How To Build Business Credit (UPDATED 2023)
Okay, I am here with Justin Mirche of Justin Mirche Consulting. We are about to have a conversation because both of us have the exact same experience where we blew out our personal credit trying to build our businesses, and then we found out about business credit. You now know about it. I know about it. You are helping others and we are going to have a real conversation about the difference between personal credit and business credit and business funds. Welcome. Thank you. I'm Justin Mirche. I'm the president of Justin Mirche Consulting. We help people build out their business credit so that they can get the funding that they need to support their business.
And what's, like you were talking about, Noelle, I know your story is very much the same as mine and I think maybe back then that's just kind of the way you did things, right? Yeah. It wasn't hardly known, right? Yeah. If you were going to launch a business back in the day, you were going to put it all on the line. You're going to take your loans, you're going to max out your credit cards, you're going to ask your family and friends for money. Yeah. You're going to just totally put it all on the line and if it works out great. And if it doesn't, then not so good. Right? Yeah. I didn't have any idea about the power of business credit. Yeah. I mean, it wasn't even
on my radar. I worked for a software company. I was an executive salesperson. I took out a massive personal loan and that's how I funded my first business. There was no separation at all from my personal situation and my business situation. And now I understand that the primary reason, well there's a really a lot of good reasons why business credit is really important, but one of the primary reasons is that as business owners, we need to separate our personal from our business and that's true. And that's the whole point of an llc, right? We create these LLCs as their own entities and then we put everything on our personal, which makes zero sense at all. Right? So that's a great point. So let's kind of get into that because like I said,
we have so much in common where we did blow out our own personal credit. And so like I said, I think we had the similar situation where we wanted to be entrepreneurs. We had no idea that we could build business credit and then we found this opportunity later, almost later in life, later in our business life. So let's kind of talk about the old way, what people used to do and talk about what's the new opportunities are, Right. So the first thing I kinda wanna talk about is that personal credit was never designed to support a six figure, seven figure business.
It just wasn't. Your limits on your personal side of credit, if you have really good credit might be quite high. I mean, I have high limits. I have 20, 30, 50, $60,000 limits. But on the business side of things, it can be 10 times that or a hundred times that. Having a credit card on the business side that has a hundred thousand dollars limit or no limit is very, very common, right? Yeah. No limit. If you're a business owner and you're making widgets as an example, and you've got all this inventory and all these raw materials and all this labor and you've gotta wait 60 days to get paid and then after that 60 days your receivables aren't paying, right? Yeah. So what are you going
to do in the meantime? That's where business credit comes into play. Back in the day, there really wasn't a whole lot of options or maybe it was there, but it was so cryptic, nobody knew about it. Right? By the way, it still is cryptic. It is. It's still very cryptic. It is, yes. Yes, it really is. I paid even to learn about business credit that or even existed, I had to pay a thousand dollars. Right? Right, right. Well, not only that
on the personal side of things, people are always trying to get our business. It's all over the place. But on the business side of things, outside of your major financial institutions, there's not a whole lot of information about it and I'll give you an example. When I first started business, I needed a paper folder. I needed something that would shoot up, put it out, bold it up,
cause thousands and thousands and thousands of things were going on every single month. So you had a paper folder. So I call it this company, I don't remember what the company was. Now mind you, I already had business credit or so I thought, right? I had business credit cards at that time and the company had, and this was actually kinda embarrassing cause it was one of my employees that actually arranged the deal. They said, do you wanna pay for this cash? I think it was just under $10,000 or do you wanna do same as cash and we'll just pay it out because you have to have a service agreement anyways, that's no-brainer. If it's same as cash, I'm not going to give you all the cash up front, right? I said, let's do, let's pay it out with a service agreement. They denied me. They said, I'm sorry, you don't have the business credit. In order for us to do that, not only do they deny me, but they wouldn't even write up the service agreement if I paid cash for the machine. Wow. I was like, wait a minute, I've got amazing
personal credit. I've got business credit cards. So what's the problem? Well, the problem is the business credit cards that I had weren't reporting to the business credit bureaus. So there was no sign that anything was ever happening and this is what we find on the business side all the time.
