unexpectedly high payments, credit inquiries, or bank account access. It appears that, due to ongoing account access, they can draft payments from your account. While they do disclose this, it seems a lot of borrowers miss it. As you can imagine, this results in some overdrawn bank accounts.

Kabbage Review: The Final Decision on Kabbage

My final opinion after my Kabbage review is, they will do in a pinch but try to find something better first. It appears that they truly stand by what they do and offer a legitimate product. They do not lie about anything or misrepresent themselves in any way.

However, the fee model is confusing even to those that work with finances every day, like me. It could be seen as a ploy to make it appear that interest rates are 1.5% to 10%, when in fact there is no actual interest rate, and the fees are much higher than it sounds. The information is all there, but you do have to look for it.

I highly recommend, if you choose to take out a line of credit with Kabbage, you do complete and thorough research. Read through positive and negative reviews on the BBB and on other sites, and read all of the FAQs on the Kabbage website, along with the footnotes.

How Do I Find Something Better?

That’s the million-dollar question isn’t it? Most people use a service like Kabbage because it is easier to get approval with a poor credit score. My Kabbage review convinced me that if you can get funding that costs less, you should. To do this, you need to increase fundability. The truth is, your credit, both business and personal, are only a small piece of the complete fundability of your business.

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What is Fundability?

At its core, fundability is the ability to get funding for your business. When a lender considers lending to your business, do they feel that you are high risk? Do you appear to be a business that can and will pay back the debt? Lenders are in it for the money, and they need to feel they will get a return on their investment. Truly, a high credit risk is not a wise lending choice.

How Do You Increase Your Fundability?

The harder question is how does a business increase their fundability? What makes this answer difficult is that there is so much the answer must cover. As I mentioned, a great business credit score is important. However, there is a lot more to it.

A potential creditor needs to see that your business is legitimate and profitable. Many loan applications are denied approval due to fraud concerns. Others, simply because something didn’t match up and threw up a red flag. Maybe the addresses or phone numbers didn’t match on a couple of reports and it just looks unprofessional.

Make Sure Your Business Is Set Up to Be Fundable

It has to be set up to appear to be a fundable entity separate from you, the owner. How do you accomplish this? Make sure your business has a fundable foundation. The building blocks of a fundable foundation include:

Separate Contact Information
An EIN
Incorporation
Dedicated Business Bank Account
All Necessary and Proper Licenses
Professional Business Website

In addition to a fundable foundation, the following factors affect fundability.

Business Credit Reports

The next piece of the fundability puzzle after the fundable foundation is your business credit report. That is the credit report, much like your consumer credit report, that details the credit history of your business. It is a tool to help lenders determine how credit worthy your business is.

Where do business credit reports come from? There are a lot of different places, but the main ones are Dun & Bradstreet, Experian, Equifax, and FICO SBSS. Since you have no way of knowing which one your lender will choose, you need to make sure all of these reports are up to date and accurate.

Other Business Data Agencies

In addition to the business credit reporting agencies that directly calculate and issue credit reports, there are other business data agencies that affect those reports indirectly. Two examples of this are LexisNexis and The Small Business Finance Exchange. These two agencies gather data from a variety of sources, including public records. This means they could even have access to information relating to automobile accidents and liens. While you may not be able to access or change the data the agencies have on your business, you can ensure that any new information they receive is positive. Enough positive information can help counteract any negative information from the past.

Identification Numbers

In addition to the EIN, there are identifying numbers that go along with your business credit reports. When considering what is fundability, you need to be aware that these numbers exist. Some of them are simply assigned by the agency, like the Experian BIN. One, however, you have to apply to get. It is absolutely necessary that you do this.

Dun & Bradstreet is the largest and most commonly used business credit reporting agency. Every credit file in their database has a D-U-N-S number. To get a D-U-N-S number, you have to apply for one through the D&B website.

Business Credit History

Your credit history has everything to do with everything related to your credit score. This is a huge factor in the fundability of your business.

