Business Credit 101 | How To Build Business Credit FAST

Business Credit 101 | How To Build Business Credit FAST

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hey what's going on cash flow hackers  it's Chris life180 I'm excited uh to   be doing this this interview I've been  doing a lot of thinking on this stuff   personally lately uh talking about  the concepts of business credit and   um just ultimately how do we for all these  entrepreneurs out there that I know uh are kind   of in the same position that I'm in how do you how  do you segment your life from your personal life   to your business life and really get your finances  dialed in and so I've got who a guy who's become   a friend of me Sebastian Boyer uh on this call  we're going to be doing a really fun interview   I'm excited to kind of introduce them to the group  because Sebastian and I have been working together   um he is a licensed life insurance guy um he is  does a lot with the infinite banking concept you   can follow him uh the approved guy on YouTube I'll  put a link down in the description below uh that's   awesome but he also is uh the owner of a company  called business credit 101 and he's also the   Director of Finance for a company called orangefy  and what they do is I and you can kind of get more   into this Sebastian you know as we get into it but  they're basically like a business uh credit broker   or business loan brokerage company is that about  right correct yes right awesome so so he does a   lot of stuff he's he's he's got courses teaching  how to build business credit he's he's um honestly   he's just amazing with this like any anytime I  have a question when it comes to anything to do   with business credit or getting loans or credit  cards or anything like that for the business   specifically he's kind of like the guy that I lean  on and so I thought it would be really great to   get him on here uh interview him ask him questions  about like uh you know where to start ultimately   whatever whatever we think is going to be able  to add the most value uh to you as you're getting   introduced to the concept of going down this  path of uh you know starting a business creating   an LLC I think the a lot of people when they  Sebastian when they create an LLC they feel   like they automatically have this segmentation  of their personal life and their business life   and right it all just kind of happens and uh  you know that's not necessarily the case and so   um so I'm excited to get into this man so thanks  for being here thank you thanks for having me and   um I appreciate the intro and it's always  a pleasure to to work with you and just to   build together and and share stories and just  work together it's awesome um so I guess just   to just to touch on like where do we start you  know yeah obviously you know we're talking about   business ownership here entrepreneurship right  yeah um so one one big mistake people do is they   they think they can do it as a sole proprietor so  number one that's a no-go don't even go down that   route yeah so let's just x that out you need to  actually form a a LLC or escort C Corp you know   you know with an EIN number um but the sole  proprietorship angle is is not gonna it's not   gonna cut it and unfortunately I've seen people  who do that and they're you know they're they're   making money um as a sole proprietor and then they  have to form a company and then they get an EIN   and then a bank account and they're basically  starting from square one after three four five   years of operating as a sole proprietor so just  number one don't do that make sure you're actually   performing a legitimate business um get yourself  set up with your secretary of state obviously what   Secretary of State uh what state you know there's  different states that you can operate in there's   different advantages to that I'm not going to get  into that but you want to get set up you want to   um you want to get your EIN number and then you  need to get your business checking account right   don't operate you know your business using your  personal and these are like little things that   you think are just like automatically um you know  just I have a business I'm going to get a business   checking account but you but you'd be surprised  how many people are not operating with a business   checking account though they have a legitimate  business and so um when you're when you have a   business checking and money is flowing into the  business you start to record you know Revenue   you start to record the businesses cash flow  and income and so now the bank has something to   look at to say that this business is a legitimate  business now there's there's about 10 data points   that Banks and lenders and the business credit  bureaus look at besides your structure that you   have a legitimate business besides having a  business checking account that's two of them   right but there's little details that a lot  of especially home-based business owners   um yeah don't pay attention to uh because you  don't think it matters and the thing is you   don't need to do these things to make money so  it's not going to stop you from doing business   but right if you want to position yourself so that  you are attractive and considered credible that's   the word they use called credibility right in the  eyes of the banks and the lenders these 10 basic   data points um need to be met and simple things  all right so your business name right your EIN   your business bank account a phone number in the  business not a personal cell but a business phone   number for the business right yeah and there's  there's ways to save money on that you can set   up a legitimate voice over IP business line that's  very affordable and have that forwarded to your   cell phone what about getting a business cell  phone line like actually that's okay as well it's   as long as it's actually a business account in the  business account in the business name right yep   um and then of course um your email you know a  lot of folks just use Gmail Yahoo or free email   accounts again it doesn't stop you from doing  business but when a bank or lender looks at   that it tells them whether or not you're really  a serious business owner or maybe you're treating   this as a hobby right yep um so you know setting  up a domain name with a basic website because now   the internet and your website is your storefront  right very simple to do very affordable you don't   have to go crazy you know you can build your  um you know elaborate super website later but   at least have something up right with a contact  page and you know that shows that you're open   yeah something that's that shows that you're open  and that you're reachable and that you're legit   um so you know that's going to be your  domain name your email account right   um and um there there's a few things you you  can do to be remain you know private like you   know if you want to