The Fundamentals of Business Credit

Disclaimer:
Before reading this book, please note, this was written for
informational purposes only. If you have any legal questions,
please contact an attorney. If you have any tax related
questions, please seek the counsel of a tax accountant.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Glossary: 4

What is Business Credit? 6

Business Credit vs. Personal Credit 6

Why business credit? 6

Where do I begin? 7

Registering with the 3 Major Business Credit Reporting

Bureaus: 9

How to start building? 10

D&B Paydex Score 11

Five ways to Establish a Favorable Bank Rating for Your

Business: 17

How to Get Funding? 18

Microloan Application Checklist 19

Seeking Professional Help 20

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Glossary:

Assets: Economic resources owned or controlled by the company.
Bad debt: An uncollectible accounts receivable balance.

Balance sheet: A financial statement that lists a company's assets, liabilities, and owners' equity on a
particular date.

Business credit information: business start date, number of employees, whether you rent or lease your
space, information about profitability, solvency and efficiency ratios.

Capital: Financial assets or the financial value of assets, such as cash or business equipment used in
production.

Cash Flow: the total amount of money being transferred into and out of a business.

Corporation: A legal entity chartered by a state. Ownership of a corporation is represented by stock.

Collateral: Alternative source of repayment in case the primary source fails.

Credit: the ability of a customer to obtain goods or services before payment, based on the trust that
payment will be made in the future.

Credit Appraisal: a number ranging from 1 to 4 determined by company’s payments, financial
information, public records, and age evaluated to decide whether or not business can qualify for credit.

Credit Bureau: a company that researches and collects information relating to the credit ratings of
individuals or business and makes it available to lenders, creditors, and consumers, in the form of a
report.

Current Ratio: a measure of the liquidity of a business; it is a company's assets divided by current
liabilities.

Debt to equity ratio: a measure of the relative utilization of debt and of equity.

Dun & Bradstreet (D&B): a company that provides commercial data to businesses on credit history.

D-U-N-S: Data Universal Numbering System
Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

DUNS Number: is a unique, non-indicative 9-digit identifier issued and maintained by D&B that verifies
the existence of a business entity globally. D&B assigns DUNS numbers for each physical location of a
business.

Experian: a company that compiles the records of other companies and it provides credit information that
will give potential lenders an idea of the business and how creditworthy it is.

Equifax: compiles credit reporting data from many sources and creates a credit file that reflects your
business’ creditworthiness and viability.

Financial Stress Score: a measurement of the likelihood that your business will experience financial
stress in the next 12 months.

Intelliscore: Experian’s credit scoring which can be a number between 0 and 100 which is determined by
how quickly a company pays back loans or whether they paid before the due date.

Lender: an organization or person that lends money.

Limited Liability Company – LLC: a corporate structure whereby the members of the company cannot
be held personally liable for the company's debts or liabilities.

Micro Lender: a company or organization that lends small amounts of money to people or businesses
that have low incomes and that cannot use traditional banking services.

Paydex Score: numerical score granted by Dun & Bradstreet to business as a credit score for promptness
of their payments to lenders.

Personal Guarantor (PG): A co-signer, someone who will be liable to repay the debt if the business is
unable to.

Public Records: Secretary of state Business registration, judgments, liens, or bankruptcies reported for
the business.

P/L: Shorthand for Profit and Loss Statement

Small Business Administration (SBA): The Small Business Administration is a United States
government agency that provides support to entrepreneurs and small businesses.

SBA Loan: an amount of money borrowed by a small business person to start or run a small business.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Starter Accounts: accounts you set up to start building credibility for your business. These accounts act
as the first showing of your credit behavior and credit relationships so that credit bureaus and potential
lenders have an idea of how you operate.

Trade line: industry jargon for “account”

Vendor Accounts: See Starter Accounts

What is Business Credit?

Business credit or corporate credit is credit that has been given to one business from another
business. Similar to your personal credit, it displays your business’s creditworthiness to

authorized lenders and allows you to maintain a separate credit history for your business that

does not have any affiliation with your personal credit history. This allows you to obtain larger

amounts of capital you may not have been able to get just by using your personal credit profile.

Business Credit vs. Personal Credit

Business Credit Personal Credit

The employee identification number (EIN) will Your social security number (SSN) is used to

be used to apply for credit. apply for credit, and payment history will be

reported on your personal credit profile.

If you have more than one business, you will You will have one credit profile with all 3
have more than one EIN and the amount of credit bureaus.
credit your business qualifies for will be based
on the individual EIN.

