| If you have been in business for a few years | | | | Net-30 Accounts |
| then you know that during a down economy cash | | | | A net 30 account is a credit account your |
| flow can be a problem if you don't have any | | | | business can establish with another company that |
| business credit established. You must have access | | | | supports your business. These account are |
| to cash to handle expenses to sustain your | | | | general easy to set up since they are done with |
| business during a business downturn. | | | | companies that you already have a relationship |
| In order for your business to get access to cash, | | | | with. These types of accounts are very common |
| you should start establishing business credit in | | | | with companies and their suppliers. These |
| order to have cash readily available when is it | | | | accounts are usually paid in full every 30 days. |
| needed. There are many options that you should | | | | Net-30 accounts are also very useful in building |
| consider i.e. secured business credit lines, | | | | your business credit. For example, when your net |
| unsecured business credit line, a net-30 account, | | | | 30-account reports to Dun and Bradstreet, they |
| and business credit cards. Depending on the type | | | | will help establish your PayDex score. A PayDex is |
| of business you have and other factors one or all | | | | a standard way to rate business's credit history |
| of these options may be a fit for your business. | | | | much like Equifax rates personal credit. Over time |
| Allow me to summarize each option here. | | | | and with good payment history you can establish |
| Secured Line Of Credit | | | | a favorable score, the highest being 80, to start |
| A secured credit line is a business loan that | | | | applying for business credit without a personal |
| requires some type of collateral to be used in | | | | guarantor. This is a very effective way to build |
| order to get this loan. Typically some real estate, | | | | business credit for your business. |
| or some business asset can be put up as | | | | Business Credit Cards |
| collateral. A typical loan size for these types of | | | | Business credit cards are very similar to |
| loans are around $25,000-$100,000. These credit | | | | unsecured credit lines. Probably the only difference |
| lines will usually require a personal guarantor with | | | | is that business credit cards offer a little easier |
| an A+ credit rating and the business must show a | | | | access to cash than an unsecured credit line. |
| profit for at least two years. The loan | | | | Business credit cars usually do require personal |
| underwriters are more likely to approve these | | | | credit and strong business financials however they |
| types of loans since they have written a loan that | | | | can be good for access to smaller amounts of |
| is secured by assets. Two major benefits to the | | | | cash which can be good for petty expenses. |
| type of loan is that once your pay it off the have | | | | Any one of these options may be good for a |
| access to using it again when needed up to the | | | | company that is a established, has strong |
| original loan amount and you only pay on the | | | | financials and has a personal guarantor with |
| amount that you borrowed. | | | | excellent credit. But what about those companies |
| Unsecured Line Of Credit | | | | that are just starting out or have no personal |
| An unsecured line of credit is like a secured line of | | | | guarantor with excellent credit. This would be |
| credit except that no collateral is needed to get | | | | probably the majority of business out there these |
| approved. However, since no collateral is needed it | | | | days. Well, there is a way to can a substantial |
| can be more difficult to get approved for a loan | | | | amount of cash for your business if you do not |
| amount above $10K-$15k. An unsecured line of | | | | quality for conventional business lines. |
| credit usually does require a personal guarantor | | | | Building Business Credit |
| with excellent credit and the company must be | | | | The absolute best way to build credit for your |
| able to show that it has been profitable for at | | | | business is by building your PayDex score with |
| least two years. Loan amounts higher than $25K | | | | Dun and Bradstreet. By establishing credit in your |
| are extremely difficult to qualify for especially in | | | | business name you can build your business to the |
| today's market. Lenders across the board are | | | | point where you can easily acquire business credit |
| slow to lend to anyone these days. Even though | | | | from various funding sources. Some immediate |
| they got a $700 billion dollar bailout to lend money. | | | | ways to start building your PayDex score is by |
| Go Figure. However if your company can show | | | | establishing net- 30 accounts. Use utility bills in |
| strong financials for the past three years and the | | | | your company name. Apply for a Staples Credit |
| personal guarantor has strong personal financial | | | | Card. Use your cell phone service in your |
| statements it is quite possible to get a substantial | | | | company name. As long as these account a |
| unsecured line of credit. The rule of thumb is | | | | reporting to Dun and Bradstreet and payments |
| banks will typically lend a fifth of what the | | | | are paid on time, you can get and favorable |
| average net profit the company has brought in | | | | PayDex score for your business and unlock |
| over a two to three year period. | | | | countless funding opportunities. |