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Business Credit Breakdown

Discussion in 'Business & Tax Advice' started by AkademikJeanius, Feb 12, 2015.

  1. AkademikJeanius

    AkademikJeanius Registered Member

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    Peace BHW'ers.

    New member here (dizzy from all the information) but have been studying credit for a few years now, more specifically business credit. My interest in the subject started years ago after a wayward search effort on personal credit introduced me to this angle. The reason for my attachment to this is multi-fold:


    1. More shroud in mysticism compared to personal credit

    2. HIGHLY scalable as far as number of creditors and credit limits on each file in comparison to personal credit.

    3. Ability to duplicate efforts across several businesses simultaneously unlike personal credit (only one ssn unless you go Black Hat (shameless plug)).

    4. No personal guarantee (if finagled correctly), effectively giving those with a challenged personal credit situation a chance at creative financing to fund ventures OR protecting those with pristine personal credit from the risk of damaging what they've worked so hard to build in the event their business efforts don't work out.

    5. Because I hate big businesses/goverment getting over on the small guy (getting corporately "son'ed out") and am driven to figure out ways to return the favor.

    6. Too good an opportunity NOT to delve in (much like IM, which I'm a complete crawling a** newbie on).



    So, considering the nature of this subforum, I wanted to create a thread that explains the basics, in detail as I've seen a few threads started in the past requesting information and/or confirmation. I'm not sure, however, if this is off-base for the overall forum's focus. Furthermore, if it's cool with the mods, I'm not sure how much interest there is on the topic.

    If I get all clear and good feedback on interest, I'll share info in steps and eventually provide links to all the posts containing steps comprehensively and consecutively in this initial post.

    100
     
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  2. sully1975

    sully1975 Jr. VIP Jr. VIP Premium Member

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    I am all ears, I used to hang out at credit boards and a few others with a keen interest in business credit as a contractor. The last big thing was the UCC when I was in the loop.
     
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  3. King Bruce

    King Bruce Newbie

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    I am actually signing up my business now for business credit cause I am trying to acquire about 500,000 and it took some time to get my profile right but it is worth work.
     
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  4. AkademikJeanius

    AkademikJeanius Registered Member

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    Credit Boards is one of the more known sources for info. Hundreds of smaller niche outfits giving info for a small fee (of course nothing wrong with that). It's similar to IM in that it is pretty simple (easy?) as long as you figure out the basic system, stick to a well-thought out plan, and be patient. Also, like IM, there are "blackhat" ways to go about it at every turn.



    Oh o.k., awesome. Glad you are already well aware of the reality stated in last half of your sentence: "..it took some time to get my profile right but it is worth work." You doing it yourself or contracting a service provider to enhance your biz's creditworthiness?
     
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  5. AkademikJeanius

    AkademikJeanius Registered Member

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    I'm not going to be too verbose with the breakdown. Let's get into it...

    The trick to building business credit can transcend the need for personal guarantees is to over-qualify it. What do I mean by this? You want to be over the underwriter(s) standards for types of creditworthiness. This is accomplished by taking very easy but carefully calculated steps to ensure that when the your file is ran through the algorithms used to stamp "denied" on the vast majority of applications, your's will stand out as organically superior.

    Step 1.

    You want to choose a proper business structure. I won't go into the science behind the pro's and con's of each. Please do that research to your mind/heart's content. I'll simply say that a C-Corp is the most favorable as most MAJOR businesses (think fortune 500) go this route because of the superior asset protection as well as the ability to sell stock ownership (think collateral as well as fund raising), eventually go IPO, etc. If they decide to start a subsidiary, often times they'll go with another C-Corp or LLC, which are (at present) the 2nd best structure to use for building biz credit. S-Corp would be the least fruitful of the bunch and before anyone calls me on not mentioning Sole Prop's, it's because this is considered a personal business/hobby and not taken seriously AT all in biz financing world. At best, going Sole Prop, you'll get personal cc and loans that MIGHT have higher limits than what you'd otherwise achieve as a regular W2-dependent using what you make at the job as sole income stream. Digressing, you'd want to file articles of incorporation with your S.O.S. (secretary of state). Please note that the most important part of this aspect is choosing a good 6-digit NAICS (formerly (though sometimes still used) 4-digit "S.I.C.") code. "Good" meaning recession/depression proof, "rooted"-style (no fly by night consulting firms), more on the conservative side of risk (non-real state/financial market speculation based). This goes for the naming of business too. "Internet Marketing Consultants for Real Estate Investors Inc." is out. Finding out where lenders are willing to bet their dollars takes some due diligence to get specific but generally speaking, anything related to agriculture, manufacturing, basic human services that require special equipment, wholesale/retail in consistently growing and necessary industries, etc. I could see the IM skill-set helping in this effort. Think about it like this: if you can get a gov. contract doing it, it most likely is a good NAICS/SIC code.

