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Get the Skinny with Our Behalf Online Lender Review

Published By Janet Gershen-Siegel at April 2nd, 2018

What Can Behalf Do for Your Business?

Behalf is an online lending company, among several other lending companies online. They offer purchase financing, and also have a virtual MasterCard in order to facilitate funding your purchases. We look at the specifics and drill down into the details.

Background

Behalf is located online here: https://www.behalf.com/.

Their physical address is:

126 5th Avenue

New York, New York 10011.

Behalf keeps their headquarters in New York City with offices in Tel Aviv. You can call them at: (877) 943-9962. Their contact page is here: https://www.behalf.com/help-center/. They have been in business since their founding in 2012. Behalf is backed by venture capital funds from Viola Growth, Spark Capital, Sequoia Capital, MissionOG, Victory Park, and Vintage.

Purchase Financing

Behalf’s fees are based on the terms offered to customers. Their fees rise as the number of days to pay rise, with an apparent cap at 3%. This lender offers products to both merchants and their business customers. For business customers, you select the amount to finance, the amount of time to pay it back, and whether you will pay on a monthly or a weekly basis.

Since the end of 2017, all funding from Behalf is through FinWise, a Utah-chartered bank which is located in Sandy, Utah.

This online lender will make a hard inquiry on your personal credit when you first apply for financing.

There is a maximum line size of $50,000. It can extend this in instant purchase capacity to any business customer. Their minimum transaction size is $300. Plus there is no upper limit on individual purchase transactions.

Fees

Monthly fees start at 1%, and there is a fixed monthly rate. There are no origination fees and no maintenance fees. You can save 10% on finance fees by choosing a weekly plan.

Advantages

Advantages to online lender Behalf include a fixed monthly rate to make your budgeting easier. In addition, there is a discounted rate option if you select weekly payments.

Disadvantages

Disadvantages include higher fees if you give your clients longer payment terms. As a result, your company will be penalized for providing better payment terms to your customers.

An Alternative – Building Business Credit

Small business credit is credit in a company’s name. It doesn’t connect to an owner’s personal credit, not even when the owner is a sole proprietor and the sole employee of the business.

As a result, a business owner’s business and personal credit scores can be very different.

The Benefits

Due to the fact that small business credit is separate from consumer, it helps to safeguard an entrepreneur’s personal assets, in the event of court action or business insolvency.

Also, with two separate credit scores, a business owner can get two separate cards from the same vendor. This effectively doubles purchasing power.

Another benefit is that even start-ups can do this. Heading to a bank for a business loan can be a formula for frustration. But building company credit, when done properly, is a plan for success.

Consumer credit scores rely on payments but also various other considerations like credit utilization percentages.

But for business credit, the scores truly only depend on whether a company pays its invoices in a timely manner.

Behalf Review Credit Suite Link:

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

The Process

Growing company credit is a process, and it does not occur automatically. A small business needs to proactively work to build company credit.

Having said that, it can be done easily and quickly, and it is much quicker than establishing personal credit scores.

Merchants are a big part of this process.

Undertaking the steps out of sequence will cause repetitive denials. Nobody can start at the top with business credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.

Company Fundability

A business has to be fundable to credit issuers and vendors.

Due to this fact, a small business will need a professional-looking website and email address. And it needs to have site hosting bought from a vendor like GoDaddy.

In addition, business phone and fax numbers should have a listing on ListYourself.net.

Additionally, the company phone number should be toll-free (800 exchange or similar).

A business will also need a bank account devoted purely to it, and it has to have all of the licenses essential for running.

Licenses

These licenses all must be in the particular, appropriate name of the small business. And they need to have the same small business address and telephone numbers.

So note, that this means not just state licenses, but possibly also city licenses.

Working with the Internal Revenue Service

Visit the Internal Revenue Service website and acquire an EIN for the small business. They’re totally free. Select a business entity such as corporation, LLC, etc.

A company can begin as a sole proprietor. But they will probably wish to change to a form of corporation or an LLC.

This is in order to limit risk. And it will maximize tax benefits.

A business entity will matter when it involves taxes and liability in case of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. Nobody else is responsible.

Sole Proprietors Take Note

If you operate a business as a sole proprietor, then at least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the business name. Therefore, you can find yourself being directly accountable for all small business financial obligations.

Also, according to the Internal Revenue Service, using this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 possibility for corporations! Prevent confusion and noticeably lower the chances of an Internal Revenue Service audit as well.