kind of mask your identity  um in other words if you don't want the public   to know who's the owner of the company  right when you're forming the company   um you can make sure that you have a registered  agent which could be either the attorney or CPA   or whatever form firm is helping you set up the  company um a registered agent is a buffer between   you and the Secretary of State or anyone trying to  serve you documents um your name is not on public   record per se and so your address is not listed  you you don't have to have a business address   you can work out of your home but it's public  record okay right so anyone can go to Google   but in your business address and find your  street address that you live at see your car   on Google Maps maybe you were outside washing  the car that day and there you are you know so   if you want to remain anonymous you have a  registered agent and then when you buy your   domain name you you purchase the extra ten dollars  to make it private it's that simple right having   the phone number the email all these things  you know create that separation that barrier   um and um and then ultimately you  want to get listed on 4-1-1 directory   and you want to um you wanna um then set  up a duns number with dun and Bradstreet   got it right so that there's three  major business credit bureaus   there's done at Bradstreet there's  Experian business credit division   and then there's Equifax now there are others  including public records records with LexisNexis   okay um and there's there's credit safe there's  paynet but those are I guess you could say smaller   ones that are not as important and if you focus  on the big three then the others will follow suit   um done in Bradstreet is what everybody's  like concerned about oh I have a duns number   I hear that a lot oh I have a duns number and  that's like the equivalent of telling me you   have a bank account number it's great that you  have a bank account but if you're not depositing   money in the bank account it's an empty account  it has no value right so a duns number is just an   account number it's not building your credit  their credit score is called a paid X score   paydex score paid X paydex paid X right to get  a paydex score you need to have at least three   trade lines reporting to Dun and Bradstreet so  okay so that's fair so let's let's start there   and let me ask you a couple questions about that  so you go out you do all the things you're talking   about you get your duns number um and your  your uh the entrepreneur business owner and   you need to get three trade lines do you have to  personally guarantee those trade Lines no the the   there are trade lines that you can personally  guarantee but you don't need to there are   several trade lines in my course I have about  12 of them that are not personally guaranteed   um that uh will give you an account with no  prior business credit so that you can you know   establish business credit that's the hardest part  is that initial tier one step one of building yeah   um it takes about 30 to 90 days for those accounts  to report to the bureaus and um sometimes you have   to make multiple transactions on those accounts  because credit is nothing but a record of a   transaction right that's all it is right yeah  um with the personal credit it's pretty much   automatic but with the business credit you have to  be more intentional you have to set up that duns   profile when it comes to Experian and Equifax  they're they are a little bit more automate   automated once you establish an account that  reports to those bureaus then they will report   and create the account for you so you can't really  go create an account with them and then once you   have an account then you can go update that  account with your information right because   a lot of times they're going to have missing  pieces of those data points we talked about   um you'll they also record your business um  Revenue um you know your your profit margins   like they all that is on public record and if  you update that regularly then when when Banks   lenders and credit card companies and and you know  different institutions are looking at you and if   they may be looking at Experian or Equifax it's  just going to help your your credit profile um   and that's what's going to help you qualify to get  the higher level credit cards as a business and   the better business loans and all these different  things correct so so the thing about this is that   it's not cookie cutter there's certain Banks  and lenders that may only look at Equifax   there's certain that ones that might only look at  Experian some of them may be only looking at dun   and Bradstreet some of them may look at a mixture  so there's an there's an overarching uh body that   called the Small Business Financial exchange that  collects data from these bureaus and they report   that data to the SBA and then the SBA creates  a business credit score called the sbss score   so you know if you are in in business for more  than a year two to two years and you're looking   to get approved for an SBA loan you have to have a  legitimate business credit score got it right now   there's some business credit cards and I'll tell  you this 99 of the business loans that are on   the market including the business credit cards are  going to require personal guarantee no matter what   right which means that you can have amazing  business credit but your personal credit is   still relevant and important and you can't just  ignore that right so so people are a lot of people   are like oh I have business credit but they have  550 personal credit like yeah yeah there are loans   out there sorry and that's not gonna fly for  the most part no there are products that you   can get approved for with really bad business  personal credit but now you're talking about   very high interest rates and very aggressive  terms and you know if you're looking to get the   better rates and the better terms and you really  want to have you know powerful uh leverage then   um you know your personal credit along with  the business credit along with your revenue   and showing that the business is is Cash flowing  right is is important right so that's another   mistake that business make owners make they you  know yes we want to save money on taxes we want   to write off as much as we can but if you're Lo  if your goal is to expand and grow your business   and you're look you're going to be looking for an  expansion loan you need to show that the business   is profiting you can't show that you're running in  the negative or breaking even so there has to be   a balance between the tax write-offs depending on  how much revenue you're bringing in now if you're   if you can write off as much as possible and still  show strength and growth then fantastic but after   write-offs if you're showing either you're  just breaking even or you're in the negative   that's good for your tax