Corporate Credit vs Business Credit vs Business Funding

Hello, and welcome to this module, corporate credit versus business credit versus business funding. So in this system and program, I’m going to show you how to leverage and take advantage of all three of these and for simplicity purposes, I’ve defined it this way. So you can understand the types of money you’re going to be getting to grow and fund your company. Now here’s what we’re going to cover right at the gate, I’m going to break down what corporate credit is. Then I’m going to break down what business credit is and then business funding, as you should be viewing it, when it relates to getting money to grow your company. I’m also going to break down what a business credit score is, why you need a business credit score, how your business credit scores are generally calculated the benefits of corporate credit versus personal credit and then also the importance of separating your business and your personal finances for a number of reasons. The main ones is being, you want to just have it separate. You want to limit liability. And then also from a tax perspective. So again, you’re going to hear me preach this structure, structure, structure, and own nothing, control everything. So you want to really not have anything in your personal name and you want to basically control the company that has most of the things.

So we’ll get into it. So corporate credit, what is corporate credit and how should you be viewing this? Well, corporate credit is credit extended to your company from another corporation that can be used only at that corporation. So, essentially what this means, these are generally going to be those net term or net term accounts. Typically these are going to be trade credit or vendor financing accounts specifically with that vendor and generally speaking, non-reporting credit accounts. Now, when we start this process of building up your corporate credit file, typically these can also be store/retail credit accounts as well, because essentially what I’m trying to communicate is corporate credit is going to be extended from a corporation to your corporation to use only at that corporation fleek/gas cards or another one, so if you, once you’ve built up the certain tiers of credit, which we’ll get into, you’ll be able to use that gas card only at that particular gas station, but you can’t use it anywhere else. So typically these accounts can be established with no personal guarantee. And, but the benefit is it’s giving you leverage, so you don’t have to use your cash. However, you can only use as corporate credit at that particular corporation.

Now business credit is a little different, business credit is basically credit extended to your company from a bank credit union or large financial institution that can be used like cash or debit. So typically these cards are going to be Visa, MasterCard, American Express, or Discover accounts/card. So generally speaking, these are going to be your business credit cards or your revolving lines of credit. And this is why I’m calling this business credit, because generally speaking, you can use this as cash and this is what many people want to get to, but they aren’t unable to, if they don’t have the correct structure in place, initially. This is also going to be what we call our unsecured credit lines. And then generally speaking, you can even do a secured credit line when you put up the money like a big secure card, it’s still going to be attached to some type of Visa, MasterCard, Discover, American Express, typically a Visa MasterCard witness with a bank or credit union, or even whatever the financial institution is.

Typically these accounts are going to require a personal guarantee and good personal credit to be established. So many people when they’re starting off and trying to get credit in their company’s name, nine times that attended really trying to get this type of credit so they can use it as cash to grow their business or turn credit to cash. So how do you get the money off this to turn into cash is business credit. And generally you’re going to have to have a personal credit now. I mean a personal guarantee. Now, can you get this type of credit without a personal guarantee? You can, but it’s very, very rare as a brand new business, which is why it’s important for your personal credit, your personal financial affairs to be in order. So you can PG it and then eventually I’d rather you get the credit, get access to the line, show some credibility, and then eventually remove yourself as a personal guarantee once the corporation established but this is business credit.

Now let’s get into what business funding is. Now, business funding is a little different. So the first two are lines of credit and access to capital, but you don’t have to pay it back versus business funding is large loans or loans or large infusions of cash extend to your company from a bank credit union, large financial institution or government agency that can be used as working capital to grow the business. So essentially you’re getting a loan upfront to take care of whatever it is that you’re taking care of. There’s different ways of you business funding. Now, typically the common ones, the ones that are simple to get are vehicles, equipment financing and commercial mortgages, because generally speaking, those are going to be backed by some type of collateral. So this is going to have some red tape, but not as much red tape once you already have some things established. Then you have just like normal installment loans. So this is essentially installment loans is going to give you that large infusion of cash, similar term loans, and then even leases.

But generally speaking, you’re going to get that large infusion of cash upfront with an installment loan. And you’re going to pay it back over 5, 10, 15, 20, 30 years, and their stated interest rate and a set of monthly payment. And then once the balance is paid in full, you would have to reapply for another large infusion of cash. So generally this form of credit is secured by some type of collateral, generally speaking. And even if you get a large infusion of cash, generally, they’re going to want to do a UCC filing and attach a lien first, right of refusal if your businesses go belly up or whatever the case is, they’re still going to come after the company’s assets. And then in most cases, these are typically going to require a personal guarantee and good personal credit standing as well, because they’re going to say, hey, look, we, you know, your business, isn’t solid enough for a disc to only have its his own file, so we want a personal guarantee. So again, the whole purpose of this, and this is why I cover what I covered in the wealth triangle is not to get this money and not pay it back. You know, I understand stuff happens, but you want to go into business with the mindset that I’m going to make this business successful. I’m going to do all the required things to take it to the next level. And now stuff happens. I get it. But you just wouldn’t have that perspective about if you’re getting this type of business funding.

