Seven Steps to Build Business Credit

How do you build your business credit? Here’s what Wells Fargo Bank has said regarding separating Personal and Business Finances…

“The longer you delay establishing business credit,
the longer you delay taking advantage of business loans.”

By strengthening your business credit, you will not have to use the owner or shareholder(s)’ guarantee(s) for loans, leases, credit cards and other sources of debt financing. If your company has a strong operating history and financials to support this, you can easily build your business’ credit. If you have not already done so, do the following as soon as possible to build your small business credit:

1. Make sure you are registered with Dun and Bradstreet and have a D&B number. Then sign up for the free self-monitoring system.

2. Obtain credit cards from Staples, Office Depot or other office product provider up to the amount allowed with no guarantee. Use these cards to purchase your office supplies. Obtain credit cards from Home Depot, Lowe’s, or other office improvement entity. Use these to purchase any repair or cleaning items for the office.

3. If your business has lines of credit with any of your vendors or suppliers, ask that they report this information – and the performance – to D&B. If you do not have any lines of credit, ask for them.
o Each year, see if you can increase the size of the credit line. Make sure you use it as appropriate to keep the credit line there. Example: If you have a $50,000 credit line but always pay within 10 days by check, your credit line will disappear. You should place your orders using the credit line, then pay off the credit line every 30 – 60 days.

4. If you have a business loan from a bank or other financial institution, even if it is guaranteed by you as the owner or by another individual (i.e., investor), make sure that the loan is under the COMPANY’S tax id and is reported on the COMPANY’S credit report. All banks report to D&B regularly. Therefore, making consistent, on-time payments on your company’s bank loan can very positively impact the business credit.

5. Check your D&B report quarterly, but no less than annually. Make sure that any loans, leases, or other debts showing are correct. Many times entities report when they file a UCC (Uniform ) but do not report when the loan is paid off. Hence paid off/retired loans and leases may still be showing on the company’s credit, which makes it seem like the business has a much higher debt ratio than it actually does.

6. Pay your suppliers within their specified terms. Make sure that you are working with at least two suppliers who report to D&B and/or Experian. Otherwise, your great payment record will be completely unknown. If the supplier does not report to Dun and Bradstreet, request a Letter of Payment History from the supplier and submit it to D&B to add to your business’ credit file.

7. Provide reviewed or audited financial statements to D&B. You may not want to provide these because your company is private but be aware, that lending entities often provide abbreviated information to D&B for the purpose of reporting. You want D&B to have accurate information. If you still are leery about releasing your company’s full financial statements, consider providing just the annual revenues and the balance sheet (or a snapshot of it) via a statement from your CPA.

Finally, you should have a business plan. Banks and other lending institutions will look at the company’s credit profile, its financial history, financial projections, and the business plan in making its decision. If you do not have a business, it obviously cannot factor into the decision-making.

Bad Credit and No Credit Credit Cards: Avoid Hidden Fees and Rebuild Your Credit Cheaply

Individuals with problematic credit histories often suffer unfairly from high mortgage, insurance, and car loan rates. On top of that, they have difficulty getting approved for credit cards. The whole situation can get extremely frustrating. Frequently, I get emails from consumers wondering what they can do to rebuild their credit. The first thing I tell them is to get a credit card designed for people with bad credit. The second thing I tell them is written in bold: READ THE FINE PRINT.

There are only a limited number of credit cards for individuals with bad credit. At first glance, many look the same. They all help build and rebuild your credit by reporting to the major credit bureaus on a monthly basis. They all provide you with the Visa or Mastercard you need to make many purchases. And they are all necessary evils that can save you thousands of dollars in mortgage and car loan rates in the future. However, you must read the fine print before applying for one of these credit cards, as they often charge high yearly fees, set-up fees, and even monthly fees. Here, I will examine a few examples of charges current “bad credit” credit cards bury in the fine print. Of the three major cards I will examine, only one stands out as consumer-friendly.

“Bad Credit” Credit Card #1: This credit card charges a very low interest rate for an unsecured credit card. However, your first fine print glimpse reveals that there is a one time setup fee of $29. Not too bad. So far, since the next charge is a one time fee of $95. So far, we’re up to $124 in expenses. That’s got to be it, right? No. Add in another $48 for the annual fee and $6 per month in account maintenance fees. That’s brings the cost of your new credit card to $244 the first year, and $120 each additional year. This is no small change, and a card such as this should be considered only if you cannot be accepted for a better unsecured credit card for bad credit.

“Bad Credit” Credit Card #2: This credit card charges a very high interest rate for an unsecured credit card. This can’t be good. But the setup fee is only $29. Maybe this card isn’t so bad. There is that pesky monthly maintenance fee of $6.50 per month which brings the cost of this unsecured credit card to $107. Maybe we’ve found a bargain. Not quite. The annual fee is a whopping $150. Yes, $150 every year. That not only brings the initial cost up to $257, but you will also pay $228 a year just to maintain the credit card. There has to be a better offer.

“Bad Credit” Credit Card #3: This credit card is available as both a secured and unsecured credit card, based on the issuer’s review of your credit history. The interest rate is average, even competitive. Now, the fine print reveals that there is a one time setup fee. However, based on your credit, this fee can be as low as $0 or as high as $49. So far so good, especially if your credit is not that bad. But, there must be a huge annual fee. Not exactly. The annual fee for a secured credit card is only $35, and for an unsecured credit card, this fee can be as low as $39 or up to $79. So far, the cost of this card ranges from $35 to $128. Now its time for the monthly maintenance fee. This one has to be huge. Or not. Its $0. That means the most you could possible be charged to obtain this credit card is $128, about half of what competing cards are charging.