Your credit history consists of a number of things including:

How many accounts are reporting payments?
How long have you had each account?
What type of accounts are they?
How much credit are you using on each account versus how much is available?
Are you making your payments on these accounts consistently on-time?

The more accounts you have reporting on-time payments, the stronger your credit score will be.

Business Information

On the surface, it seems obvious that all of your business information should be the same across the board everywhere you use it. However, when you start changing things up like adding a business phone number and address or incorporating, you may find that some things slip through the cracks.

The key to this piece of the business fundability is to monitor your reports frequently.

Financial Statements

This encompasses a broad spectrum of things. First, there is the obvious. Both your personal and business tax returns need to be in order. Not only that, but you need to be paying your taxes, both business and personal. However, there is yet another layer.

Business Financials

It is best to have an accounting professional prepare regular financial statements for your business. Having an accountant’s name on financial statements lends credence to the legitimacy of your business. If you cannot afford this monthly or quarterly, at least have professional statements prepared annually. Then, they are ready whenever you need to apply for a loan.

Personal Financials

Often tax returns for the previous three years will suffice. Get a tax professional to prepare them. This is the bare minimum you will need. Other information lenders may ask for include check stubs and bank statements, among other things.

Bureaus

There are several other agencies that hold information related to your personal finances that you need to know about. Everyone knows about FICO. Your personal FICO score needs to be as strong as possible. It really can affect business fundability and almost all traditional lenders will look at personal credit in addition to business credit.

In addition to FICO reporting personal credit, you have ChexSystems. In the simplest terms, this keeps up with bad check activity and makes a difference when it comes to your bank score. If you have too many bad checks, you will not be able to open a bank account. That will cause serious fundability issues.

Personal Credit History

Your personal credit score from Experian, Equifax, and Transunion all make a difference. You have to have your personal credit in order because it will definitely affect the fundability of your business. If it isn’t great right now, get to work on it. The number one way to get a strong personal credit score or improve a weak one is to make payments consistently on time.

Application Process

So much plays into this that you may not even think about. First, consider the timing of the application. Is your business currently fundable? If not, do some work first to increase fundability. Next, ensure that your business name, business address, and ownership status are all verifiable. Lenders, even Kabbage, will look into it. Lastly, make sure you choose the right lending product for your business and your needs. Do you need a traditional loan or a line of credit? Would a working capital loan or expansion loan work best for your needs? Choosing the right product to apply for can make all the difference.

Kabbage Review: Final Words

If you have no other options and you are desperate, Kabbage can help you out in a pinch. However, you must be sure you know what you are getting into. If you qualify for a good rate with them, you likely qualify for a loan that does not cost as much somewhere else. If your fundability is not up to par, get started working on that now. Start by doing an analysis of fundability and go from there.

The post Is It Too Good to Be True? An In-Depth Kabbage Review appeared first on Credit Suite.

The Good Enough Family

The households of the not also remote past were related along 4 axes. These axes were not equally special. Some overlapped, every one of them improved each various other.

Individuals obtained wed for different factors:

1. Due to public opinion as well as social standards (the Social Dyad).

2. To create an extra synergetic or reliable financial system (the Economic Dyad).

3. In quest of psychosexual gratification (the Psychosexual Dyad).

4. To protect long-term friendship (the Companionship Dyad).

Hence, we can speak about the complying with 4 axes: Social-Economic, Emotional, Utilitarian (Rational), Private-Familial.

To show just how these axes were linked, allow us think about the Emotional one.

Up until extremely lately, individuals utilized to obtain wed since they really felt extremely highly concerning living alone, partially as a result of social stricture of reculsiveness.

In some nations, individuals still register for ideological backgrounds which advertise the household as a column of culture, the standard cell of the nationwide microorganism, a hothouse in which to reproduce kids for the military, and more. These cumulative ideological backgrounds require individual payments as well as sacrifices. They have a solid psychological measurement and also offer incentive to a host of habits patterns.

