SHOW NOTES FOR EPISODE 099 -FUNDING YOUR REAL ESTATE INVESTMENTS WITH BUSINESS CREDIT

If there are two key constants in real estate investing success it is the fact that you always need access to cash and secondly, need to maintain a good credit history.  In this episode, our guest Ty Crandall will discuss how establishing business credit early can not only protect your personal credit rating but can also give you access to massive amounts of credit.

What You Will Learn

• How you can set up a business entity and establish business credit in 90 days or less
• How losing everything in the crash of 2007-2008 taught Ty Crandal the value of business credit as means to protect personal assets and grow your business
• The grim reality of credit for real estate investors
• The main differences between personal and business credit
• How you can get access to and beyond $150,000 in business credit

About Our Guest

Ty Crandal

Ty is an internationally known speaker, author, podcast host and business credit expert.  With over 16 years of financial experience, Ty is recognized as an authority on business credit building, business credit scoring and business credit repair.  Ty is the author of two popular books on credit- Perfect Credit and Business Credit Decoded.  He is often interviewed or radio and news shows, TV programs and magazines, including Entrepreneur and Inc.  He currently serves as the CEO at CreditSuite where he has helped create and grow one of the biggest and most creditable business coaching operations in the United States.

More About Ty

• Grew up in a small town – Elwood, Indiana
• Joined the military and was hoping to see the world but ended up based out of Air Force base  in Ohio, minutes away from his hometown
• Went into financial services (father was an accountant) developed a passion for it
• Eventually, opened his own mortgage company right at the height of the bubble before the bust in 2007-2008
• Lost nearly everything
• His credit was destroyed
• Started a consumer credit company because he figured a lot of people would need help
• Went from doing business to make money to doing business to help others
• People began to ask about business credit but didn’t know anything about it
• Researched

His Lightbulb Moment

• Once he found out what business credit was and that it is totally separate from your personal credit, he realized, “Gee, if I had a separate business credit account, I wouldn’t have lost everything in the crash.”
• At that point he became an advocate with a mission to educate as many people as possible about what business credit is and how it can help protect your personal assets

The Grim Reality of Credit

• Sometime you are going to have to use credit or you will be evaluated by your credit score
• It’s better to be informed and prepared before that time comes
• You don’t think about it until you need it and when you need it, it’s too late to do anything about it

The Difference Between Personal and Business Credit

• Consumer credit was not designed to fund activities in your business
• Business credit was designed to fund your business activities
• Business Credit and Consumer credit
  • Both have a credit profile based on your tax i.d.
  • Both have a credit score linked to your tax i.d.
  • Both use that profile to get mortgages, credit cards, auto loans
  • You can build up your credit with both but the info on your consumer credit report will not appear on your business credit report and vice versa
  • Consumer credit tied to your social security number
  • Business has an EIN number (tax i.d. for the business)
  • 35% of your consumer credit score is based on how you “pay back” a debt, 30% is your credit utilization. When you over utilize your credit you can damage your score almost as much as when you don’t pay back on time.  It’s just a mathematical equation.  That’s why you can’t use consumer credit for business expenses
  • When you apply for business credit, you don’t have to fill in your social security number. That way they are forced to only look at your business credit
  • When you apply for a business loan, the inquiry won’t go on your consumer credit report
  • Also, you are not personally liable for your business credit
• Credit Capacity
  • As a consumer, you won’t need $10,000 credit at Dell
  • Businesses spend and need access to larger amounts of money than consumers
  • SBA says business credit is 10 to 100 times greater than consumer credit
  • In three months, a business can get $10, 20, 50,000 in credit relatively easy but a consumer would take much longer time to build that kind of credit

How Can 50plusers Get Started in Establishing Business Credit

• Go to your local state Secretary of State and file for an LLC or corporation – set up a business entity
• Don’t do a sole proprietorship
• Go to IRS.gov and apply for a tax i.d. in the name of the entity
• Make sure your business is creditable
  • Set up a business website with a professional URL/domain name
  • Get a business email address with your domain
  • Get a business address and phone number
  • Get listed everywhere you can (yellow pages, directory searches, etc.)
• Establish credit with easiest companies first
  • Vendor accounts/trade lines. Companies like:
    • Uline
    • Quill
    • Seaton
    • Monopolize Your Marketplace
    • Wells Fargo Secured business credit card
  • These companies report your transactions to the business credit bureau and help you get business credit history
  • Buy little things on credit, pay back on time and start creating a positive credit history
  • Move on to store corporate credit:
    • Lowes
    • Home Depot
    • Exxon
    • Best Buy
    • Amazon
    • Apple
    • Shell
    • When you have 10 established, move on to credit cards (120 days)
  • Move on to cash credit cards
  • The more you use and spend of your credit the better your rating and increase of limits
• Costs to get established: $500-1,000
  • Setting up corporation – $75-150
  • EIN – free
  • Business phone – $15/month
  • Website design – $200
  • Website hosting – $7/month
  • Virtual office address – $25/mo
• Timeframe
  • Once your entity is set-up, you will start getting vendor credit right away
  • May take 60 days or linger for the vendors to report transactions to credit bureau
  • $30-50,000 limits in 6 month time limit
  • After a year or more pf credit building – maybe up to $100,000
• Business Credit Rating
  • Equifax and Dunn & Bradstreet rating based primarily on how you pay your bills
• Real Estate not looked upon favorably by banks
  • Too few transactions
  • Each transaction is large
  • Lenders prefer many smaller transactions

Unsecured business financing

• Service Ty’s company offers
• Get 5 business credit cards with personal guarantee – high limits
  • 0% for 6-18 months
  • Balance transfers (move balances off of your consumer credit and see your personal credit score sky rocket up)
  • No income verification
  • No documents
  • Great for start-ups
• Report to business credit reporting agencies
  • Can get up to $150,000
• Without personal guarantee or personal credit check

Credit Inquiries

• Consumer credit FICO scores are impacted negatively with each credit inquiry
• You are penalized if you don’t have enough credit and penalized when you try to get more credit
• Takes many years to get to 800 score
  • He has one friend that said you have to have a credit card for 12 years to get a 800 or more
• Not the case with business credit – based on how you pay
• Experian business does factor in consumer credit factors but 85% is payment history
• Equifax and D&B don’t factor in those things

Main Business Credit Reporting Agencies

1. Dun & Bradstreet
   1. Paydex
   2. D&Bs score
   3. Weighted average: More weight on your highest limit accounts
2. Experian
   1. Telescore
3. Equifax
   1. Based solely on payment history

Advice to Old Dawg’s Looking to Establish Business Credit

• Get credit BEFORE you need it
• Follow the steps above under “How Can 50plusers Get Started in Establishing Business Credit”
• Get your business credit to fund your business
• Businesses need money to make money

Rap-It-Up

• Favorite real estate book: Rich Dad Poor Dad by Robert Kiyosaki
• Favorite business book: The Power of Positive Thinking by Noram Vincent Peale
• Most valuable website for success: YouTube
• Favorite app: WAZE
• Favorite quote: “Success occurs when opportunity meets preparation.” – Zig Ziglar
• If you lost everything and only had $1,000 – Start a new business and build credit lines

How to Reach Ty

• Website: CreditSuite.com/EIN – Get free eBook – “How to Get REAL Business Credit For Your EIN That’s NOT Linked to Your SSN”

This Episode Brought to You by HealthIQ.com

This episode is brought to you by Health IQ, a very special life insurance company that gives health conscious individuals the best life insurance rates and quotes.  Learn about what they can do for you specifically at HealthIQ.com/olddawg.

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