purposes but you're  not going to be able to qualify for that SBA   loan it's no different for people who who are  entrepreneurs that want to buy a house you know   and and they're using it personally and they try  to keep their income low but that's going to make   us who don't qualify for a house exactly exactly  so you have to balance that that those parts   um and uh and just be holistic approach it  holistically right your personal credit your   business credit your Revenue your assets all of  these things are going to come into play depending   on the type of loan that you're trying to get  approved for so let me let me ask you this if if   you got a pretty much 99 as you said um you have  to put a personal guarantee on it anyway what's   like what's the importance then of getting a  business credit score if it's got to be personally   guaranteed anyway can't you just couldn't you just  show all the revenue and do business and uh just   go get a personal loan against it anyway which  is because the risk would be really no different   so the answer is yes you could you could but  having the business credit is going to there's   going to be some loans like I said like for  example even an SBA loan that you have to have   that SPSS score right okay so um you can have all  the good uh credit and uh Revenue but that score   still needs to be there there's a there's a lot of  the business credit cards require business credit   even though it's personally guaranteed right  got it some of them don't some of them yeah   you if you're starting off a new business you  have excellent credit you're at 750 to 800   personal credit you have you know good income  um you can get a business credit card without   a without having business credit right um but  there's going to be limits to the accounts that   you can get access to so if you're someone who's  really aggressively trying to get access to the   maximum business credit limits and lines that  are available and you're looking at getting   you know especially looking to get zero percent  interest promotion business credit cards then   you want to focus on building your business  credit to complement the personal credit right   um and so ultimately it's a compliment to the  personal credit and the personal credit is a   compliment the goal should be to be able to  secure financing whether it be credit cards a   line of credit or a loan in the business where  it's not on your personal credit at all right   because even though it's personally guaranteed  it's not going to show up on the personal credit   got it so now that debt on the business side let's  say you have a twenty thousand dollar credit card   with a nineteen thousand dollar balance on it  if that was on your personal credit your your   personal credit score is going to tank because of  high utilization but on the business side it's not   going to show up on the personal so that's a big  that's a big deal I mean to be able to do that   uh and and that would be one of the big reasons  that you would want to make sure you're focusing   on your business credit is is yes you might have  to personally guarantee it to a certain extent   but by building your business credit you get it to  the point where you don't have to have it all on   your personal personal side of it so it's going to  insulate and protect uh your personal credit from   the from uh like a debt utilization perspective  because I I think a lot of people don't realize   the impact that like the use of credit is  a huge factor in what your score actually   is oh yeah definitely so so ideally you when  you are looking to apply for a loan or a line   of credit or credit cards you want to make sure  that your credit card specifically your credit   cards your utilization not overall but individual  credit cards are under 35 as close to 30 percent   or less right under 35 is is great right um  anything over that your scores are going to start   to go down and then you start to show higher risk  for the banks and the creditors right so the thing   is this there are resources available that we can  tap into like and and I and I could provide them   um where you can access your three Bureau credit  report see exactly what the banks and lenders are   going to see and you can check to see what are  your not just what are your scores but what are   your limits reflecting on your credit report and  here's the problem I could pay a credit card today   let's say I have a twenty thousand dollar card  nineteen thousand dollar limit and I'm gonna go   ahead and pay that down to you know three thousand  dollars so I'm way under 30 right I could do that   today it's going to update with my credit card  company within 24 hours but there's a statement   closing date which is the date that the credit  card company reports that data to the credit   bureaus that's not the due date it's a different  date and it's not the same for every card or for   every customer so I could have 10 cards with  different statement closing dates yes and then   so I make that payment it updates on my credit  card statement and I think I'm great I'm gravy   my my credits but it didn't update yet so I go  and apply for that car for that house for that   credit card and I get the client or I get a  higher rate interest rate it's right funny   yeah yeah I'm laughing because I just went  through this personally so my wife my wife   um got this new credit card right like for  the house and like and and it was not a huge   balance it had like I think like a five thousand  dollar limit or something like that right and so   um she went out and um was buying all sorts of  stuff for the house and like whatever it was   just put on the credit card and we paid it off you  know and so like no interest spent no anything but   then she was like she got a notification that  her credit score went down and she's like what   the heck like why did that happen and I and I was  like so you know we had to have this conversation   she's like but I paid it all off so I shouldn't  my credit utilization shouldn't have been you know   negatively impacted I was like well but you spent  over and it closed you know and they reported it   before you paid it and therefore in the eyes  of the credit bureau you're you know you are   utilizing 80 of the maximum credit availability  on this card and they're gonna whack you for that   yep it's all about timing and it's knowing when  to and how to time it right but the thing is if   you look at these reports you can see the last uh  posted payment date or you can call the card and   ask them and if you pay your balance that you  want to pay give it at least seven days before   that statement closing date then you will always  reflect the lowest balance on your credit report   and that's what most people don't realize  and why they're wondering why is my credit   score dropping it'll it'll adjust next month  next closing statement right but for 30 days   unless you have the