TMB Tax and Financial Services

It’s a Business Credit Pop Quiz that you CAN’T fail!

It’s a Business Credit Pop Quiz that you CAN’T fail!

Thought your days of pop quizzes were over? This quiz is just one question so let’s go. Here’s the scenario. There are 3 categories of small business owners:

1). business owners with good credit to finance their business,

2). business owners with investments from family members, partners, grants, etc. to finance their business; and

3). business owners with challenged personal credit that can’t finance their business.

Question: Which category of business owners should obtain business credit to accomplish their company’s financial goals? Time’s up. The answer is ALL THREE!

By working with small business owners for years, I’ve found that most of us believe the answer is only #3. Most business owners never think that the first and second categories should obtain business credit as much as the third category should. Why is this the case?  

In my last blog, I explained several concepts of business credit. When done properly, business credit can be obtained with no Social Security Number (SSN) guarantee of the business owner…. something CONSUMER credit cards can’t deliver. I know I promised only one question for the quiz…. but my inner teacher wants to pop another quiz question so one more.

Question: Using the above 3 categories of business owners, which category can afford to ignore an opportunity to maximize a positive cash flow for their company? Yeah, that one is simple NONE OF THEM! 

Not exploring your company’s opportunity to build business credit is NOT seizing an opportunity to positively influence your company’s cash flow. I don’t know any business owner – start up or industry giant – that willingly does this.  


Most CONSUMER credit starts with secured credit cards or an account that has a well-established co-signer. However, co-signed accounts and secured accounts really aren’t popular or widely used in the business world. Most business credit starts with VENDOR accounts instead.

VENDOR accounts are accounts that typically offer terms such as Net 30, instead of revolving so if you get approved for $1,000 in vendor credit and use all $1,000 of it, you’d need to pay that money back in set term such as within 30 days on a Net 30 account. To the same point, a Net 60 account would need to be paid in full within 60 days. With VENDOR accounts you have a set time in which you must pay back the entire borrowed amount (or the credit) you used.

So, to start your business credit profile the RIGHT way, you need to get approved for vendor accounts with companies that actually report to the business credit reporting agencies. I can’t stress “that report” enough. Beware of business credit building companies that will put you into a program on the promise that your vendor accounts will report…some of these companies simply have not done their homework on the process but will gladly take your hard-earned money with no results.  

Once you’ve established a vendor account that will report, you can then use the vendor credit from the company, pay back what you used, and the account gets reported to Duns & Bradstreet, Experian, or Equifax linked to your company’s Employer Identification Number (EIN). Once reported, then your company has trade lines, an established credit profile, and an established business credit score.  

Using your newly established business credit profile and score, you can then get approved for store credit cards, and eventually cash credit cards without needing to supply your SSN for a personal guarantee.

This is possible because now your EIN credit profile is established and can stand on its own. So, if you leave your SSN off of the business credit or financing application, the credit issuer then pulls your EIN credit profile(s), sees a solid profile and score, and can then approves you for real revolving credit in your company’s name.  

Of course, there are phases to building business credit and this doesn’t happen with only one trade line reporting. We need to speak further. Don’t walk away from an opportunity to fund your business goals. 

Contact us today to get your free business credit and financing assessment.  

-The #TMBTaxLady

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