The psychological financial investment in today’s individualistic-capitalist ideological backgrounds is no smaller sized than it was in the other day’s patriotic ones. Real, technical advancements provided previous assuming inefficient as well as outdated however did not relieve Man’s crave advice as well as a worldview.

Still, as modern technology advanced, it came to be an increasing number of turbulent to the family members. Raised wheelchair, a decentralization of details resources, the transfers of the standard features of the household to personal and also social industry facilities, the enhanced occurrence of social communications, much safer sex with minimal or no repercussions – all cultivated the fragmentation of the conventional, extensive and also extended family.

Take into consideration the patterns that straight influenced ladies:.

The outcome was a significant (and also on going) re-distribution of wide range from males to ladies. Include to this the differences in life span in between the 2 sexes as well as the size of the transfer of financial sources ends up being noticeable.

Due to the fact that they live longer than males and also hence acquire them and also since they obtain a share of the marriage residential or commercial property when they separation them, females are coming to be richer. These “endowments” are generally greater than they had actually added to the pair in cash terms. Ladies still gain much less than guys.

2. A rise in financial possibilities. Social and also ethicalities transformed, innovation enables boosted movement, battles as well as financial turmoils brought about the compelled intro of females right into the work markets.

3. The outcome of females’s boosted financial authority is a much more egalitarian social as well as lawful system. Female’s legal rights are being legitimately along with informally protected in a transformative procedure, stressed by small lawful changes.

Females had actually greatly accomplished equal rights in financial and also instructional possibilities as well as are battling a gaining fight in various other domain names of life (the armed force, political depiction). It is unusual for a guy to grumble of sex-related harassment or to get spousal support or wardship of his youngsters or, in lots of nations, to be the recipient of social well-being repayments.

The development of socially-accepted (normative) solitary moms and dad as well as non-nuclear households aided females to form their lives as they see fit. Many solitary moms and dad households are headed by ladies.

Hence, progressively, the shaping of future generations comes to be the unique domain name of ladies. Also today, one third of all kids in industrialized nations expand in solitary moms and dad family members with no male number around to offer as a function design.

The resulting sex-related change impacted both sexes yet the major recipients were ladies whose sexuality was unexpectedly legitimized. No much longer under the cloud of undesirable maternity, ladies really felt complimentary to involve in sex with numerous companions.

In the face of this newly found flexibility and also the truths of altering sex-related conduct, the dual ethical basic fallen apart. The household, consequently, comes to be likewise a sex-related joint endeavor.

Transportation, urbanization, as well as interaction increased the number of experiences in between ladies as well as guys and also the chances for financial, sex-related, and also psychological communications. For the very first time in centuries, ladies were able to evaluate as well as contrast their male companions to others in every imaginable means.

10. Ladies familiarized their requirements, concerns, choices, desires and also, generally, of their appropriate feelings. They abandoned feelings and also believed patterns instilled in them by patriarchal cultures as well as societies as well as maintained with peer stress.

11. The duties and also typical features of the household were progressively deteriorated and also moved to various other social representatives. Also features such as psychological assistance, psychosexual communications, and also kid rearing are commonly delegated to outside “subcontractors”.

Cleared of these features as well as of inter-generational communications, the extended family was minimized to an inefficient covering, a center of fundamental interaction in between its staying participants, a run-down variation of its previous self.

The standard functions of ladies and also their claimed personality, tendencies, and also dispositions were no more helpful in this brand-new setting. This led females to look for a brand-new interpretation, to locate a brand-new specific niche. They were actually eliminated of their houses by its useful loss.

12. In parallel, modern-day medication boosted ladies’s life span, lengthened their youngster birthing years, boosted their wellness substantially, as well as maintained their elegance via a myriad contemporary methods. This offered females a brand-new lease on life.

In this brand-new globe, females are much less most likely to pass away at giving birth or to look decrepit at 30 years old. They have the ability to time their choice to bring a youngster to the globe, or to avoid doing so passively or proactively (by having an abortion).