Clearly, there are substantial difference between “bad credit” credit cards. Of the three offers we have examined, only one doesn’t take you to the cleaners. In fact, “bad credit” credit card #3 provides great value. All positive changes to your credit history and credit score will translate into lower loan rates, lower credit card interest rates, lower insurance rates, and ultimately, thousands of dollars in savings. The path to rebuilding credit has its costs, but in the long term, rebuilding your credit with a “bad credit” credit card is the fastest and most cost-efficient way to correct the often unfortunate circumstances that have damaged your credit in the first place.

Credit Tenant Lease (CTL) Lending – An Expert Explains the Process

Credit tenant lease (CTL) financing is a unique and highly specialized type of lending designed to fund the purchase, refinance or construction of real estate that is triple net leased (NNN) to a single investment grade tenant.

The CTL process is quite different from traditional commercial mortgage lending. The lease rather than the real estate itself is the primary collateral that backs the loan and the lending process is in reality an investment banking transaction.

Qualifying the Tenant

The fist step in the CTL process is to determine whether or not a given tenant will qualify. The company that backs the lease is required to be “investment grade”. This simply means that they need a good credit rating by one of the major rating agencies. For example any company rated BBB+ or higher by Standard & Poors should be eligible. The drug store chain Walgreen’s is an example of a typical credit tenant, Walmart and Home depot also credit worthy firms that are big in the NNN space.

Analyzing the Lease

Next the banker will want to do a comprehensive analysis of the lease. They must understand the exact extent of the landlord’s responsibilities (if any) and calculate the value of the building based on the income it will generate. They will also check to make sure the length of the lease period conforms to their CTL criteria. They will scour the document for any provisions or clauses that might undermine their ability to perfect a security interest in the property.

Executing an Application

Only after the tenant and the lease pass muster will the borrower formally apply for a CTL mortgage. The application details the loan amount, the interest rate, the term of the loan and makes a good faith effort at estimating loan expenses. If everything is in order the borrower signs the application and places a deposit with the bank.

Underwriting the Loan

After the application and deposit are received the banker will begin underwriting the loan. Third party reports such as appraisals, environmental reports and title work are ordered and the numbers are crunched. The borrower’s finances are also scrutinized during underwriting. CTL loans are non-recourse but the bank will verify that the sponsor has the financial wherewithal to get the deal done.

Issuing a Private Placement Mortgage Bond to Fund the Loan

The investment bank will issue a new private placement mortgage backed bond and link it to the target property. They fund the loan by selling the bond to fixed income investors.

Issuing the Loan Commitment

Once the mortgage bond is sold the loan is fully funded and the banker will issue a formal and binding loan commitment. Exact and final terms will be spelled out and locked in. The borrower will be asked to accept or decline the loan.

Closing

If the commitment is signed by the borrower, the closing and dispersing of the funds can happen as fast as lawyers can draw up documents and schedule a closing date. All the paperwork is reviewed and signed, the mortgage is recorded and the deal is wrapped up.

CTL loans can be completed from-start-to-finish in as little as 45 days, but 60 days is the typical time frame.

The Best Car Insurance Rates

If your car insurance is due for renewal and you are considering buying another policy then this article will provide you with important facts that you should know about. Car insurance policies are getting increasingly expensive and you should do all that you can to reduce your costs. How much you have to pay for your car insurance is dictated by a variety of factors as they apply to you and your vehicle.

In this article we will examine coverage limits, your age, gender and marital status, your location and insuring other household members. All of these factors will have a great influence on how much you will have to pay for your policy.

Coverage limits are generally dictated by the price that you are willing to pay for your insurance. A higher level of coverage will generally result in higher premiums. The best way to find a good value policy is to comparison shop. Nowadays it is generally accepted that the best way to do this is by using a car insurance comparison website.

Your age, gender and marital status will have a great effect on the auto insurance rates that you are offered. Insurers rate drivers using a variety of criteria, if you are a young single male driver you will usually have to pay higher rates. If you are a middle-aged female married driver then your rates will be lower. Insurers calculate the best car insurance rates for you by comparing levels of risk. Those groups which are statistically more likely to be involved in an accident have to pay correspondingly higher rates.

Location plays an important part in deciding how much your premiums will cost. Drivers who live in an urban environment will usually pay more than those from a rural area. This is because drivers who live in cities and heavily populated areas are more likely to be involved in an accident, or to have their car stolen or vandalized. Insurers generally offer better rates if you’re able to demonstrate that you keep your vehicle in a garage at night. You may also be able to improve the security arrangements of your automobile by fitting an alarm, immobilizer and steering wheel lock.

Insuring other household members will have an influence on the cost of your policy and the best car insurance rates that you offered. If you have teenage family members living with you and they are added to your policy, then your costs will increase. This may still work out cheaper than if your teenage driver were to have a separate policy in their own name.

In conclusion, there are a variety of different factors which can affect your ability to be offered the best insurance rates. Some of these are coverage limits, how old you are, whether you are male or female and whether you are married or single. Your rates will also be affected by the area where you live and whether other household members are included in your policy.