A couple of months later I decided to apply for another Citibank card hoping that my limit will be far greater than what I had already received, of 4k. This time around I was approved again, however, only for $2500. The limits kept getting lower and lower. I am sure because of a lot of relatively new credit is the reason for the small limit. I went online and apply for a SAMS Club membership. Shortly thereafter I applied for a Business LOC with Sams Club. After impatiently waiting a couple of weeks, I placed a follow up call an spoke to an underwriter, he said he can approve me for $10,000.
I asked him if he can approve me for $25,000. He left the phone for a brief minute and when he return he said if I wanted more money, I would have to fax over my tax returns.Not anxious to do that, I thanked him and happily accepted the 10k. Another step forward!
Ø Taking stock of your progress may be in order at this point. How many business credit cards were you approve for? How many business loans or Line of credit? Is this sufficient funds to grow your business? If the answer is yes to the last question then stop applying for credit.
If not, consider the suggestions below.Ø Business credit cards are still the easiest credit to get. Maybe in your situation you would be better serve by applying for two or three additional business credit cards, especially if your personal credit score is under 700, but not below 680, then business credit cards is the way to go.
Ø If your personal credit is below 680 than hold off applying until you raise your scores. Sure you can get a business credit card with scores below 680, however, the limit will be very low. Who wants a $500 to $1000 business credit card. Not me.
Think about…
What’s on your three major business reports? How many trade lines? Do you need additional trade lines to make your business reports more powerful? My recommendation would be between 8 to 10 trade lines. This is not too little or too much.
How is your personal credit? Have you recently order a tri-merge credit report to clearly see what is on your three major credit reports?.What are you going to do to improve your personal credit scores?. Do you have a strategy? And yes! You will need to have good personal credit to be approve for business loans and business line of credit, and most business credit cards. I’m talking about cash, money honey.
Strive to get your personal credit reports to 750, especially now in 2009.What have you accomplished so far?
If you applied for a business credit card and was decline it is important for you to stop and analyze why you was turn down. There is no point in applying for any additional credit without first fixing the reason for your decline. That applies to business loans and lines of credit as well. Don't operate in the dark!
When I started out in 2005, before receiving one penny in business credit it was necessary to spend money I had on hand to build business credit. And it will be the same for you too. It’s important not to bite off more than you can chew! If you cannot afford to make purchases with four trade lines then start with three, I know of people who have received a Paydex score with only three trade lines, so it is possible. If three is too much for you to handle than start with one. No matter how you look at it you are taking on debt and you must not overextend yourself.
Lay down the foundation first and foremost by becoming Incorporated or an LLC. Getting your tax id and then your business telephone number, then have that number listed with directory service. Then open a business bank account depositing money into it.
From there you begin to make purchases with Net 30 accounts, also known as trade accounts, every month, purchasing and paying in full before the due date. The point is, an income is necessary to pay for all of this. You may need to keep your "day" job until your business becomes financially stable with an income that you can depend on.
Here I was paddling my canoe forward cautiously toward my waterfall of over $300,000. Small strokes kept me above the waves.After several months you will be rewarded with a Paydex score from Dun & Bradstreet. Your prompt payment will also be reported to Experian and Equifax as well. Which will also give your business a score.
It is important that you use caution and not pile up too much debt in the name of establishing business credit. It is easy to just keep applying and applying for more. I have witnessed business “Newbie” pile up a lot of debt in the name of establishing their business credit. Then, having a limited cash flow, many cannot keep up their monthly payments and they fall behind. With a plethora of unpaid cards and a lot of debt weighing them down, they put themselves out of business.
They drown, in debt that is.
If you have bad personal credit, this is the time to be working on clearing it up. You work on your business credit and your personal credit, both at the same time.
Along the way I develop a clear action plan to get my business credit to a dynamic level, for me that was between 8 to 10 trade lines. I wanted to get my credit to a point where it spoke for me. And no one would give me a second thought when I requested credit.
How about you?I also, at the same time, worked on my personal credit scores with an action plan to raise it to over 700. Both I have accomplished in a grand way. It took months of planning and patiently watching the results accumulate, waiting for the right time to execute the next steps of my plan. I only applied for business loans and lines of credit after my personal credit reports were well into the 700’s and my business had reach the two-year anniversary mark.
What is your action plan? During my last several requests for business financing, it was noticeable that the approval amounts kept getting smaller and smaller. I guess a little something is better than nothing at all. Most likely, because of my debt to income ratio. It wasn’t my credit score. My Equifax score had reach and all time high of 799. My transunion was above 770.
I had already amassed over 300k in business credit and with a projected income of 260k, my debts now outweighs my income. When lenders access my Equifax business report, they see it all, every credit card, every loan, every line of credit, the business store cards and your net 30s accounts, all are sitting there in plain sight.
Even with my Experian credit report in a “deep freeze”. I was still able to amass plenty of funds for my company with having only two of my personal credit reports available for review. Transunion and Equifax.
When I look back I can see I’ve covered a surprising amount of ground. By February 2008, I had acquired 258k in cash, money, - your business loans, business LOC and business credit cards
(11 business credit cards, 3 business loans and 2 business LOC’s).
And finally about 7k in Net 30 accounts, since I started making purchases for my business back in 2006.
My experience definitely was not a straight road to achieving over $300,000.
There were a lot of bumps and bruises along the way, which resulted in disappointments and declines. “But I survived and thrived and you will too. If you play your cards right you can also acquire 300k or more in business credit.