Eight 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."
Eight Steps To Build Business Credit
By strengthening your 00004000 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:
- Make sure you are registered with Dun and Bradstreet and have a D&B number. Then sign up for the free self-monitoring system.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
If Obama is for the “little guy,” why do the Big Guys do so much better with him as the POTUS?
The Washington Post carried an article last week outlining the immense consolidation that has taken place in the US banking system as a result of the policies of the Bush and Obama administrations in response to the financial crisis.
The article, entitled “Banks ‘Too Big to Fail’ Have Grown Even Bigger,” reports how the largest banks have consolidated control over a greater share of financial markets and are using their monopolistic position to increase their profits by raising fees and interest on consumers and small businesses.
“The oligopoly has tightened,” said Mark Zandi of Moody’s Economy.com, who is quoted in the Post article. “There’s been a significant consolidation among the big banks, and it’s kind of hollowing out the banking system,” he added.
The newspaper reports that JPMorgan Chase, Wells Fargo and Bank of America now each hold more than 10 percent of all deposits in the country. These banks, plus Citigroup, issue half of all mortgages and two-thirds of all credit card loans. In the past year alone, the ten largest banks have increased their share of bank deposits from 40.6 percent in 2007 to 48.2 percent today.
The large banks are taking advantage of their increased control over the market to drive up fees. The Post noted that in the last quarter these banks raised their deposit fees by an average of 8 percent, while the smaller banks lowered their fees by 12 percent.
In promoting and subsidizing the takeover of failing banks by the biggest banks and investment houses, the Post notes, the government violated federal antitrust regulations, which prohibit any single bank from controlling more than 10 percent of deposits nationwide. They also violate Justice Department antitrust advisories on the degree of control over regional financial markets by individual banks.
In addition to these major acquisitions, more than 80 smaller banks have been seized by the FDIC this year and many have been incorporated into larger banks, with the aid of government subsidies.
As a result of this process, three major competitors of the largest Wall Street firms—Bear Stearns, Lehman Brothers and Merrill Lynch—have disappeared, and major commercial banks such as Wachovia and Washington Mutual have vanished, leaving such giants as JPMorgan Chase and Goldman Sachs in a position to dictate market conditions.
The growth of the remaining big banks has been staggering. Bank of America grew by more than 138 percent after acquiring Merrill Lynch and Countrywide Financial, according to the Washington Post report. JPMorgan Chase grew by 50 percent after appropriating Bear Stearns and Washington Mutual, and Wells Fargo expanded by 43 percent after snapping up Wachovia.
Prior to the crisis, Wells Fargo, JPMorgan Chase and Bank of America controlled 4.4, 7.0 and 9.6 percent of bank deposits, respectively. Now, they control 11 percent, 10 percent, and 12.9 percent.
This consolidation, together with the Obama administration’s pledge to spend whatever public funds are required to prevent the failure of the remaining mega-banks, has enabled these banks to borrow funds at significantly lower rates than their smaller rivals, creating the conditions for a further concentration of financial power in the hands of a few super-banks. Banks with $100 billion or more in assets are borrowing money at interest rates on average 0.34 percentage points lower than their smaller rivals, according to the Washington Post. That advantage was only 0.08 percent in 2007.
The process of government-mediated consolidation continues. The Wall Street Journal reported Monday that the FDIC has been subsidizing the purchase of distressed banks by larger institutions by guaranteeing virtually all of the potential losses of the bigger banks.
The article reports that the FDIC has assumed up to 95 percent of the risk on $80 billion in assets of failed banks bought by other banks. The FDIC’s total potential losses are close to $80 billion, compared to the $10.4 billion it currently holds to guarantee the deposits of millions of consumers.
The FDIC’s deposit insurance fund has fallen from more than $50 billion a year ago and is being further depleted by new bank failures. Officials say they expect over 300 more bank failures in the coming months. The agency expects to cover $14 billion in losses on the takeover subsidies it has already extended. It is widely expected that the FDIC will tap billions of dollars in public Treasury funds to shore up its deposit insurance system.
As the Wall Street Journal notes, the FDIC’s policy of engineering bank takeovers at public expense “amounts to a subsidy for dozens of hand-picked banks.”