It's a vast majority of creditors are not going to report to the business bureaus. You have to get that stuff set up with DUNS and you have to know what reports where, and you've gotta apply for the right things and if you're a brand new business, you're not going to get that American Express no limit. Right? Because a lot of people think they can just, there's all kinds of myths, they think they have poor credit, they can't build business credit. And that is false. That is furthest thing from the truth. You can build out your business credit in your EIN only without running your personal credit. If you do it properly, you'll still get high limit revolving cards. You still have some
of the same opportunities you can, even with your Turo program, Noelle, a lot of your people talk to me about that. You can actually about your business credit and put your cars in your business credit only. Right? . I have a story to talk about with that. Did you? Okay. No, we're going to get to that because that is important. I want people to know that's a such a powerful thing that I'm wanting to educate and tell the world, all of these aspiring entrepreneurs and I think one of the things I had mentioned to you before we started is I said, I wish I would've known about this even before I transitioned to entrepreneur. I was the same. We have the same story. I was in corporate America and I literally have my students now that will be building their business credit while they are still working. So then when they transition out of
working, they're already set up and that is incredible to me and I am so proud of that, that I've been able to to teach people. So tell us more about that and how that works. So smart. I mean, so smart. I worked for a software company. I was an executive salesperson. I flew all over the country, which travel was fun, but only for a moment. It was fun until you
don't see your family most of the time. After I had kind of ran that through and I realized that I was never going to be able to do the things that I wanted to do, I needed to do my own thing. I started my personal credit company and I had a full year that I was testing the market. I was doing pro bono work for lender, seeing how it's going to work and how I can best serve my community. I had that year to build out business credit, but I knew nothing about it. It wasn't even on my radar. Not mine
either and when you tell me your students are doing this, and I know they are because they talk to me about it, you're teaching them. Well yeah, they're preparing for their launch of their business. You can create your LLC. You can take that year to build out business credit, save your money before you make the full jump. It's amazing. It is. Now, some of the mistakes that I do see,
and I know you teach this also, a lot of times people are getting denied for business credit and they think it's for reasons that it's not. Now to separate personal from business. Personal is highly regulated. Highly regulated. They have to give you a reason for denial. If somebody checks your personal credit, it actually is an inquiry. It may decrease your scores a little bit. They
have to announce themselves, the credit scores work differently on the personal credit side of things. Now let's flip over to the business side of things. It's completely different. Yeah, I can fool anybody's business. I want to, there is no law against that. Inquiries don't matter. You can run your credit a thousand times in a month. Not now. That one I didn't even know. Ok. Yeah. Inquiries do not matter. It anybody can pull any, not regulated. It's a different thing. It's meant for businesses that check out. It is. This is a different beast, right? And you can have your $50,000
credit card, your a hundred thousand dollars credit card and other things and have them all maxed out and guess what? You can still have a near perfect business credit scores. Cause all they care about is if you pay your bills on time, Right? So the massive difference is that personal is designed to support your personal situation. It's not designed to run a big business. So the business side of things says, yes, spend your money, max out your credit cards as long as you pay on time. Yeah, Good. No, great point. I absolutely love that. And so let's talk about too how some people are taking these side hustles and turning them into real business so that they can get real business funds. So the people that are
doing Turo or Airbnb or some of the things that they just do on the side and really transforming their whole business situation by making it a real business. Talk about that or a sec. No, and that's an amazing thing. So the Turo situation, which again, I learned a lot from you, Noelle didn't even know about it until I started watching you and then some of your students would come to me, especially on the business credit side of things, or I wanna start, I wanna buy some vehicles and start this. But first let me start with a story of how this lack of knowledge about business credit infiltrates even really successful business people. So I recently took on a business credit client who has a rental a brick and mortar rental.