same cycle of usage exactly  then you're always going to be like what's going   on but if you get ahead of it give it enough  time to update with the bureaus worst case   scenario you know what you could do you go to the  credit bureaus and you can dispute it and they'll   update it for you within three to five days  they're gonna tell you because they're required   it's going to take 30 days but it's not a like a  dispute of a derogatory item it's a balance update   so yeah they'll update it but you don't have  to do that if you simply just time it properly   and you know stay ahead of it and here's the  thing Chris if if you're not applying for   any major loans right yeah a car loan anything  right in the interim having high utilization is   not negative it's not derogatory sure it's just  real-time reflection of activity of utilization   yeah because your credit score is just a function  of risk so the the lender knows the risk and so if   you have if you're utilizing eighty percent of  your credit score but you have on-time payments   and no derogatory stuff or anything no collections  nothing like that and then you pay that all down   your credit score is going to reflect very very  significantly very very quickly it actually could   go higher than it was Prior because you're showing  utilization and aggressive payback so like let's   say two people have the same credit profile and  let's say they had 50 000 of available credit   and one of them did not use that fifty thousand  or they used it very sparingly a little bit at   it they didn't use it much the other spent fifty  thousand but then paid back fifty thousand spend   fifty thousand again and then pay back fifty  thousand that one the scores are probably going   to reflect higher because of that aggressive usage  and payback sure and that record of utilization   is going to make lenders feel confident that  they can lend you larger amounts because you're   spending and paying back larger amounts versus  someone who's very you know very carefully not   spending and just barely using the account so  there's something I like to call it's I call   it the compound credit effect okay all right and  this is what happens if you leverage credit cards   in particular credit cards properly right you take  advantage of the zero percent interest promotion   on credit cards and you take advantage of the  rewards points cash back points travel points you   leverage the credit instead of spending money from  your checking account using a debit card which   doesn't give you anything back you take advantage  of these three four five percent rewards points   right immediately pay it back so that you're  always reflecting a lower balance yeah right and   what's going to start to happen is these credit  card companies are going to see how you're using   that credit and they're going to start giving you  limit increases they're going to start giving you   new zero percent promotions so now you're you're  12 months zero percent promotion is going to get   renewed for another 12 months so why do they do  that why because you would think for the credit   card company there's nothing in it for that  because if they see they're doing that you're   functioning like that and you're utilizing it and  they're paying you bonus points are they are they   like that almost seems and and I'm not saying  this is how it is I'm just like my my my skeptic   is coming out right it's like if I feel like the  credit card company is trying to trap you in some   way right they're trying to like let you do it  because they know eventually a lot of people   are not going to remain disciplined and they're  gonna fall like you know what I mean like why   why you know what I I just I agree with you that's  that's maybe a part of it there's probably a large   percentage of folks that don't remain disciplined  with it and fall into a trap and end up you know   paying the fees and whatever there are always  going to be some fees like if you are taking   advantage of zero percent on a balance transfer  there might be a two or three percent transaction   fee right yeah they make money there but there's  something else it's called The Interchange   okay what's that you know interchanges so The  Interchange is the minor minute processing fees   that occur whenever a credit card transaction is  is created between a merchant and a and a consumer   so they're making that money and that's where  American Express makes all their money I didn't   know the name for it it's called The Interchange  so that that those fees they're they're minor like   you know fractions of points but when you add up  millions of millions of people you know creating   hundreds of thousands of transactions you know  it's well it would be billions of transactions   you know that by itself they don't need to  charge interest rates that's that's just yeah it's like what we talk about with infinite  banking if we think about interest volume versus   interest rate that's that's what you're talking  about there you're talking about volume of just   massive amounts of transactions exactly when  you make little tiny amounts that'll totally   Trump the the rate of return that's right  that's it or you know or the the cost of   that interest rate on your credit card so  that okay that makes sense to me for the   first time ever thank you yeah you're welcome  so that you know that so if you leverage credit   properly and you're doing it on your personal  credit and then you build up the business credit   and you start getting access to business  credit cards now you have double the power   you can leverage the business credit for the  business and keep that personal credit for when   you need it yeah right awesome and then once you  get enough business credit you can start buying   assets with the business credit like vehicles cars  so here's what happens most business owners own or   they they're financing a car in their personal  name it's on their personal credit so that's   increasing your personal debt to income ratio it's  a 100 personal liability and then we're trying to   squeeze out tax deductions on mileage and gas  and you know maintenance on the vehicle because   we are using it as business owners right if you  can finance that vehicle on your business credit   and now this is somewhere now where you can get  that asset um and I'm calling it an asset because   a vehicle in your name personally is a liability  right right but in the business it becomes an   asset right it depends on how you use it but if  you can Finance it in the business this is one   of the only places one of the few places that you  can actually 100 100 remove the personal guarantee   got it right so now you can Finance the vehicle  100 in the business no personal guarantee it's   a business liability business asset does not show  up on your personal credit your monthly payments   to that vehicle you're paying for a business  expense it's a business