The vast concentration of financial power is the result of a deliberate policy of both the Bush and Obama administrations. It is one component of a program to utilize the financial crisis precipitated by the speculation and profiteering of the major banks to carry out a massive restructuring of the
I am not “you guys.” He is absolutely a waterboy for the corporate oligarchy. He’s no socialist. He’s emptying the federal treasury into the coffers of private corporations, by the trillions! Follow the money, not the rhetoric.
where did the additional funds go?! (kind of long, please answer!)?
My husband refinanced our home with wells fargo financial (NOT the same as the actual Wells Fargo, we found out a few weeks ago) on a 12 year note in 2008. it was originally a 30 year term. we had been dating for about 6 months, so it was really none of my business at the time. the payment went from a little under 500 per month to 950.80 per month. turns out the interest rate is 10%. the more I dug the more pure crap I found. the original rate was 10.82%, they sold him $3060 worth of points and it sits at 10%.the total paid to the other mortgage company was about 61,000. closing was about 3000. there was also a small personal loan rolled into that for about another 3000. that total should be about 70,000, right? WRONG!! there was like 9,400 on the “amount paid to borrower” line, bringing our total financed to 79,000!!! problem is, he didn’t receive any money, not a single penny! He did receive what he thought were credit cards from WFF on like 3 different occasions, but he shredded and trashed them because he thought they were just credit cards and didn’t want them. were they some kind of prepaid debit card with a loaded balance of 9400 bucks? if so how do we access it now, after 3 years? we have paid 10% on it and could really use it to refinance! there is no credit card reporting on his credit, but we haven’t gotten any statements from a WFF account saying we have a balance, which makes me think they were prepaid debit cards. they weren’t even activated! we are fairly confused, and I will be calling WFF and our loan officer at Churchill mortgage first thing monday morning, but I thought I’d try to dig up some info in the mean time. any ideas??? what an awful company to have dealt with! obviously we aren’t the only ones, from what I’ve googled.
by the way, Churchill Mortgage did not sell us this garbage, they are who we are working with to refinance and have been WONDERFUL!
Would you make this trade?
Let’s get crazy and imagine this scenario could occur. This is a two part question, one for liberals, the other for conservatives.
Conservatives: A Congress and President is elected that is ready to abolish the IRS and implement the Fair Tax/Flat Tax – pick your favorite. They are staunchly anti-regulation and pro-business. They have passed the Balanced Budget Amendment and are awaiting the states decision. They have privatized social security and repealed “Obamacare.”
They also repeal DOMA. They repeal DADT. They pass the “Marriage Equality Act” prohibiting states from banning same-sex marriage. They pass the “Women’s Reproductive Liberties Act” which repeals the Partial Birth Abortion Ban act and provides federal fundings for abortions where applicable – i.e., military, in insurance plans for federal employees, etc.
Accept or reject?
Liberals – A congress and President is elected that is actually willing to stand up to the corporations and big banks. They take the hammer to Wells Fargo, Bank of America, Chase, smashing them into smaller regional banks to limit t their influence. They reinstate Glass-Stealy. They repeal the Bush Tax cuts. They get us the $#@% out of Iraq and Afghanistan. They bend over the unethical credit card companies and securities brokerage firm and just @#%@%@% them. They raise the minimum wage.
They also gladly watch a supreme court reverse Roe v. Wade. They not only don’t reverse DOMA, but push for a Constitutional Amendment banning abortion and defining marriage as a man and a woman. This hypothetical President is more religious and open about it than George Bush. They gleefully repeal FMLA.
Accept or reject?
I ask because I contend for most people, social issues trump economic ones and easily. The only exceptions to this that I’ve observed are very wealthy people.
Edit: Please state whether you identify yourself as a conservative or liberal.
reject. lets have freedom and not kill babies. that’s all i ask for.
Without seeing the actual settlement statement, it’s hard to be sure, but from what you describe, it does sound like that he did a “cash out” refinance. As far as I know, those are typically paid with a check made out to the borrower at the time of closing. I’ve never heard of that money being paid via pre-paid debit cards. That’s not to say it couldn’t happen – financial companies got very “creative” (in a bad way) there for awhile – but I’ve never heard of anything like that.
