Published By Janet Gershen-Siegel at March 4th, 2019
Do you need long haul trucking business credit? We can help you get it.
Why, exactly, do you need business credit for trucking? It’s because business credit is good for all business and not just traditional companies.
If you’ve got an EIN, then the IRS says you’ve got a business. However if you just have personal credit, then you’ll be responsible for your company’s financial obligations, its tax obligations, and its bankruptcy, if that happens. You don’t want this. Split business from personal credit and it won’t.
And specifically, fleet credit will directly help your trucking business. And gasoline charge cards will, too. We all know how costly it is to fill up nowadays.
Business Credit is credit in a business’s name. With business credit the firm builds its own credit profile and credit score. With an established credit profile and score, the company will then get approved for credit.
Since the company qualifies for the credit, in some cases, there is no personal credit check required from the firm owner. The firm can make use of its credit to get approved for retail credit cards.
These come from establishments just like BP, Sunoco, Exxon, Shell, Ford, RGS Fleets, Walmart, even MasterCard, Visa, and AMEX. Plus the business can use its credit to get approved for fleet credit for repair and maintenance of business vehicles including semis. And the business can also get approval for lines of credit and loans.
A credit profile can be built for a firm which is thoroughly separate from the company owner’s personal credit profile. This offers firm owners two times the borrowing power as they have both personal and business credit profiles. A small business owner can get credit much quicker making use of their business credit profile instead of their personal credit profile. Approval limits are much greater on business accounts as opposed to personal accounts. According to the SBA, credit limits on business cards are normally 10 – 100 times greater than for consumer credit.
Dun & Bradstreet’s Business PAYDEX scores are based upon payment history.
But personal credit scores are based upon 5 factors:
When done correctly, business credit can be developed without a personal credit check and irrespective of personal credit quality, with no personal credit reporting of business accounts. Most business credit can be gotten without having the owner taking on personal liability, or a personal guarantee.
Therefore in the event of nonpayment, the company owner’s private assets can’t be pursued. When a business owner applies for financing, their business credit is under review. Not having business credit developed will get an owner turned down for funding. There are no regulations requiring lenders to tell the business owner for their reasoning for denial, so many never know.
Virtually any company can get business credit as long as it has an EIN number and entity set up. You don’t need collateral or financials. Your business can be a startup. You merely need to understand the proper building steps. All highly-successful companies have business credit; it’s a “rite of passage” to ever attain real success.
A business starts developing a new credit profile almost the same as a consumer does. The business starts off with no credit profile. The business gets approved for new credit which reports to the business credit reporting agencies. Then the business uses the credit and pays the bill timely. A positive business credit profile is developed.
As the firm keeps using credit and pays off bills promptly it will qualify for more credit.
The assumption loan providers, retailers, and creditors have of your business is essential to your potential to establish strong business credit. Before making an application for business credit a firm must ensure it meets or surpasses all lender credibility specifications. There are over 20 credibility points that are needed for your firm to have a strong, credible foundation.
It is vital that you use your exact business legal name. Your full firm name should include any recorded DBA filing you are utilizing. Ensure that your company name is exactly the same on your corporation papers, licenses, and bank statements.
You can build business credit with just about any form of business entity. If you truly wish to split business credit from personal credit your firm must be a distinct legal entity. For this reason it can’t be a sole proprietor or partnership.
Unless you have a separate business entity (Corporation or LLC) you may be ‘doing business’ but not truly ‘a business’. You need to become a Corporation or an LLC to split personal from business.
Whether or not you have employees, your business entity must have an EIN. Your EIN is used to establish your bank account and to establish your business credit profile. So take the time to affirm that all agencies, banks, and trade credit vendors have your business listed with the exact same EIN.
Your business address must be a genuine brick-and-mortar building, with a deliverable tangible address. For retail businesses, it should not be a residential address, a PO Box, or a UPS address. Some lending institutions will not approve and fund unless these standards are met.
However, virtual addresses are very good business address solutions. For address only, you will get mail and packages at a dedicated business address. For a virtual office, you get a professional business address, and dedicated phone numbers. And you also get receptionist services and part-time use of well-appointed offices and conference rooms.
And for a genuine office, you’ll have your own full-time private office with front desk services, dedicated phone and fax, internet, full furnishings, conference rooms, and more.
You must have a dedicated business telephone number listed with 411 directory assistance, under the company name. Lenders, vendors, creditors, and even insurance companies will confirm your business is listed with 411. A toll-free number will give your firm credibility. But you need to have a local telephone number for a listing with 411 directory assistance.
Lenders judge 800 number or toll-free phone numbers as proof of firm credibility. Even if you’re a solitary owner with a residence-based company, a toll-free number makes you seem like an even bigger company. It’s very easy and affordable to set up a virtual local phone number or a toll free 800 number.
A cell or residential telephone number as your main business line could get you flagged as a non-established firm, which is too high of a risk. You can forward a virtual number to any cell or land line phone number.
You will also need a business website. Credit providers will investigate your business on the net. It is best if they found out everything directly from your firm website. Not having a website will significantly hurt your chances of getting business credit.
There are many providers on the net offering economical business websites. This way, you can have an internet presence showcasing an overview of your firm’s services and contact details.
Plus, it is vital to get a company email address for your company. It’s not only professional, but significantly helps your chances of getting an approval from a credit provider.
Setting up a business email address is just too simple and economical to neglect. When it concerns your business email, never use free email services like Yahoo and Hotmail. The email address should be at yourcompany.com.