Starting Off the Business Credit Reporting Process

Start at the D&B website and get a totally free D-U-N-S number. A D-U-N-S number is how D&B gets a company into their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the company. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

By doing so, Experian and Equifax will have something to report on.

Vendor Credit Tier

First you need to establish trade lines that report. This is also known as the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can begin to get credit in the retail and cash credit tiers.

These sorts of accounts tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But to start with, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are frequently Net 30, instead of revolving.

Hence, if you get an approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, like within 30 days on a Net 30 account.

Behalf Review Credit Suite Link:

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Details

Net 30 accounts need to be paid in full within 30 days. 60 accounts must be paid fully within 60 days. Compared to with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To kick off your business credit profile properly, you should get approval for vendor accounts that report to the business credit reporting agencies. Once that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Helps

Not every vendor can help in the same way true starter credit can. These are merchants that will grant an approval with minimal effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may need to apply more than one time to these vendors. So, this is to confirm you are dependable and will pay punctually.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to the retail credit tier. These are service providers such as Office Depot and Staples.

Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications.

One such example is Lowe’s. They report to D&B, Equifax and Business Experian. They want to see a D-U-N-S and a PAYDEX score of 78 or better.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move to the fleet credit tier. These are companies like BP and Conoco. Use this credit to buy fuel, and to repair, and take care of vehicles. Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, make certain to apply using the business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or more and a 411 small business phone listing.

Shell may say they want a certain amount of time in business or profits. But if you already have enough vendor accounts, that won’t be necessary. And you can still get an approval.

Behalf Review Credit Suite Link:

Cash Credit Tier

Have you been sensibly managing the credit you’ve up to this point? Then move to the cash credit tier. These are companies such as Visa and MasterCard. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or more. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Also, they want you to have an established company.

These are companies like Walmart and Dell, and also Home Depot, BP, and Racetrac. These are normally MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and deal with any errors ASAP. Get in the practice of checking credit reports and digging into the details, and not just the scores.

We can help you monitor business credit at Experian and D&B for only $24/month. See: www.creditsuite.com/monitoring.

At D&B you can monitor at: www.dandb.com/credit-builder. At Experian, you can monitor your account at: www.smartbusinessreports.com/Landing/1217 . And at Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Experian and Equifax cost about $19.99; D&B ranges from $49.99 to $99.99.

Update Your Records

Update the data if there are errors or the relevant information is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. And for Equifax, go here: www.equifax.com/business/small-business.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to contest any errors in your records. Mistakes in your credit report(s) can be fixed. But the CRAs typically want you to dispute in a particular way.

Get your company’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report mistakes commonly means you send a paper letter with duplicates of any evidence of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always send copies and keep the originals.

Fixing credit report inaccuracies also means you specifically itemize any charges you dispute. Make your dispute letter as understandable as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.

Dispute your or your small business’s Equifax report by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute mistakes on your or your small business’s Experian report by following the instructions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B’s PAYDEX Customer Service telephone number is here: www.dandb.com/glossary/paydex.

A Word about Building Business Credit

Always use credit sensibly! Don’t borrow more than what you can pay back. Keep track of balances and deadlines for payments. Paying off in a timely manner and completely will do more to increase business credit scores than nearly anything else.

Growing company credit pays off. Great business credit scores help a business get loans. Your credit issuer knows the business can pay its debts. They understand the company is bona fide.

The company’s EIN attaches to high scores and lending institutions won’t feel the need to require a personal guarantee.

Business credit is an asset which can help your company for many years to come. Learn more here and get started toward building company credit.

Behalf Review Credit Suite Link:

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Upshot

For companies just starting out, allowing for longer payment terms for customers can help to convert one-time customers into regulars. Because Behalf effectively penalizes a company for providing longer terms, this is a strike against using them if your company is a startup trying to build a reputation with your clients.

However, for a not so new company which can readily make payments, the discounted weekly payment plan (and rate) could be an attractive option, although companies with regular revenue and enough time in business tend to qualify for more traditional financing, including loans from the Small Business Administration.

And finally, as with every other lending program, whether online or offline, remember to read the fine print and do the math. Go over the details with a fine-toothed comb, and decide whether this option will be good for you and your company. In addition, consider alternative financing options that go beyond lending, including building business credit, in order to best decide how to get the money you need to help your business grow.

 

 

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