Credit score is determined using a Credit score is determined using FICO/Beacon
Paydex/Intelliscore credit score rating. credit score rating.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Why business credit?

Well over 95% of businesses fail within their first 5 years in business. Many surveys have shown
the biggest reason for their failure is lack of capital to help sustain and grow the business. Even if
a business is producing good revenue, sometimes that is just not enough to keep the business
operating. Having established business credit would have saved those companies that just needed
extra cash flow.
In this workbook we are going to discuss the fundamentals of business credit. This is a guide to
help you build business credit without a personal guarantee for any size company, without these
essential steps it will be difficult to get business funding.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Where do I begin?

All businesses should be properly created; failure in doing so will put your approvals to a halt
before you even start.
Here is a list of things you should do to start building business credit, although all are extremely
important, you may still be able to get some vendor accounts without doing all of them.
However, to obtain any type of cash credit you’ll want to check off in this listed order:

✓ Set up a legal entity (LLC or Corporation)
✓ Obtain an EIN Number
✓ Obtain permits or licenses as necessary to your business
✓ Set up or Hire someone to create a professional looking website
✓ Professional email address
✓ Physical or Virtual Address
✓ Professional phone number, preferably a toll free number
✓ Fax number
✓ Business bank account
✓ Identify your company’s SIC and NAICS code
✓ Register will all 3 business credit reporting bureaus – Dun & Bradstreet, Experian and

Equifax

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Registering with the 3 Major Business Credit Reporting
Bureaus:

This part is extremely imperative. If your company’s credit profile is not set up properly with the
credit bureaus, it can take longer to establish a business credit score.

Dun & Bradstreet: Go to iupdate.DandB.com using internet explorer. Search for your company
name, when it is not displayed you will be prompted to “Get a D-U-N-S Number”. Make sure
you set your business profile up exactly as it is listed on your articles of incorporation. This
service is completely FREE. However, it can take 30 days to receive your number. You can get
your DUNS number in 5 business days if you pay $49 to expedite. If you call in to set up your
business, be prepared to get a sales pitch about the services they offer and how to expedite
getting your DUNS number. Politely decline.

The products they offer to help you establish business credit are pricey, and the service will only
be good for establishing a score with D&B and not for the other two bureaus Experian and
Equifax.

Equifax: www.Equifax.com/business The only way to establish a business credit profile with
Equifax is to purchase any one of their products. The price on their products can go upwards of
$399.00. As a new business you have to be wise with your money.

From the main page, choose the “Products” tab, then select “All Products”. This page will give
you all the products that Equifax offers for businesses. We suggest selecting “Business Risk
Indicator Report For Small Business” This product is only $7.95 per report. Select “Find A
Company”, enter the company information and search. The next screen will display all
companies with similar information, choose the one you want. Then you will be prompted to buy
report. Again, you want to purchase the “Risk Indicator Report”, following the prompts you will
see an area to enter your company information. After completing this, you will have your
business credit profile with Equifax.

Experian: www.smallbusinessreports.com Unfortunately, there is not any way to create your
business credit profile without having a trade line for your business reporting to this bureau. See
Step Two.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

How to start building?

Insure that your business has a credible foundation. One of the most important things to assure
your business can obtain funding is to make sure the business was set up properly. There is a
secret set of requirements the lenders want you to have in order to be approved, insuring you
have marked off everything from the list on the previous page is critical before you can move on
to Step 2.

Although the lenders don’t want you to know their secret approval requirements, we have
studied enough to provide you the basics. Having your company properly set up is only the first
part. Next, lenders are typically looking for 5 major points of your business to determine
approval. These 5 points are commonly referred to in the lending industry as “The 5 C’s” of
lending. Some sources will approve you if you only have 1 of the “Cs” but most conventional
want all 5 present.

The first “C” is Character; this is the willingness to pay. Is management willing to eat ramen
noodles to repay the loan? The second “C” is Capital. Borrower has sufficient stake in the loan,
how much money will you be able to personally invest (down payment)? The third “C” is
Capacity (Cash Flow): The ability to pay. If your business has money regularly coming in, you
have one of the main components the lenders want to see. The fourth “C” is Collateral: Security
in the event the borrower does not pay. Lenders truly want to see your business has collateral
equal to or more than the money you are asking to borrow. The fifth “C” is Credit; lenders may
review your personal credit to determine approval. If your business credit profile is not strong
enough, some lenders will want to see another signer who will be liable to repay the debt. This is
also referred to as a “Personal Guarantor”.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

To establish your business credit score, you will need to begin with starter accounts also known
as vendor accounts. These are the easiest to obtain and help you in your goal of getting a Paydex
score. Apply for an account with 4 to 5 companies listed below and order a minimum of $50.00.
Complete this process two to three times to establish your Paydex score with Dun & Bradstreet
(typically 90 days of reporting positive payment history.)