Female’s expanding control over their body – which has actually been externalized, reviled as well as appreciated for centuries by males – is probably among one of the most striking attributes of the womanly change. It permits ladies to clear themselves of deeply ingrained manly worths, bias as well as sights worrying their figure and also their sexuality.

The lawful system and also various other social and also financial frameworks adjusted themselves to mirror numerous of the previously mentioned sea adjustments. Any kind of contrast in between the circumstance simply twenty years back and also today is most likely to disclose considerable distinctions.

This transformation is just a sector of a much bigger one.

In the past, the axes with which we opened our conversation were very closely and also apparently completely linked. The Economic, the Social and also the Emotional (the axis bought the conservation of social mores and also beliefs) developed one amalgam – as well as the Private, the Familial as well as the Utilitarian-Rational comprised one more.

Therefore, culture urged individuals to obtain wed due to the fact that it was psychologically devoted to a societal-economic ideological background which instilled the family members with sacredness, a historic objective and also magnificence.

Regardless of social sights of the family members, most of ladies and also males obtained wed out of a chilly economic estimation that related to the family members as an operating financial system, within which the specific efficiently negotiates. Creating family members was one of the most reliable means understood to create wide range, gather it and also move it throughout time and also room to future generations.

These typical convergences of axes were diametrically turned around in the last couple of years. The Social as well as Economic axes along with the Utilitarian (Rational) axis and also the Emotional axis are currently lined up with the Familial and also personal axes.

In other words, nowadays culture motivates individuals to obtain wed since it wants to optimize their financial result. The majority of individuals do not see it this method. They pertain to the family members as a risk-free psychological place.

The family members was one of these settings of expression. Truly, it offered as a plain financial device, empty of any kind of psychological participation as well as material.

Today, individuals are wanting to the household for psychological food (enchanting love, friendship) and also not as a tool to improve their financial and also social standing. Developing a family members is no more the means to take full advantage of energy.

These brand-new assumptions have actually undercuted the family members. Both ladies and also males look for psychological convenience as well as real friendships within it and also when they fall short to locate it, utilize their newly found self-sufficiency and also liberties as well as separation.

To sum up:.

Guy as well as females made use of to look to the family members for social as well as financial assistance. Whenever the household stopped working as a social as well as financial releasing pad – they shed passion in it as well as started looking for adulterous choices.

The duties have actually turned around. Culture currently has a tendency to check out the household in a utilitarian-rational light, as a reliable setting of company of social as well as financial task. As well as while in the past, its participants concerned the family members generally in a utilitarian-rational fashion (as a riches creating device) – currently they desire extra: psychological assistance and also friendship.

In the eyes of the person, households were changed from financial manufacturing devices to psychological giants. In the eyes of culture, family members were changed from components of spiritual and also psychological ideological background to utilitarian-rational manufacturing systems.

Ladies had actually constantly highlighted the psychological side of being in a pair and also of the household. Guy constantly highlighted the comfort and also the energy of the family members. What is taking place to the establishment of the household today is that the change is ending up being mainstream.

The appearance of socially-accepted (normative) solitary moms and dad and also non-nuclear family members aided ladies to form their lives as they see fit. The majority of solitary moms and dad family members are headed by females. Guy as well as ladies made use of to look to the household for social as well as financial assistance. Culture currently often tends to check out the family members in a utilitarian-rational light, as a reliable setting of company of social as well as financial task. Ladies had actually constantly highlighted the psychological side of being in a pair as well as of the household.

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This Thanksgiving Day, Turn Things Around by Learning How to Build Good Business Credit

Many business owners don’t realize that there is even a question of how to build good business credit? They think that business credit works similar to personal credit. Since business personal credit builds passively by simply with handling credit wisely, they think business credit does the same. That isn’t the case however. The answer to “How to build good business credit?”can be summed up in one word, intentionally. You must make it a point to build business credit. You have to make it happen.