Your company banking history is important to future success in acquiring bigger business loans. The date you open your business bank account is the day that loan providers feel your firm started, regardless of when you incorporated or attained any other business milestone. The longer your business banking history, the better your borrowing potential is.
Having a high account balance is critical in obtaining an excellent Bank Rating. And a good Bank Rating is critical for loan approval in the future. Try to keep a bank balance of $10,000 or more for a 5 Bank Rating. In that way, you are likelier to be approved for loans at some point.
A typical error when developing credit for a company is non-matching company addresses on the business licenses. Even worse is not having the licenses necessary for a trucking business to operate legally.
Get in touch with the State, County, and City Government offices to see if there are any mandated licenses and permits to operate your trucking business. This includes your commercial driver’s license. Your company filings must be listed correctly at the state, county, and city levels. Plus your Internal Revenue Service filings must have correct listings.
Also be sure to verify that main agencies (State, IRS, Bank, and the 411 national directory) have your business listed identically and with your precise legal name. Also make certain each and every statement you get has your business name listed properly and comes to your firm address.
Be sure your company is listed with Dun and Bradstreet. If it isn’t, then get a D-U-N-S Number. This number initiates the process of establishing your business credit profile with them. Your D-U-N-S number will also play an essential role in allowing your company to borrow without a personal guarantor. You can get your D-U-N-S number here: dnb.com. And you can also enroll for the DNBi SelfMonitor to monitor your credit. A subscription is $39-99/ month.
And take a look at creditsuite.com/monitoring for the lowest-price monitoring. We can save you 90%!
Our business finance suite includes monitoring.
Don’t want to take the plunge just yet? Then visit smartbusinessreports.com for a copy of your Experian Smart Business report. It is priced at $49 – 99. Learn how many trade lines are reporting, and see if you have a business credit score assigned. See if you have an active Experian Business Profile, and review recent inquiries.
Buy a copy of your Equifax Small Business Credit Report. It is $99.95 for a comprehensive report.
This is the start of business credit for trucking companies.
It is when a vendor extends a line of credit to your company on ‘Net 15, 30, 60 or 90’ day terms. This means you can buy their services or products up to a maximum dollar amount. And afterwards you have 15, 30, 60 or 90 days to pay the bill in full.
So if you’re set up on Net 30 terms and bought products today, then payment is due in the next 30 days. Get products for your business needs and postpone payment on those for 30 days, thereby easing cash flow. Some merchants will approve a company for Net 30 payment terms upon confirmation of just an EIN and a 411 listing.
Pay all Net 30 vendor accounts completely and promptly. Be patient and allow time for the vendors’ reporting cycles to get into the reporting systems.
It typically takes 3 cycles of Net accounts reporting to develop credit scores. Most companies and major retailers offer business credit, but don’t advertise it. However, there is no benefit to the retailer to promote credit without personal liability if a business owner agrees to take on that liability. So they don’t promote their business credit cards and routinely demand an SSN.
You need to have a total of at least three Net 30 day pay accounts reporting, to move one.
When you have more accounts, you can begin to get approval for fleet credit and auto vehicle financing. You must have at least one account with a $10,000 high credit limit to get approval for most fleet credit sources.
Plus you ought to have higher scores, 75 or higher with Dun and Bradstreet. This score just confirms you pay off your bills on time. Fleet credit is used for everything to do with company vehicles and can be used at multiple locations. Its uses include fuel purchases, and vehicle repair and maintenance.
As you keep developing more business credit, you’ll get approval for more high-limit accounts. Most loans will call for a personal guarantee and credit check for approval.
And you will need more than 20 reported accounts, a larger number of employees, and higher revenue and profits to get loans without these. Being responsible with fleet credit will lead straight to getting vehicle financing.
This is another feasible option. Unsecured credit is not secured with collateral. Good personal credit gets you unsecured credit cards with a personal guarantee; this normally means a 685 score or higher. Good business credit gets you unsecured credit cards with no personal guarantee. The amount you can fund is often very high, as in $10,000 – 50,000, and you can get it in 1 – 4 weeks.
You can also get cash flow-based lending; these are short term loans of 6 – 18 months, with amounts as much as $1 million. The loan amounts are the same as 8 – 12% of annual revenue, with rates of 10 – 45%. A 520 credit score is accepted, but good bank statements are essential.
A revenue loan (or revenue-based loan) is an alternative type of loan. In contrast to a bank loan, it doesn’t necessitate collateral or significant assets. And unlike angel investing or venture capital, the money isn’t handed over for a portion of the business. Instead, the loan (or credit line) is paid back as a percent of incoming revenue. See: https://en.wikipedia.org/wiki/Revenue-based_financing.
The lender (investors, actually) will take an equity warrant which means they have a fixed price if they wish to buy stock in the business until an expiration date. And the company owner does not need to back the loan with their own personal assets. No valuation is done on the company’s assets.
All that is needed:
One way to get revenue-based financing is via crowdfunding platforms. Interest paid is often a tax deduction for the firm. Costs tend to be more than with traditional bank loans. It’s not for very early stage startups, by definition. But it can be a decent choice for a company about 2 – 4 years old, with revenue coming in but banks still aren’t offering loans.
One great provider is Fundbox. It’s an appropriate option for short-term financing. The gist is you borrow on a line of credit which you pay back weekly for up to 12 weeks. This is done through automatic deductions from your firm bank account. $1,000 – $100,000 is on offer. There are no minimum credit score requirements.
Find them online at: https://fundbox.com/lines-credit.
You have a great deal of options when it involves getting business credit for trucking companies.