ADP Payroll http://www.adp.com/solutions/large-business/services/payment-solutions.aspx
Nav http://Nav.com/
Elance http://elance.com/
FedEx http://fedex.com/us/account/invhome/creditcard.html
Gempler’s http://www.gemplers.com/
Grainger http://www.grainger.com/
Laughlin Associates https://laughlinusa.com/
Monopolize Your Marketplace http://mymonline.com/mymblog/
Quill http://www.quill.com/
Uline http://www.uline.com/

D&B Paydex Score

Business credit scores are based only on whether the business pays its bills on time or not.

Expect payment may come early 100
Payments come within early discount period 90
Payment is prompt 80
Payment comes 14 days beyond terms 70
Payment comes 21 days beyond terms 60
Payment comes 30 days beyond terms 50
Payment comes 60 days beyond terms 40
Payment comes 90 days beyond terms 30
Payment comes 120 days beyond terms 20
Unavailable UN

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

When you continue to follow the steps in this guide, you can expect to have a credit score of 80-
90 within your first 90 days. To give you a general idea of what this means for your business,
this is like having a 720 personal credit score.

Once you’ve successfully set up your vendor accounts and have established payment experiences
with them, you can move on to retail accounts. You can grow a relationship with creditors by
opening 4 to 5 accounts. You can choose two to three from the list below:
Office Depot http://www.officedepot.com/a/content/credit/main/
Office Max http://www.officedepot.com/a/content/credit/main/
Staples http://www.staples.com/sbd/cre/programs/credit/

Continuing the relationship with creditors, now you can apply for gas cards. You should choose
two to three cards to apply for. DO NOT APPLY FOR THE ENTIRE LIST.
Citgo https://www.accountonline.com/cards/svc/LoginGet.do?siteId=CITGO
Conoco Corporate http://www.conoco.com/gascards/
Exxon Mobile http://creditcards.citicards.com/usc/rpg/exxonmobil/microsite/exmb_personal.htm
Flying J http://www.pilotflyingj.com/
Marathon https://d.comenity.net/marathoncard/
Phillips 66 http://www.phillips66gas.com/gascards/
Quik Trip https://www.quiktrip.com/QT-Cards/Cards
Shell http://www.shell.com/global/products-services/on-the-road/card-services.html
Sinclair Oil https://www.sinclairoil.com/credit_services.html
Speed Way https://www.speedway.com/cards/SpeedwayCreditCard

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Super Fleet http://www.superfleet.net/
Texaco http://www.chevrontexacocards.com/dualcardimages/generic/chevron/en/landing_plcc.html

Union 76 http://www.76.com/gascards/

Wright Express http://www.wexcard.com/

Now, you’ll choose two to three cards and apply for. Once again… DO NOT APPLY FOR
THE ENTIRE LIST.
Advanced Auto Parts http://shop.advanceautoparts.com/
Amazon http://www.amazon.com/
AutoZone http://www.autozone.co.za/index.php/rcs-credit-cards
Best Buy http://www.bestbuy.com/site/Finance/Financing-
Rewards/pcmcat102500050032.c?id=pcmcat10250050032
Home Depot http://www.homedepot.com/c/Credit_Center
Macy’s https://www.macys.com/service/credit/index.ognc
Menards http://www.menards.com/main/big-card/c-14304.htm
Sam’s Club http://www.samsclub.com/sams/pagedetails/content.jsp?pageName=creditMarketing
Sears https://www.citibank.com/us/cards/srs/
Target http://www.target.com/redcard/main

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Computer vendors are a great use for all businesses. Choose two to three. DO NOT APPLY
FOR THE ENTIRE LIST.