asset right so it's a   it's completely different versus when you own it  on your personal that's going to free up space on   your personal credit you have no more power and  available credit to do more on the personal side   I love it I love it that's awesome so that's and  you know with with you know with the Advent of   uh programs like turo and different things  I have clients that have have financed two   or three vehicles Teslas and Mercedes-Benz on  their business credit no personal guarantee   and that's an income a passive income to their  business that they just use you know with these   uh Source resources there's turo and I think  there's another one I forget there's a new one   that people are using yeah yeah well turo and and  we've done that I mean my wife and I have rented   our car like because we used to travel back to  Vermont so we had a Denali that we used to put   up on tour every now and then when we were out of  town for like three months you know it's like Alan   just let it sit in the garage exactly and we'd  rent it like probably three times or four times   in that three month period and it wouldn't like  we weren't looking to make money off it but it   paid for the car it paid for the car you know  that's something that's awesome it wipes out   that expense you know what I mean like and it was  literally minimal wear and tear was fantastic but   what when you do two row like that and you do it  through a business credit it genuinely is an asset   because that that car is the asset creating cash  flow and you're making a spread on the difference   in the expense and the revenue created and so from  that perspective you're creating that asset and   when you have it through business credit when you  do it personally you're always going to be limited   to a certain extent on how many cars are going to  give you loans for it's kind of like you go get a   home right you get one primary home rate every  other thing home after that is going to be an   investment home or a secondary home and the rates  start to change right right when you do it through   a business credit can it can you speak to that  at all like the difference in rates and expected   expectations around that and how  business can help you in that way   so can't really speak to the rate so much um more  so that that that as if it is generating Revenue   then the business now has the ability to service  that debt or more debt so they're not going to   limit you to just one or two or three vehicles  you could end up with a fleet of vehicles if   you wanted to go that far you know what I mean  right but like folks that are in the trucking   industry Logistics Transportation you know not  only are you able to get business uh you know   Finance the vehicles in the business and it could  be other businesses that have like big equipment   like you know big printers or 3D printers or you  know very expensive equipment or assets to the   business all that could be bought you know through  the business credit you can get you know uh dell   um Mac um you know you can get five to  twenty thousand dollar limits within the   first two to three years and they even have a  lease program where you just lease your your   new uh device 20 get a fifteen thousand dollar  you know most powerful Mac that you can imagine   right and then at the end of the lease but  it's all on the business credit and then at   the end of the the lease term you just send  back the device and they give you a new one   nice so so let me ask you this let me ask you this  somebody's starting off a business today right   like let's just say today they started they they  go and they follow the steps that you're talking   about how long is it until they can go out and  maybe get a credit card in their business because   I know you've done a couple videos recently um  and if you want I'll put the links to those down   in the description below as well to the videos  that you just did on the credit cards that you   can get with no personal guarantees or something  like that because like if somebody wanted to say   hey I want to go get my business credit to the  level where I can start to do this stuff with   no personal guarantees how long does it take to  get it set up like that if you're really diligent   about doing this the right way so there's going to  be levels to it so if you're if you're a startup   um you're or even if you're an existing business  right because I've talked to business owners 10   15 20 years in business that's how I started  this actually because we're you know helping   folks with financing talking to folks 10 15 years  in business and they expect well I have all this   tenure I can get business funding with no personal  guarantee and I'm like okay well let's check out   your business credit and they don't have any  or it's very superficial they have to start at   square one just like a brand new startup the only  Advantage they have is that they have the tenure   of the business the time in business and then  the revenue where a startup has less time and   they have to build up that that Revenue but as  far as the credit building process it's going   to be the same all right um so it's basically  going to be between uh I'd say about 90 to 120   days to complete tier one where you should have  around three or four accounts reporting on all   three of the business credit Biers I mentioned  Experian Equifax and um done in Bradstreet right   um there's so you I in my course I have about 12  accounts and that's because some of them report to   experience some of them report to Equifax some of  the reports are done in Bradstreet so collectively   you set up these 12 accounts you're gonna have  the profile that you need to cover all of them   it's going to take that 90 to 120 days nothing  you can do to speed that up it's just the time it   takes for those bit for those uh companies to send  the data to those bureaus and for it to report and   for it to show it now with that in place if you  have excellent personal credit you could probably   go and apply and get approved for almost any  business credit card that you wanted to because   you have the credit minimum credit requirements  on the business side and you have really good   personal credit they're still going to be personal  guaranteed but there's there are alternative   business credit cards that are not necessarily  your revolving credit cards that are going to give   you net terms those net terms could be 30 days 60  days 90 days sometimes they'll give you six months   and sometimes even up to a year okay okay net  terms simply means that it's like a charge card   right so you have to pay back in 30 days but  if they give you 60 days you have to pay back   in 60 days there's actually no interest on them  right you just have to pay it back in that time   right because again they're making money on the  interchange on The Interchange got it okay right   so but they're looking at what