Levels of

Business Credit:
Can Business Credit Make
the Difference in Your Success?
The Levels of Business Credit
Can Business Credit Make
the Difference in Your Success?
Third Place
Uses Personal Credit
No Asset Protection
Personal Credit
Score is Likely to
Drop Causing Higher
Interest Rates
Copyright 2015 1-800-600-1760
Noreen King says, I knew it was do or die as she built her
business, Evolve Manufacturing Technologies. In an article
in the 25th anniversary issue of Inc. magazine (page 156) she
talks about how stressful it was starting her own firm and
how she did it using her personal credit cards.
Clearly Noreen King had guts and good business sense to grow
her company by 2,121% (yes, over two thousand percent) in
three years. But she relied on her personal credit cards to get
started, and perhaps it didnt have to be that way.
One of the most frequent questions we hear from entrepre-
neurs who incorporate with us is, How do I build business
credit?
While there is no simple formula, there is a process that allows
you to establish a solid business credit rating over time. In our
experience, we have found that small businesses are usu-
ally at one of three levels when it comes to building business
credit:
Level Three: Whatever It Takes
Many entrepreneurial businesses have no real business credit.
They use whatever method of financing they can get. At Level
Three, they have bootstrapped it and used personal credit
cards, loans from friends and family, equity from their home,
etc. And theyve taken some serious risks:
They are mixing business and personal credit which can
create major headaches at tax time,
They have no asset protection whatsoever,
Their personal credit score may sink due to the level of debt
they are carrying to fund their business. This can mean
higher interest rates, even on existing credit card balances.
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The Levels of Business Credit

Level Two: Wising Up

At Level Two you begin separating your business credit from
your personal credit.

When you get credit cards, lines of credit or trade accounts,

you apply for them in your business name. At Level Two, you
still will likely have to personally guarantee those business
loans or credit cards, but many will not be reported on your
personal credit reports unless you default.

Level Two Business Credit is still valuable, however, because

it helps protect your own credit rating which can be affected
by too much revolving debt.

Second Place
Begins to Separate
Personal Credit from
Business Credit
Level One:
Established Business Credit
If you are serious about small business success, you will want
to move to Level One. Thats where your business establishes
its own business credit, and as much as possible, keeps it
completely separate from personal credit. At Level One, you
will have:

Applies for Credit in Obtained credit with vendors and financial institutions
Name of Business that report to major commercial reporting agencies and
paid them on time;

A Personal Have an incorporated business for at least six months or,

ideally, two years;
Guarantee is Often
Required Followed specific steps to ensure that your business ap-
pears stable and solid;
Personal Credit Established strong credit profiles with the major business
Report is Less Likely credit reporting agencies;
to be Affected Implemented accounting systems that allow you to gen-
erate financial statements as requested (preferably by a
Personal Credit CPA);
Rating is More Have the ability to make a persuasive presentation to a
Protected lender or investor.

Copyright
Copyright 2015
2015 1-800-600-1760
1-800-600-1760 www.corporatedirect.com
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The Levels of Business Credit
First Place
Able to Borrow or
Lease without Using
Personal Credit or
Personal Guarantees
Obtain Credit with
Vendors and
Financial Institutions
that Report to Major
Commercial Report-
ing Agencies
Have an Incorporated
Business for More
than Six Months
Established Strong
Credit Profiles with
Major Business Credit
Reporting Agencies
Able to Generate
Financial Statements
on Request
Copyright 2015 1-800-600-1760
At Level One you will find yourself with opportunities to bor-
row or lease without having to rely on your personal credit
or provide personal guarantees. This, of course, is the level
most business owners want to reach as quickly as possible.
There is no magical formula or guaranteed shortcut for reach-
ing Level One, and some businesses may get there faster than
others.
Even if you dont plan to borrow, it is essential that building
business credit becomes a part of your business from the
start. Planning ahead is crucial.
To succeed in business it is important to use all the available
tools. One of the key tools is business credit. Too many entre-
preneurs rely only on their personal credit to carry it forward.
In a time of need, their personal credit may be tapped out.
Business credit is the second line of credit, which you need to
build up as you start to grow.
It is important to understand the basics of business credit. I
want to show you how to fast track your business credit build-
ing efforts:
A Special Offer
Our new book Finance Your Business: Get On The Financing
Fast Track will help you learn how to build strong business
credit ratings the right way. Youll learn:
How to separate your business and personal credit;
Loan options if you havent built business credit, or if you
have poor personal credit;
Opportunitiesand pitfallsof crowdfunding and how to
do it the right way;
Easy ways to check your personal and business credit for
free;
And much more!
Ali Brown says in the forward to our new book, I wish I had
this kind of information when I got started!
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The Levels of Business Credit

About the Book

Learn the Financing Fast Track Strategies Used
by Successful Entrepreneurs and Investors

Finance Your Own Business will teach:

The power of business credit

How to get an SBA loan
The secrets of micro lenders
The benefits of crowdfunding
How to prepare your own PPM
The risks of using retirement funds
Financing scams to avoid

Our business credit resource section provides you

with valuable contacts to begin building your busi-
ness credit. Finance your business, and grow the way
other savvy entrepreneurs do it.

Finance Your Own Business will give you lots of strategies for raising the money
you need to get off the ground or take your business to the next level
- Ali Brown, leading entrepreneur, mentor and angel investor

About the Authors

Garrett Sutton, Esq. is Gerri Detweiler is an
the best-selling author author, talk show host,
of Start Your Own Cor- speaker, and credit ex-
poration, Loopholes of pert. She has written or
Real Estate, and seven co-authored five books
other books. He prac- and has been quoted in
tices corporate and LLC more than 3000 news
law in Reno, Nevada. interviews.

Copyright 2015 1-800-600-1760 www.corporatedirect.com