They have 80 different vehicles. They arranged special financing with dealerships and whatnot, not on their business credit, just kind of on the side and each of them had multiple cars on their credit profile. One which got wrecked and wasn't paid so it ended up charging off. So we've got successful business owners that have been in business for a really long time, have huge cash flow and are not utilizing their business credit at all. So there's a couple of problems
with that. The first problem is that they're not separating their personal from business. Can you imagine if somebody gets in a wreck in that car and they do serious damage to somebody else, and it's on your personal credit, right? Oh my gosh. They could come after all of your assets, right? Yeah. But what's really amazing about Tu ro is that
I have people that are coming to me before they even start their business and they understand the value of business credit and they say, okay, we need to get to the place where I can get vehicles just in my EIN only. There's lots of ways to get that done as far as the business credit is concerned. Some of the pitfalls that I see people kind of fall into when it comes to business credit is that, and they're real simple. They think that they're being denied for a variety of reasons, but the reality is, is that they're being denied for maybe something really simple. Maybe they created their LLC with an address and they're using a different address when they're applying for these vehicles or these high limit credit cards or maybe that's the problem. So a lot of times there's problems with the foundation. Sometimes we have to dissect
the LLC and make sure that that they're completely fundable. So one of the biggest issues that we find in the business world as opposed to the personal side, and there's some problems on the personal side too, but in the business world, the biggest issue is fraud. It's a huge problem. Another big issue. There are a ton of LLCs that are created and very few ever see any revenue. That's true and then of the ones that see revenue, many of them go upside down. So business creditors are stuck in this kind of silo of looking for any reason to decline you. It can be that you're using your personal cell phone instead of spending the
money on an 800 number. It can be that again, that you're using your home address instead of spending money on having a virtual address, which they are everywhere by the way, right? So there's lots of different kind of fundability aspects that we need to go through and dissect and make sure everything is set up correctly so that you can get fundable or so that you can get funded. I love that. I love that. And it's just such a great point. Like I said, I think so many people, even that educated, been to school have businesses, really don't know the power of business credit. So you said another point that I really want you to touch on is how much more funds you can get with a business setting up the business credit properly versus trying to rely on your personal credit. Talk about that for a second. I, you know, and I know the answer. The truth, how much funding is endless amounts of funding, right? If you have top-notch credit, personal credit, and top notch business credit, I mean the sky's the limit, right? You're going to get funded. Sky's the limit. I mean,
sky's the limit. Get credit limits that have zero limits on 'em, right? Zero limits. Yeah, no limits. Yeah. I have limit have two, three credit cards in my business name that have no limit whatsoever. I've charged hundreds of thousands of dollars on those credit cards at a time. And they like you for that. Yes, thank you. They
do. You can go buy a few... buy a Lamborghini or whatever on your business credit. So the funding is dramatically different. So where, as an example, you might get a $10,000 credit card on the personal side of things, and you might think that's a good limit, right? And that might be a good limit. You might get up to 30,000 that's getting pretty high up there. But on the business side of things, if you
build out your business credit properly, getting 10 times that is nothing, right? Is nothing at all. Even just getting high limit store cards, they're probably going to start you out at five or 10 or $15,000. Remember? That's true. Yeah. The business side of things, they're looking to support a business. They understand that concept. On the personal side of things, a bank may wonder why you need a $50,000 limit. Yeah, I like 50,000 limit credit cards though. I hate it. Yeah, yeah, yeah. It it's so, it's so different. And that was the big mind blowing thing to me that when I started using my personal credit cards in my business, I was running ads with them. And so I'm like, yeah, you gotta run ads. People told me, get on Facebook,
they got these great ads and I'm putting my credit card in there and I'm thinking, yes and then two months later, they're shutting my limits down, they're putting the limit to what the balance is, and then my credit score is going all the way down and I'm like, whoa, what happened? Even I was even making the payments. But they, it's in the, it's so annoying credit, they get it. It's annoying, it's hard. They almost are afraid of you using those credit cards to those limits and in the business world, they're like, go for it. Go it. As long as you're making your payments, they are encouraging you to grow your business and they understand you need to advertise. No, you're absolutely right about that. And it, it's gotten better, Noelle, they don't do some
of those scandalous things. They used to do, oh, I don't remember if you remember universal default, but if you're using your personal credit, and let's say you default on one of your credit cards and you had five or six, they would universally default all of your credit cards because you were defaulted on one of them and they'd max out the apr. Now you're paying 29% on all five of your credit cards used to happen back in the day. What you're talking about used to happen back in the day. Doesn't happen as much as it does now. It happened to me. I'm old, I'm in my early forties and I'm like, I remember that and just being devastated because at that point, that's affecting your business. And so you really gotta get off of the personal credit