are they looking at  they're looking at the business credit and they're   looking at the business Revenue well that's kind  of what American Express does doesn't it it is   I mean yeah that's that's basically but there's  a lot more available besides American Express   that that can give you a lot of spending power  with these net terms and the the limits can grow   twenty to fifty thousand dollars with you know  30 60 90 days until like I said maybe six months   even in some cases right so when you combine  these alternative and now those are no personal   guarantee okay those you can get no PG because  they're looking at the revenue they're looking at   the business credit the the credit cards that are  more like what we're thinking of like a revolving   credit card account that you want to have that  revolving minimum monthly payment option that's   gonna require that personal guarantee now these  charge cards do they offer like uh you know how   American Express has pretty good reward points and  stuff like that go with it do these other ones do   the same they do they offer rewards they offer  a lot of advantages um there's two I could just   name real quick there's one called Divi um okay  I'm an ambassador for them I have a video on them   there's another one called revenued that's the one  I think you're talking about I'm Ambassador for   them I have a video for them there's a whole bunch  of them capital on tap um there's a whole bunch   of these accounts that you can get access to um  and they're not personally guaranteed okay that's   awesome so so let's let's talk about this for a  sec so when you personally guarantee something   and I think I know the answer to this but I  want to ask it and have you say it probably more   succinctly than I could when you personally uh  guarantee something I go get a credit card right   so you just mentioned charge card would be no need  for a personal guarantee if your business credit   is set up the right way if you go get a credit  card and it's got to be personally guaranteed   when you personally guarantee that business  credit card and then the business uses a   credit card how does that impact your personal  credit score it does not does not it does not   unless that's actually my answer than I thought  you were getting unless so I did not unless you   default unless you're def unless you default  then it refers back to the personal guarantee   okay so but if you if you're basically a co-signer  that's because that's what a personal guarantee is   right like you're basically kind of co-signing  right like right you're guaranteeing that you're   gonna back it up no matter what even if your  business fails and so um so on a month in month   out basis the credit usage on that even if it's a  credit card and you're personally guaranteeing it   doesn't it doesn't show up impact debt to income  ratio on the personal side correct I would say   99 there's one card out there it's a capital  one that will report on your personal credit   the rest of the business credit cards do not yeah  so don't get that one you know it's it's actually   okay though because it's a starter card so if you  really needed like if you didn't have the best   personal credit and you really wanted some credit  in the business name it's a card to start with   um but um but uh but yeah the the for the vast  majority of the business credit cards they will   not reflect on your personal credit which means  if you're maxed out on the business credit cards   you're not impacting your personal but if allows  you it allows you on that oh sorry I don't want   to cut y'all yeah I was just saying if you default  30 days late then it's going to hit your personal   guarantee on your personal credit so you don't  want to do that got it okay so but from that   perspective like if I had a ten thousand dollar  credit card limit right and I'm doing like paid   traffic and I'm utilizing that credit card to pay  for my ad spend and I want to get the points and I   know I'm going to spend it or I know I'm going to  spend that money anyway right right I'm spending   money on ads no matter what right right and I'm  thinking about very specific situations here for   me it's like if I know I'm gonna spend 10 to 20  grand a month in ads boom right like swipe rather   than pay cash use a charge card build my credit  pay that back every month get the bonus points   you don't sound credit effect that's what's  happening credit effect right yeah so now I'm   able to do that without having a negative impact  on my personal credit because I'm using the Ah   that's yeah that's awesome and then you're getting  the cash back or the rewards points travel points   I know you travel a lot you know all of your hotel  accommodations your flights could be covered by   just your regular spending you know and even on  the personal side you know for someone that maybe   doesn't have that I don't know maybe you're just  looking at this you're not a business owner you   can still there are rewards points in cashback  and travel points on personal cards too you know   that you can leverage and um take advantage of if  you're not a traveler there's certain cards that   are are going to give you three to five percent  cash back when you go buy groceries when you go   to the gas station you're gonna go buy groceries  you're gonna go to the gas station right the   problem with people and when it comes to credit  cards credit cards have a bad reputation because   of how how um have they been abused and misused  and people end up getting in to big trouble right   yeah and as we know credit card interest rates are  compounding so and they're high and it's high it's   compound interest on the credit card so if you  have a zero percent interest promotion credit card   and you take advantage of that zero percent get  the balances down to under 30 percent right before   that promotion expires right chances are you can  get another zero percent extension right keep   leveraging that zero percent or once that zero  percent expires you go get a new zero percent move   the balance from that one to the new one and keep  moving to one entry then exactly yep yeah so you   can literally stay with stick with zero percent  if you leverage the credit properly keep taking   advantage of the rewards points um and look you  could buy all your Christmas presents and you   know birthday presents on points right if you're  not a traveler right if you're a traveler you can   pay for your flights and your hotel accommodations  well it's just efficiency right we like it goes   back to the volume versus rate conversation if  you're able to get two percent to four percent   worth of bonuses on every dollar you ever spend  now when you go to get to Christmas time or you've   got to travel for work or you got to travel  for personal reasons take the family vacation   like that's all money you were gonna spend anyway  get it this way and you were able to get that