How To Build Business Credit (UPDATED 2023)

How To Build Business Credit (UPDATED 2023)

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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 That's justinmirche 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.

2022-12-30 15:51

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