    Also, you'd simultaneously or soon after want to get your EIN from the IRS. You can get this on their website, though, ideally, it's best if you call in and obtain one. Reason being is that the first two numbers of EIN change depending on whether or not you created it quick by a couple keystrokes or took the time to call it in, showing no fear in talking to live discerning human beings for setup. This is yet another instance where the similarities to IM reveal themselves. If you want lasting effects, take the more tedious "legit" route. Be prepared for some light 5th degree. If you want to do a trial run and go the web-based method, you should be adequately prepped to call in.

    That's all for now. I'll edit this if I can think of anything else noteworthy related to above step(s).
     
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  6. AkademikJeanius

    AkademikJeanius Registered Member

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    I stepped away from the thread for a quick second. Look up and a month has shot past. SMH...


    Yea, CreditBoards is cool but most of those guys are totally whitehat (at least publicly). Nothing wrong with that at all if it works for them but I was taught under a different philosophy and considering the nature of this forum, I want to share both extremes as well as the many shades of gray in-between. UCC still has it's place in aging corporation. I guess it'd be the equivalent (and I think I've even seen it actually referred to as) "backlinking". Not necessary but definitely helps IF done correctly. Please don't hesitate to share any and all info you feel is relevant.


    Good to hear you're getting it figured out. It's really just like IM in that you make the vendors 'n lenders see what they want to see. Where are you with your goal in achieving that figure? What steps have you taken?
     
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  7. profitdesire

    profitdesire Registered Member

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    Were you trying to be a tease or what? lol... waiting to hear more bro
     
  8. AkademikJeanius

    AkademikJeanius Registered Member

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    Folks don't know how to hit the "Thanks" + as I told you in pm, I typed the next post but lost data on unexpected browser close and never retyped it. Will see what I can do on continuation.
     
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  9. AkademikJeanius

    AkademikJeanius Registered Member

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    I promised a few people that I'd get around to finishing this up so w/o further delay...

    Step 2. Soon after completing the initial INC/EIN setup, you'll want to began the process of creating "anchoring". By this, I mean you'll start to putting in place the effects that scream "I'm a legit and long-term business owner!!".

    You'll need an address as your base of operations. Ideally, if you have the budget, an office address should be your aim. However, a home address is more than adequate, considering the fact that rarely is a new business established in a commercial location because the majority are started on a shoe string line of capital so it's not out of the ordinary at all. What you DON'T want to do is use a virtual or mailbox suite address. This will get you red flagged early in w/ the business credit reporting/data collection agencies as it looks like you plan to deal-and-dash first chance you can w/ what ever assets you can get. Decide this part first so that you can use this address for your .INC/.LLC and EIN setup. The goal is consistency across the board. At every point, all the information should be the same, no matter where a potential creditor or investor looks.

    Next, you'll need a phone number. Again, IDEALLY, a business landline w/ a Verizon AT&T is your best bet, pocketbook allowing of course. Besides the fact that it has the same legitimacy boosting effect as the commercial address example above, it has the bonus of automatically adding your company to the some of the major directory listings, meaning you SHOULD show up in 411 and others w/o lifting a finger (besides to authorize your payment method). The low/no cost options are anything from a cheap virtual pbx setup to a free Goog.le Voice #. These are fine but make sure you register w/ the mega business listing directories such as: Superpages, Localeze, InfoUSA, etc. If you skip this crucial step, you'll find it will delay your efforts considerably.

    Typically, I'd say setup a quick dirty email account for the biz for registration's sake ([email protected]) but because this is an internet marketing forum, I don't need to stress importance of having a having quality business website and email w/ business url as domain or making sure they are SEO'ed to show in/near top results for local and global organic searches, online directories, etc. Social media marketing, logos, business cards, YouTube videos, reviews, etc fall in this category too and, again, should go w/o saying considering the audience but were mentioned for posterity's sake. This all adds to heir of legitimacy, especially in this digital information day and age.

    Next, you'll want to go setup a business bank account. You'll need INC/LLC paperwork, tax i.d., biz phone #, & email address so don't jump the gun on other steps. Advice I can give here is credit unions and small mom-and-pop-shop banks are easier during the infant and toddler stages because they usually are all for investing in the immediate local community and, as such, usually have more creative and lenient banking/borrowing policies and options for small businesses . Save the Chase and BOA take-downs for the teenage/adult part of your biz development. DO NOT MENTION ANYTHING ABOUT FINANCING. You're just a lowly startup, looking to get basic business checking and saving accounts opened.

    That's all for now. I'll edit this if I can think of anything else noteworthy related to above step(s).
     
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    Last edited: Jul 23, 2015