two   to four percent on every dollar you ever spend it  makes it just increases your financial efficiency   on a huge way yes is it is it more does it take  more um responsibility and more intentionality and   more planning yeah but just like anything as you  start doing it it starts to become second nature   and then you wonder why did I never do this before  like I should have been doing this years ago right   um for sure but yeah it's it's it becomes another  uh Revenue stream or income stream you know   technically and guess what those reward points and  cash and travel points there's no taxation on that   yeah that's awesome I mean yeah I've read articles  about the a couple guys that like game the system   and got hundreds of thousands of dollars of  rewards points and no taxes you don't get taxed   on that so there's another little way to you know  to really leverage you know but you know a lot of   times people think to themselves oh it's only two  percent it's only three percent it's not that big   a deal but again if you're doing it every day on  every on your living that you're going to spend   out of cash out of pocket anyways you just change  the habit of using the what most people do is they   use a credit card when they can't afford something  yeah exactly and it can't be that yeah no you   use the credit card when you can't afford it yeah  because you can pay it right back and and leverage   and advise that for most people yeah it's a  difference between debt and leveraging yeah versus   leveraging is going to give you either return on  investment or give you uh cash back or grow wealth   debt is just gonna take you down a rabbit hole you  don't want to go there but but with that I think   that's where people get in trouble so let's just  talk about that really quickly because I think   it's really important it's like to leverage it for  to utilize it as Leverage is great but let's face   it people go through swings in life you know like  you got to be super disciplined and and be really   self-aware of of your current set of circumstances  right like because I just got done doing a video   before you know we got on this one right and I  was talking about the importance of saving before   investing and talking about the cyclical nature  of the world and the economy and everything right   so when when things are going really well and  you've got your income and the revenues coming   in and whatever and you can utilize a credit card  for leverage that's great I think where people run   into problems and I think I'm saying this to make  it so people avoid having this happen to them is   when things start to kind of take that downward  swing and your Revenue goes down and you can't   afford as much you have to be really aware to not  keep putting the amount of money on your card that   you were putting on when times are good and and  manage that cash flow because what happened and   I've seen this like in all the coaching and the  stuff that I've done with people is they're like   things are great and then things weren't great and  I'm like well you have all this credit card debt   oh yeah it's because we're we're used to going out  and putting four thousand dollars a month on our   credit card and going to dinner then Johnny lost  his job right and we just kept going out anyway   I got news for you like the habits got to change  you know what I mean like you've got to be like   otherwise you're going to run into problems and  I think it's it's easy to kind of like lose touch   with that because you still have the card like  right it feels different right and and emotionally   we just kind of want to right that's the danger  that's the danger that is the danger so just be   very very aware of that yes you know what I mean  like because that's huge so one last question   before we go I've been it's been on the top of  my mind since since you've been you brought it up   credit score for your business um what did you  say it was called again so dun and Bradstreet   is paydex it's called the paydex score it's from  zero to a hundred okay so that was my question so   we're used to talking personal credit scores like  anything between like 6 20 and up you can kind   of get a mortgage anything above seven to seven  twenty seven forty is like okay 740 760 and up is   really good right like so I think most people are  thinking about it in those terms like so can you   explain the difference in how business credit  works from a number perspective sure so uh so   first done and bradstreets paydex score is zero to  a hundred okay um Equifax it's called the intelli   score and um that's from zero to 100 as well I'm  sorry that's Experian Experian is the intelli   score Equifax is a risk score that's what they  call it and that's from zero it's tool there's   two of them there's one from zero to a hundred  and then one from zero to nine hundred right okay   um but you just focus on the zero to 100 and  ultimately you want your score on all three of   them to be 90 and above right okay so your first  round of building credit your pro if you do it   properly you should hit around 80 to 90 and then  as you continue to you know manage the debt you   should hit 90 or higher okay what what determines  that is going to be how fast you pay the bill so   that's that's the thing about the business credit  it's not even about paying it in full but it's how   fast do you pay it right so I swipe the card on  the charge card to pay for ads and then next day   pay it off pay it off don't wait don't wait see  with personal credit you could wait to the last   minute got it you can even pay late and it's not  going to affect your credit like right up to 30   days late yeah you're gonna have a late fee yeah  yeah but it won't actually hit your credit with   the business credit you're not gonna see like  a ding like it doesn't say oh you're late or   anything but what happens is just think of it like  this every day that you don't pay you lose a point   got it you got it so they reward you for  fast prompt payment so if I'm doing that   then let's okay let's let's break down give me  a little personal coaching here okay so like   I'm I'm spending 700 a day on ads right and I  put it on this card do I send in 700 bucks a   day to the charge card yeah you could do or you  could just do like 400 a day to the charge card   something like that and then do a lump um at  the end of the month kind of right so you're   because all you're showing is that you're you're  on top of it you're paying it immediately so if   you're doing that you're probably if you're  doing it like daily like the next day you're   gonna end up with like a 98.99 score because  you're literally like there's no delay right   um now the the thing to also note is if it is a  net 30 account or a net 60 or net 90. uh you have   to make sure you pay the invoice on the account  okay okay so depending on especially when you're   building credit when you're first