Now, let’s go and get into what, you know, what a business credit score is. So just like a personal credit score, your personal FICO score, it’s a number that’s used to determine your credit worthiness, and there’s no different when it comes to your business credit. You know, so again, when it’s a brand new company and it has to be structured correctly, but when it’s a brand new company, they want to have some type of credit history to make you more credit worthy in order to get funding right, or get money from the bank. So like your personal credit score, like I’ve already said in previous trainings can range anywhere between 300 to 850. But when your business credit score is low different, so your personal credit score works very similar, but when we look at business credit, it’s for your business specifically.

So the two main ones are going to be Dun & Bradstreet and Experian. So when we look at Dun & Bradstreet, typically your Dun & Bradstreet is going to be used for corporate credit and some not all, but some business credit an Experian is going to be used for your business credit. So generally speaking, in order to build up that corporate credit file, I mean, at Dun & Bradstreet, they’re going to have some corporate accounts Experian is going to want to use some business credit accounts. And then small business FICO typically is going to be used with the SBA. If you’re trying to get business funding. And that’s one, that’s not as used as the first two, but it still is a business credit score. Now, when we look at your business credit score, the key differences between your personal credit and your corporate credit. And I’ve already said this, but I want to just make it very, very clear is that your personal credit score can range between 300 to 850 yet when it comes to corporate credit, especially with Dun & Bradstreet and Experian Intelliscore, those are the two main ones is going to range between zero to a hundred and a hundred being the best. So that’s why when you have like an 80, 75, 80 Paydex score or Experian score on the business credit side, you’re at a good place. So when you look at this, like I would say, like your personal credit scores are typically going to have different things, associated with it, but your business credit is not going to have any of your personal accounts associated with it whatsoever. There may be a few lenders, like I’m saying, especially on the business credit side that consider your personal credit, but none of that stuff is going to show up on your personal credit score.

Like for instance, I have like several large credit lines like US bank Chase, several of them that did require my personal credit, but it does not report on my personal credit. So even if I use $50,000 on that current, on that business credit card, it’s not going to affect my person utilization, it’ll affect my business utilization, but doesn’t affect my personal utilization. This is all the data that they use very similar to your personal credit is used for your business credit score, and the whole goal is to build up built credibility and show that you can be trusted with the money, your corporation can be trusted and get yourself to the place where you don’t have to personally guarantee. Now, when you look at your personal credit report, generally speaking, you can get access to your personal credit reports for free.

You can just go directly like annualcreditreport.com and sometimes you can even go to like Credit Karma and there’s some websites that will give you your score in your report or version of your report for free, but your business credit report is not set up that way. Generally speaking, if you want to get access to your Dun & Bradstreet, your Experian and then smally, and Equifax, they have a business credit report, but it’s not as largely used as Dun & Bradstreet , Dun and Bradstreet is like 80% used and then Experian is like 14, 15% Equifax, this is like rarely used. But essentially what I’m saying is that if you want to get access to this, you typically are going to have to pay, but not to worry, I’ll show you how to get access to these corporate credit reports later on in this system. I just want you to understand it.

Now, obviously with your personal credit, there’s a lot of privacy, but with the business credit, because this is a large corporation, typically this information is going to be readily available on public record. So this is another reason why you want to, keep them separate. Now, if you just open up a new business, chances are, you probably are using your personal credit or startup cash. And what I’m going to really, really encourage you to do is really start separating. Hence, the reason why you’re in this program to start separating your personal finances from your business finances. It’s much smarter and easier to keep your business finances and your personal finances completely separate for a number of reasons, right? Because number one, the business credit file has different information that’s linked to banks, institutions, lenders, vendors, and grantors who view your Paydex score ratings and intelliscore, allowing them to expedite the credit approval process, which is what you want. You don’t want them pulling your personal credit unnecessarily. And then you want to really want to get yourself to a place where your business credit score is going to serve as a lifeline for your company’s working capital. Now, when we stop and we look at it, there’s different places that report corporate credit. So like I was saying, Dun & Bradstreet is the main one that’s going to report. Then we have an Experian Intelliscore. And then Equifax is here, but Equifax really isn’t in the game, but you will have an Equifax report, but it’s not really used as much, many vendors on the corporate credit side and then even on the business credit side, don’t really report to Equifax.