How to Build Good Business Credit: Fill Your Cornucopia with Business Accounts

In traditional Thanksgiving Day pictures, you see the ever overflowing horn of plenty known as the cornucopia. There are breads, fruits, vegetables and nuts pouring out of the horn shaped basket. If you are a business owner, you need two cornucopias. One is for your business credit, and one is for your personal credit. While you want them both overflowing with healthy accounts, what happens with many is that the business credit one is empty or non-existent. They think it is there and full, while in reality all the accounts they think are hitting their business credit report are actually hitting their personal report.

Why Do you Need Two Cornucopias? Does Business Credit Even Matter?

If you’re wondering why it is important to know how to build good business credit, here is your answer. The business credit cornucopia can hold more. Let me explain. If you try to run a business with only what is in your personal credit cornucopia, you will not have enough. You will need more than what it can hold.

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Here is what that looks like in real life. Your personal credit cards are going to have lower limits than what business credit cards have. Business expenses are, by nature, a lot higher than personal expenses. Therefore, if you try to put business and personal expenses on the same credit cards, you are going to overrun your limits.

Even if you make your payments on time, or even pay off your balances each month, you are likely going to keep hovering near your limits. Not only does this reduce the funding you have available, but it can also have a negative impact on your personal credit score. Here’s how. The closer your balances are to your limit, the higher your debt-to-credit ratio is. A high debt-to-credit ratio has a negative impact on your credit score.

So, this means you need to ask how to build good business credit for two reasons. First, you may not have enough credit availability to run your business successfully without it. Second, if you do not build business credit, you could end up ruining your personal credit. Consequently, not only would your business success be in question, but you could lose the ability to do things like buy a house or a car.

Where Does that Second Cornucopia Come From?

Here is what most business owners do not understand. You have to intentionally go out and get that separate business cornucopia. If you don’t, then any business accounts you open will just go straight to your personal credit cornucopia and wreak the havoc mentioned above. So, how do you do that? How do you establish business credit in the first place so that business accounts report to that, and not to your personal credit? The key is to make your business appear to lenders as a fundable entity, separate from yourself as the owner.

How to Build Good Business Credit: Establishing Fundability

The first thing you need to know is, it is easiest to do this as you are establishing your business. If you are a new business owner just getting started, then set your business up this way on the front end so that you can begin building business credit now. If, however, you are already up and running, it isn’t too late. You may have to do some backtracking, but it will be so worth it. Either way, this is what has to be done. This is the first part of the answer to the question of how to build business credit.

Separate Name and Contact Information

This is an essential first step to weaving a separate business credit cornucopia. Of course, most businesses do not have the exact same name as their owners. The key is, you have to list the business in the business directories under that business name. In addition, it needs to be listed with its own address and phone number.

A question often asked about this is, how do you get a separate business phone number and address if you run your business out of your home or online. Actually, there are several options now for a business telephone number that do not even require you to have a second phone. You can just have your business number forwarded to your personal line.

As for an address, there are a number of virtual office companies that offer a physical mailing address to businesses for just this purpose. Typically, they also offer a number of other useful services such as meeting spaces and live receptionist services.

Get and EIN

When you apply for credit, they always ask for you Social Security Number, or SSN. If you are applying for credit in your business name, you shouldn’t use your SSN. If you do, that account will automatically relate to your personal credit. The way around this is to get your business an EIN. They are free on the IRS website. You may still need to use your SSN for identification purposes when applying for credit under new fraud regulations, but that needs to be the only reason you use it.

You Must Incorporate

This isn’t an option. While it is much easier and cheaper to operate as a sole proprietorship or partnership, you cannot get the separation needed if you do not formally incorporate. Whether you choose an S-corp, LLC, or corporations will depend on your other needs and budget. Any of them will work for establishing fundability. Still, you must choose one.

Get a Business Bank Account

When building fundability, you need to have a separate business bank account. This serves a number of purposes. First, separate from building fundability, this helps you keep your business and personal expenses separate. That will be a tremendous help come tax time.

Secondly, some business credit cards want to see a business bank account with a minimum average balance before they will approve credit. Lastly, it helps lend credibility to the fact that your business is a fundable entity on its own, apart from the owner.