starting some  of the accounts you're going to set up are going   to be accounts with stores or with vendors okay so  they'll give you and that that vendor sells stuff   maybe office supplies or this vendor sell you know  sells um gas even there's gas cards too yeah um so   you when you process that payment if you just go  pay it but you don't pay the invoice they're not   going to report that transaction to the bureau  you have to wait for the invoice and especially   when you first start it might take a day or two  or three for the invoice to come and I had a   client once even though I told him exactly what  I'm telling you he I you know a month later his   score was like a 50 and he's like why I was like  well you paid it like 40 days late he's like well   the invoice didn't come in the mail to 30 days  later I said but I told you to pay the next day   he was like well I didn't see it so I figured I'd  just wait for it to come no no no you have to be   proactive you got to call the company and say hey  I don't see the invoice help me out here I want to   pay it right away and then they'll help you to do  it don't sit back and just treat it nonchalantly   it does require more intention and more just you  know staying on top of that but it's worth it in   the end if yeah you can do that it's so worth it  for sure and and I mean at the end of the day like   you build the company big enough you hire somebody  that can help manage that side of things for you   yeah yeah and another thing you do is you can use  some of these spending accounts as the account to   pay your other accounts so this is one of the  strategies in building business credit I have   I have you set up an account a spending  account which it reports to the bureaus   right and then now you have a net 30 term on this  account you use this account to pay your other   business credit accounts last thing I want to say  is also you want to look at all of your utilities   um as a new business owner um or even as  an established business owner look around   in your business in your personal life what can  you transfer to the business got it can you make   that light bill a business expense call the like  phone call the light uh electric company right   um if you have a gas bill can you make that a  business expense if you have anything that you   pay right now if there is a way to transfer that  to the business make it a business expense do that   right now they might not report it to the business  credit bureaus but there is a business credit   service called e-credible okay and what they do  first you pay them like ten dollars a month as   a membership and they report that to Dun and  Bradstreet just your membership but then they   search public records for any utilities it could  be a phone bill light bill any of these things   we're talking about like your cell phone bill for  instance cell phone because that might not that's   not going to report but if it's in the business  name they're going to detect it and they're going   to report it to Equifax got it which is very  helpful because there's not a lot that reports   to Equifax um so that's another thing you can  do I had a client tell me well I don't know   I don't I don't have you know much I told them  you know go look at the light look at the phone   look it came back two three months later he had  six accounts reporting to Equifax that he didn't   think he could but again it just took a little  bit of brainstorming to yeah you know and now   those are business expenses which are additional  tax write-offs to the business that's amazing   well man that's a lot to chew on so I think uh we  gave a ton of value in this if anybody is watching   this and they have any questions about anything  to do with business credit I know you have some   master classes and stuff like that so um what  I'll what I'll do guys is I'll get the links   from Sebastian if you want to go deeper down this  rabbit hole and uh and learn how to do everything   he's talking about I'll I'm going to share the  links down below for all of his different content   um I'm gonna put the link to his YouTube  channel if you if you want to get more   content about this kind of stuff um  and is there anything else I'm missing   um no just just wanna I guess just uh just touch  on I guess just overall business financing okay   yeah oh yeah yeah yeah yeah and just just  um kind of mention you know there's a lot   of funding options out there and even even with  what's going on you know in in the economy um the   the banks are right now they're trying to save the  day so there's there's incentives uh the SBA has   um waived all of their fees to the banks for SBA  Loans right so um you know the banks are they're   trying to incentify the banks to get money out  there to business owners because if if they can   do that it's it's us it's it's us small business  owners that you know are really the backbone of   society of of of our whole economy so yeah we if  we can you know get financing for our businesses   to grow the business to hire more employees create  more jobs this is what it's all about and so right   now this fun there is funding of available I  know like for example in the real estate space   a lot of mortgage lenders are freaking out and  people in the real estate industry are freaking   out but right now in the business finance space I  have to say it's very exciting because the banks   are putting money out there they want to lend so  unless there's another shutdown yeah yeah yeah I   don't think the banks are going to stop lending to  businesses to businesses but and and guys just so   you know like Sebastian is a wealth of knowledge  as you've seen in this with all that stuff like   I said he's he's the Director of Finance with  orange-fi which does the business lending stuff   he's got the business credit 101 stuff and he's so  no matter I would say no matter where you are on   the spectrum of like business owner looking to get  any of this done for yourself I would reach out to   them and and connect with them and learn more from  him and I'll put all the links to do that down   below so and if you have any comments questions or  whatever and you just kind of want to put them in   the comment section go ahead I check them all  the time I'll let Sebastian know uh and he'll   probably check them all the time as well um just  to see if there's anything relevant to respond to   um and that's it so make sure if you haven't  already subscribe hit the Bell that way you're   notified every time we launch a new video go  check out Sebastian's Channel subscribe follow   him as well and uh that's it man hey thanks so  much for being here this is so much fun thank   you thanks for having me I want an interview  for a long time so I'm glad we finally got this   in so guys have a blessed inspirational day  we will see you on the next video take care

2022-11-15 14:59

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