They’re going to reporting quite a bit to Dun & Bradstreet and Experian, but they’re not going to report to Equifax. Then if they do, it’s going to be very, very strange. So what I’m saying to you is it’s like, I’m going to show you how to build all of them, but the ones we are going to pay the most attention to is Dun & Bradstreet and Experian. Now, when you’re building your corporate credit, there’s a few things to remember. Number one, just like personal credit, each bureau is going to collect and verify information differently. So bureaus are typically going to collect your payment information. Absolutely. But then they’re going to look at your banks. They can even access sometimes like the banking relationships that you have and all of this information, they’re going to be able to access. It’s going to be verified through third parties, very similarly, like personal credit. Now, not every credit line is going to report to every bureau, just like with personal credit. So if they don’t report, it’s not going to pull or build up that side of your corporate credit, but it’s not a big deal because in the system, I’m going to show you how to make sure you get accounts that are going to report to the main bureaus that matter. So just like with your personal credit score, you’ll notice that some of your accounts are reporting all three bureaus. It’s totally fine. As long as the reporting in one of the two. And then when you get to that particular bank, that bank is more than likely going to favor one of the credit bureaus anyways.

So we go back and we start looking at this, the other third thing is that sometimes the data is going to be incorrect. So we have to make sure as we’re building up and getting up to a credit optimized company, that all the data about our company is accurate. Our name, our address, our contact phone number, the number of employees that we have, everything needs to be up to date and we can contact the credit bureaus or make sure that information I’m going to show you to make sure that information is up-to-date. Now, obviously the benefits of personal credit versus business credit is number one is it’s separate. So having the corporate credit file separate from your business credit file is going to help you several ways. Number one is you just, you just want to make sure that if, to the best of your ability, especially when it comes to corporate credit, that you can keep your social security number private. Now, again, in some scenarios, you’re going to have to do a personal guarantee or be a personal guarantor, but the goal is to not is to build your corporation up to where it doesn’t need to do that. Then even, so the information will still be private.

The other benefit is, typically there’s not going to be any personal liability for business debts. Again, remember structure, structure, structure, structure, structure, like I’m saying before. It’s so important to have that structure in place to where a corporation is viewed as a person, a separate entity that you control, right? That’s how you want to start viewing this and then legal protection. So anyone who interacts with your particular business can sue the business and not necessarily sue you personally when you have the correct structure in place. So that’s why it’s so important to make sure you have the right corporate structure, so that way your personal wealth, your personal assets are completely separated from your business assets, even though your business is being used to build up your personal wealth. I know it’s a conundrum, but that’s how you want to really, really view it, right? So worst case scenario, something happens, your business can really sustain itself and it’s not going to attack your personal finances. Another thing is, the lenders are going to assess your business credit and this credit is going to be used instead of your personal credit. And that’s what you want. So when you go through this process, I’m going to show you how to do this. And then when you start really building a business, you want to put in bookkeeping and taxes and all of this stuff is going to be a lot easier to do for tax purposes. And then I’ve also noticed that the limits for credit is going to be much higher on the business side than it would on the personal side, because banks understand that, you know, business expenses can get pretty expensive and pretty high and, you know, it’s going to require a lot more.

So unlike with the personal credit, personal credit limits can get fairly high, but my limits on the business side are significantly higher on the business side than they are on the personal credit side. Now, personal credit is going to cap out at 250,000 and that’s really for those wealthy, wealthy, wealthy people who have like large amounts of money. But mostly you’ll be able to get those types of high limits on the business side, quite easier because, your business is going to be viewed as a large corporation. And then also what I’ve noticed and what you’ll notice too, as you’re building up your business credit is that the vendor terms and the deals you’re going to get is a lot more efficient and effective along with better rates than you would if you just were using your personal credit.

So these are all the reasons why we want to go out and do this guys, and it’s just really powerful. So number one, we want to protect our personal finances and treat our business as an independent entity, separate from us. And we also want to start separating our personal finances from our business finances. So that way, if, and when something happens from a legal perspective, they can’t come after you. Right? So, I hope this helps. So really, really, really great stuff. The main key takeaway I want you to take from this is number one, we’re going to build up all phases of credit, corporate credit, business credit, and business funding. And we want to start positioning ourselves to where we don’t have to personally guarantee. However, if we have to personally guarantee just to get the funding, it’s fine because at some point we can remove the personal guarantee and start to really completely build something that is independent of us that we control. And we don’t necessarily have to deal with the liability if from a worst case scenario, something happens. All right. So I hope this helps. And I will see you in the next module.