Apple Lease https://www.apple.com/financing/

Tiger Direct https://biz.tigerdirect.com/leasing

Lenovo http://www.lenovo.com/services_warranty/us/en/financial_services.html

New Egghttp://www.newegg.com/Product/ProductList.aspx?Description=leasing&Submit=ENE

HP http://www.hp.com/sbso/buspurchase/leasing.html

Dell http://www.dell.com/content/topics/segtopic.aspx/finance/dfs_business_lease?c=us&l=en&cs=04

Aside from what many may say, you don’t have to have a huge, profitable company to apply for
business credit cards. In fact, starting a business and wanting to keep your own personal finances
apart from your business finances is really the core that you need. It is a very important move
and sign of good things to come for your business by taking that initial step.
Now that you’ve got your Paydex score going and you’ve been making your payments on time,
you can apply for business credit cards. Having your business credit cards is going to make
running your business much easier by not worrying about your business taking from your
personal obligations.

Choose 2 to 3 from this list. DO NOT APPLY FOR THE WHOLE LIST.

Advanta Platinum Business Card
https://www.creditkarma.com/creditcard/CCAdvanta145

Bank of America Cash Rewards for Business MasterCard
https://business.bankofamerica.com/creditcard/products/cash-back-business-creditcard

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Capital One Spark Cash Select for Business
http://www.capitalone.com/credit-cards/business/spark-cash-select/

Citi Business
https://www.citi.com/credit-cards/compare-credit-cards/details.do?ID=all-smallbusiness-credit-
cards

CitiBusiness/AAdvantage Platinum Select World MasterCard
http://www.aa.com/i18n/AAdvantage/earnMiles/beyondTravel/creditDebit/citibusiness.jsp?anch
orLocation=DirectURL&title=citibusiness

Credit One Bank® Credit Card with Gas Rewards
http://www.creditcards/com/credit-cards/credit-one-bank-gas-rewards-credit-card.php
Discover Business Card (2016 recently changed to require PG)
https://www.discover.com/credit-cards/business/

Ink Cash Business Card
https://www.chase.com/online/business-credit-cards/ink-business-credit-cards.htm

Ink Plus Business Card
https://creditcards.chase.com/ink-business-credit-cards/ink-plus-card?CELL=6MST

Key Bank
https://www.key.com/personal/credit-cards/credit-card-options.jsp

The Blue for Business® Credit Card from American Express
https://www.americanexpress.com/us/small-business/credit-cards/blue-for-business/

Wells Fargo Business Platinum Credit Card
https://www.wellsfargo.com/biz/creditcards/business/

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Here are 5 Ways to Establish a Favorable Bank Rating for
Your Business:

One of the steps to building your business credibility was to open a business bank account. You
want to maintain a good business rating rapport. Your bank is likely to give you what you need
when you need it by staying on good terms with them. Think of it like loyal customer rewards.

1. Maintain a healthy balance rating- This rating is your average minimum balance
maintained in your business bank account over a three (3) month period. A $10,000
balance will rate as “Low 5″, $5,000 rates as “Mid 4″, $999 rates as “High 3″, and so
on. Your goal should be to maintain a minimum “Low 5” bank rating ($10,000) for at
least 3 months. Unfortunately, without at least a “low 5″ rating, most banks will assume
your business has little ability to repay on a loan or a line of credit.

2. Keep a positive bank rating cycle – Each cycle is based on your balance rating during
the previous three month period. So before you decide to apply for credit keep a balance
rating of “low 5” for the past three months.

3. Manage your account responsibly– Avoid writing non-sufficient funds (NSF) checks at
all costs as it destroys bank ratings. From this point forward, NSF checks are something
you can’t let happen. I would suggest that you add overdraft protection to your bank
account as soon as possible.

4. Show a positive cash flow– The cash coming in and going out of your company’s bank
account should reflect a positive free cash flow. Positive free cash flow is the amount of
revenue left over after your company has paid all its expenses. When your account shows
a positive cash flow it indicates that your business is generating more revenues than is
used to run the company. It’s important to also recognize that banks are motivated to lend
to a business that has consistent deposits.

5. Establish bank history- A seasoned bank account shows stability and longevity in the
eyes of lenders. Keeping a healthy and long standing relationship with a bank is crucial
for your company.

In addition to a positive bank rating, your bank should act as a trusted advisor that can assist you
in growing your business. You may want to consider working with a financial institution that
specializes in providing banking services tailored to your specific industry.

Working with a lender that already understands your business makes it much easier to get a loan
approved, compared with other lenders. This is because the majority of lenders have difficulty
assessing the credit risk of most small businesses.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

While profit and loss statements, tax returns, business credit and personal credit checks are
common requirements in the lending process it is much easier for a lender to underwrite your
business’ financial risk when it truly understands and specializes in making loans to a company
like yours.
Choose a small business-friendly bank and establish a solid bank rating so your company can
qualify for the credit and financing it needs to further grow and expand.