It sounds like your new husband is not very financially knowledgeable. (It sounds like you either already are or are well on your way, so hopefully he will realize how lucky he is to have someone like you that’s probably going to save him a lot of money.) From everything you say, he got a really bad deal there. In 2008, 10.82% or even 10% was WAY WAY higher than going interest rates. Unless his credit rating was horrible at the time, I think he got a very bad deal on the interest rate. Also, $3000+ in points on a $79,000 loan is a LOT of points (about 4) to lower the rate by just 0.82%. Another bad deal. I personally try to avoid points if at all possible. While in some cases, the cost of the points MIGHT be offset by interest savings over the life of the loan, the reality is that most people don’t keep the loan for the full duration so the interest savings is not going to be as much as it might look like it will be. In his case, he paid $3000+ to save 0.82% on a $79000 loan for about 3 years which if you do the math is less than $2000, so he’d have been better off with the 10.82% rate and no points.
I don’t think anyone that understood what was going on would agree to the kind of a deal he got, which means there are lots of possibilities for that “missing” $9400. Perhaps he was given a check and didn’t realize it and it was put in with the other documents he was given at the closing? Is there anyone that was with him at the time of the closing that you could talk with now to find out about that? A closing can be overwhelming for anyone without a firm understanding of what’s going on, so perhaps he missed some key detail about where that $9400 was going. He shouldn’t have even been getting cash out unless he asked for it – and if he did ask for it, it seems that he would have asked about where it was at the time of the closing (or soon after) if he didn’t get it.
If you can’t get a straight answer from Wells Fargo Financial, I suppose you could also take the original closing statement to the person you are working with at Churchill and ask for their opinion. It’s not their job to evaluate your prior loan so they might tell you they can’t help you with that, but you could probably ask them what are all the possible ways that $9400 could have been paid and they might answer that. My guess is that he got a check and either lost it or deposited it somewhere and doesn’t remember.
I suppose you could ask the Churchill person to contact Wells Fargo Financial (if you didn’t get anywhere with them) to find out whether that $9400 was ever taken (either via check or some other way) and if not, see if they will reissue the check (which they probably won’t) or reduce the balance on the loan. My guess is that they’ll probably claim they have no records of whether the check was cashed and they can’t do anything. I’m not sure of the laws regarding something like that. For that amount of money, it might be worth contacting an attorney if you, the Churchill person, and Wells Fargo are unable to come up with a reasonable explanation.
There’s an expensive lesson here. Always make sure you understand what you are doing when doing financial transactions like this. If you don’t understand, ask someone financially knowledgeable to help you understand. I wouldn’t ever trust what the person on the other side of the transaction is telling me (unless I understand it myself and it makes sense) because far too many people are less than honest when it comes to anything where they’re making a profit.
Good luck. I hope you’re able to get it straightened out. Feel free to contact me through my profile if you want to. I’d be curious about what you find out, particularly if that $9400 was paid some way other than a check at time of closing.
I am not going to lie. I thought that Obama would have been different than the typical puppet for the plutocrats. I was wrong.
The consolidation of wealth into the top 1% of the rich has accelerated under Obama. Furthermore, the average worker is now working harder than he ever has, and is getting paid less for it. All the while, the worker is being used by the rich oligarchs.
Historically, business downturns witness a decrease or stagnation in worker productivity. The current economic crisis is different. Worker productivity has increased rapidly in recent months. While productivity increased by more than six percent in the second quarter, labor costs tumbled by 5.9 percent.
This is part of a longer trend in the US economy. “Between 2000 and 2007, the average American worker’s productivity rose 19.2%, yet more of those gains are going to top managers,” “Adjusted for inflation, average wages have grown just 0.7% per year since June 2000. In 1979, the ratio between the average CEO’s pay and the typical workers pay was 27 to 1. By 2007, it had widened to 275 to 1.”
This is not the social change I voted for, this is the same ultra right wing conservative economics that I have come to loathe. I have lost all hope for this country, and as other countries are falling in line with the USA and following their pattern, at the behest of the World Bank (a puppet of the USA plutocracy) and the IMF, I do not know where to turn for a decent place to live where I can be treated fairly.
The funniest part, which is also ironically the saddest part of all this is that 1/2 of all America believes that Obama is a socialist. In reality, he is nothing more than a capitalist puppet. No liberal minded person would ever confuse Obama with anything related to socialism. However, the oligarchy in the USA has successfully convinced the radical extreme conservatives that Obama is a socialist, and convinced Americans that socialism is bad.
It is truly a dark time we live in.