Professional Website and Dedicated Email

In today’s business world, if you do not have an online presence you do not exist. Having a poorly executed online presence is just as bad. You need a professionally built, working website. Pay for design and hosting. The free services are not going to be good enough to help you out here. In addition, you need a dedicated business email address with the same URL as your website. Free email platforms such as Yahoo and Gmail do not look professional.

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Get a D-U-N-S Number

There are several business credit reporting agencies, or CRAs. The 3 most commonly used are Dun & Bradstreet, Experian, and Equifax. Of those three, Dun & Bradstreet is definitely the largest and most commonly used. Before you can have a credit profile with them, you must have a D-U-N-S number. This is how they identify your business.

If you do not have a D-U-N-S number, you will not have a credit profile with Dun & Bradstreet, so you definitely need the number. That’s all you need though. They will try to upsell you on other services, but stay strong and resist. You just need the number, and it’s free.

How to Build Good Business Credit: Fill the Cornucopia

Once you have your separate business credit cornucopia, it’s time to fill it with lots of yummy accounts to build your business credit big and strong. That, again, takes intentionality. You cannot just go out and start applying for credit in your business name. It won’t happen. Just as those that celebrated the first Thanksgiving Day had to actively work to provide the food for the feast, so you will have to actively build business credit. To do this, you have to work through the business credit tiers.

Starting at the bottom tier, you build enough accounts and business credit to move up to the next tier, until you reach the top. Here is a little more about each tier and what it takes to move on to the next.

How to Build Good Business Credit Using The Vendor Credit Tier

This is the first tier on your journey to fill your business credit report with accounts. It consists of starter vendors. These are vendors that will offer your business net terms on invoices without first checking your credit. Then, when you pay, they will report those payments to the CRAs. This is the second part of the answer to how to build good business credit. In this way, you can begin to build credit without having credit.

They will look at other information however. Some like to see a certain amount of time in business. Some will want you to place an initial order, or more than one, before they will extend net terms. Others will want to see a business bank account with a minimum balance. Another thing they sometimes look at is a listing in the business directories. Starter vendors may require any combinations of these things. Find out more about some of the most common starter vendors here.

How to Build Good Business Credit With The Retail Credit Tier

After you have 8 or 10 accounts from the vendor credit tier reporting positive payment information to the CRAs, you can apply for credit in the retail credit tier. These are those cards that you can only use at the specific retail store that issues them. For example, Office Depot cards that you can only use at office depot are in this tier..

How to Build Good Business Credit: Continuing to The Fleet Credit Tier

After you have enough accounts reporting from the retail credit tier, you can apply for cards in the fleet credit tier. These are cards that you can only use for fuel costs and automobile repair and maintenance. Fuelman and Shell are examples of companies that issue cards in this tier.

How to Build Good Business Credit: Finishing with The Cash Credit Tier

This is the top credit tier. It’s the goal. Once you have enough accounts reporting from the fleet credit tier you can apply for cards in this tier. It consists of the standard Mastercard, Visa, Discover, and American Express cards that are not limited to a specific store or type of expense.

How to Build Good Business Credit: Don’t Let Things Start Falling Out

Even though the overflowing cornucopia makes for a pretty Thanksgiving Day picture, you don’t really want the same effect with your business credit. If you do not handle the credit you have properly, you’ll start losing control. Be sure to pay accounts on-time. Remember, don’t buy things you cannot afford just to build business credit. You will end up with the opposite of what you want. Also, be sure you keep an eye on things. You wouldn’t want a bug eating up all that good food in your horn of plenty right?

Monitor your business credit regularly to ensure there are no mistakes and that everything is up to date. We can help you with that here.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

How to Build Good Business Credit: May Your Cornucopia Be Full

I think it’s clear at this point. It takes more than just paying your bills on time to build business credit. Unlike your personal credit score, your business credit score does not appear passively. You have to work to intentionally build it. It isn’t a hard process, but it is a process. You have to trust the process and act responsibly. Now that you know how to build good business credit, it’s time to get started.

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