How to Get Funding?

By completing all of the previous steps, you have created a solid track record that shows your
credit behavior. You want to continue to keep all your payments made on time or before its due
date. After 6-8 months of paying your trade lines on time you will be able to visit a bank for a
small loan. Building business credit can take time but doing it comes with great benefits. We’ve
showed you how to establish and build business credit, now we will explain how to get business
funding!

Without proper knowledge of building business credit, your natural reflex is to go to the banks to
secure a loan, but what if you’re not able to get a loan. Your other funding option is to apply
for a microloan. Microloans are smaller loans made with attainable terms and are meant to help
you start and grow your business. In the U.S., microloans can range from $500 to $500,000
through some sources.

Micro lenders are relatively recent and offer a financing product that gives support and limited
access known as microcredit to small businesses. It was created to empower people to escape
poverty with entrepreneurship. You should only apply with a micro lender after you have
completed all of the other “How Tos” mentioned in this guide. It’s very critical to have at least
10-15 payment experiences reporting before you apply. Acknowledging that financing isn’t the
only thing you need to make your business thrive, micro lenders offer additional support such as
marketing strategies, and proper business planning. This means you get much more than just
financing, and as a new business this is an advantage you can’t afford to pass on.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Microloan Application Checklist:

Applying for a microloan can feel much like putting in a job application because your character
or a display of good character matters are well as the supporting documents you provide.

For existing businesses
✓ Personal Tax Returns for the last three years on all borrowers who own 20% or more of the
business
✓ Business Tax Returns for the last three years
✓ Financial Statements (balance sheet and P/L) for the last three years
✓ Interim Financial Statement (balance sheet and P/L) since your last tax reporting period (current
within 45 days)
✓ Brief history and explanation of your business
✓ Proof of other income (i.e. most recent paycheck stub)

For startup businesses
✓ Personal Tax Returns for the last three years on all borrowers who own 20% or more of the
business
✓ Proof of current income (most recent paycheck stub) on all borrowers
✓ Business Plan, Projections, Assumptions on which the projections are based
✓ Resumes of all owners
✓ Government ID such as social security number or individual taxpayer identification number
(ITIN)
✓ Collateral. Personal and business assets may be used to secure a loan.
✓ References. You may need a list of professional and/or personal references.

To receive a microloan lenders list please email us at [email protected]

Another avenue a new business can use is The Small Business Administration. Not every
business is eligible for a SBA Loan, qualifying businesses must meet the criteria set in place by
the SBA, and every loan has its own specific requirements.

An often misconception is that the SBA lends the funds. The agency does not directly lend
money to businesses. You can get an SBA loan from a bank that participates in SBA financing.
The SBA guarantees a percentage of those loans to the banks, so financial institutions have more
incentive to lend money to small businesses.
Because of this guarantee, bankers may be more willing to lend you money even if you don’t fit
their strict credit criteria. However, at many major banks, getting an SBA loan can still often be a
complex and lengthy process that can take several months. The lenders will want to review your

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

credit and financial statements and expect you to have collateral to secure the loan. So even with
the government guarantee, many small businesses may not qualify for SBA financing.
Following this guide for setting up your profiles with the credit bureaus, getting the accounts that
create a track record, and having a good personal credit score increases your chances of
qualifying for this kind of loan.
There are still other options for getting the funds your business needs, such as crowdfunding,
angel investors, grants, and other credit vendors we did not list in this guide.
This guide was intended to get you and your business on your feet and initiate the building credit
process, while it can be lengthy and time consuming... it works and you’ll be happy you did it
once you start!

Seeking Professional Help

If you still feel you need professional assistance, we can help! Our Business Credit Starter
program offers a 6 week business credit course. We will evaluate your business, and walk you
through step by step into building and obtaining business credit.
Following this guide, along with our expertise will put you on a fast track for being approved!

Feel free to contact us at (866) 225-1366 or send us a message on our website
www.AlliedCreditGroup.com

Please also follow us on Instagram, Twitter and Periscope @AlliedCreditGroup

Good Luck! ☺

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com

Ty Griffin – CEO @EntrepreMommy

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by
any means, including photocopying, recording, or other electronic or mechanical methods, without the prior
written permission of the publisher, except in the case of brief quotations embodied in critical reviews and
certain other noncommercial uses permitted by copyright law.

Copyright © 2016 – Allied Credit Group Inc
www.AlliedCreditGroup.com