track because it's going to limit what you can do in your business. If you're relying on your own personal credit cards to grow your business, it's not going to be the track that you wanna be on. And so business credit and business funding and setting it up properly, like you said, getting a business address, even if you're just getting started with the virtual addresses and not those things that you teach, it's business changing. So it's life changing. And then knowing what creditors are going to report. Nobody knows about the vendor credit,
but there's, there's more, right? Knowing we will apply for things. When does it make sense to apply for things? Do I have a robust enough business credit profile to get that high limit credit card yet? And trying to keep everything in your EIN. Now, there's some situations where you're going to personally guarantee things. So many
entrepreneurs are like, how do I get a half a million dollar line of credit? I'm like, well, you are going to have to personally guarantee that, right? Don't have any cash flow. It's not possible. So we have to be creative and find other ways to fund our business. So once you get your business credit built out appropriately, there's so many different options for alternative financing. Yeah. I mean, you can use your credit cards, you can buy your cars, but then there's all kinds of different loans that you can get that aren't advertised, but they're there. They're there for businesses only. A good example, that's one too that I don't think people know
how many unadvertised business loans and business funds are available that you're just not going to know about until you kind of start entering that World. That's right and if you Google business loan, they're going to probably connect you with a major financial institution. You're going to get denied, right? You are, I promise. That's right. They want you to have 10 million in sales. They want you to be open for 10 years. They want these no crazy things or you're going to find maybe the FinTech company that does a personal loan, but then I'm only going to offer one form of business loan instead of all of the different types that are available to you. You're going to get denied and you're going to think, well,
I can't get a loan. And that's just not the truth either. Bridging the gap in funding while we're doing business, and I kind of wanted to bring this up because there's a real good example, and many companies do this and this, the way that big companies operate, we have the same ability. One that comes to mind is going to be Walmart and this is a, well, a well-known kind of machine that runs, right? They have all net 30, net 45 with all of their vendors. When I go, people do not know this, Justin, tell, preach, teach. Cause people not know this. That's which just what you think. No one knows this. Tell them the secrets. Yeah, absolutely. Yeah. So Walmart has net 30, net 45, and probably even some net sixties. So with
all of their vendors. So when I go into Walmart and I go and I grab that bottle of ketchup and I go and I ring it out in the self checkout line because they don't apparently like to check out your stuff anymore at Walmart. And immediately once I scan that they have just in time inventory, it's on a truck back to that, back to that same store. What ends up happening is they're able to move their inventory probably 3, 4, 5 times in a 30 or 45 day cycle, but they're only paying once. So they're hundreds of millions of dollars of inventory is carried on the backs of their vendors. So they take all of that cash and they build more stores, they expand their business. We have the same ability on the small business side.
If you build out your business credit properly, we have the ability to be creative in the way that we manage our funds. Not everybody has a million dollars sitting to the side and also we have the ability to get ahead of the curve because I can tell you what I'm seeing right now in the economy, and I know that you see it also, Noelle. Yeah, it's getting bad and it's going to get a lot worse, right? Yeah. And guess what happens? Small businesses are the first ones that get hit the hardest. They get hit the hardest and the problem is that we've had so many years of
just craziness in terms of expansion in the last couple of years, stimulus money and government spending and it's just been crazy. You come even blowing up, I mean, even last year I could throw a dart at any stock, go to sleep, come back two months later and make money, right? It's not like that anymore. But what ends up happening is when it's good, it's really good for small businesses. They fail to build out their business credit, secure the funding that they need
and then when the economy crashes, what ends up happening is they're all scrambling trying to figure out how they're going to make ends meet. And unfortunately, sometimes that's too late. This is something that we need to build from the get, and we right now as much funding as we can and have it all sitting on the sides. That way when something happens, we're like, got it. Ready. Yeah. I love it. I love it. So tell people, because this is a great information, we'd be here all day just sharing all of the information that you know and what you know about business credit and the help that you provide. I love that you're helping my students. I love
that you've helped me. So tell people how they can reach out to you and your consulting. Because I know Noelle, you might have heard me say this before, you can click in the link in the description. She's going to put a link down there. Otherwise, you can go to justin mircheconsulting.com. That's justinmirche consulting.com. Also, we're running a special just for Noelle, and what that looks like is that we've recently started a YouTube channel and we're looking for subscribers. If you search Justin Mirche, and YouTube, subscribe to my channel, take a screenshot and tell us, Noelle sent you, you'll get $250 off of our business credit coaching program.
I love it. I love it. I have been encouraging all of my real entrepreneurs, people I know that are heart-centered entrepreneurs that really bring value, really help, really our integrity to start these YouTube channels because it's a wealth of knowledge that you can give away absolutely free and those that wanna work with us have those opportunities as well, because you are an excellent resource. I love you, love you, love you. And I thank you so much for your time today. Thank you, Noelle. Thank you so much.