Thank you so much for having me. I m really excited to be here today.

Transcription

1 Welcome to The Boomer Business Owner. My guest today is Ty Crandall. Ty is an honorary Baby Boomer, internationally known speaker, author, and business credit expert. With over 16 years of financial experience, Ty is recognized as an authority in business credit building, he is the author of Perfect Credit and Business Credit Decoded, and has been featured by Entrepreneur and Inc. magazines. Hey, Ty. Welcome to the show. Thank you so much for having me. I m really excited to be here today. I notice you had there business credit. Intellectually, I guess, I knew there was some difference between business and personal credit, but I guess when I m thinking about smaller businesses, they seem to always be tied together. Is that in fact the case? It is, unfortunately. Entrepreneur reports that about 90% of business owners just don t know anything about business credit. From my experience, the reason that most small business owners are mixing their personal credit for their business purposes is because they re just unaware that business credit exists. The larger companies inevitably get CFOs and high financial-minded people that are very familiar with corporate credit, and help those companies build it. Somebody just getting started as an entrepreneur in the business world typically doesn t know about business credit, so that s when they have a tendency to comingle personal credit for business purposes. At what point does there become a distinction between business and personal credit? Meaning if you re a multibillion dollar corporation, obviously the company has Page 1 of 14

2 business credit, but if I m Charlie, a small business owner, I could have a couple million dollar business more often than not, when I go to the bank, they re going to want me to cosign. At what point does it become a separate issue, or should it be a separate issue from the beginning? It really should be separate right from the beginning. You reach that point when you establish a business credit profile. As entrepreneurs, we re used to providing a personal guarantee, we re used to that being asked for. What most people don t recognize is that it s being asked for because they re pulling your business credit and not seeing a profile established. When you can have a profile and score established to your EIN Because that s what business credit ultimately is, is you have a consumer credit profile that s linked to your social, while your business has its own credit profile linked to its EIN. Whenever you apply for any kind of business credit card or financing, even though they won t tell you, they re always pulling your business credit. Since you don t have any established in the beginning or a lot of companies don t, then what happens is they pull a blank credit profile and score, and that s when the personal guarantee is really pushed for because you don t have a leg to stand on. Even as a startup, you can build a credit profile and score for your business. When you do so, you can then leave your social security number off the application in many of those cases, forcing them to pull your business credit, and when they see you have trade lines or reported accounts, when they see that you have a credit profile and they see you have credit scores for your business, then your business can carry its own weight and qualify for that credit or financing without needing your personal guarantee. Understanding that you re not an attorney You re not an attorney, are you? Page 2 of 14

3 No, I m not. Okay. Whew. Are you suggesting, if somebody who s listening to this, is looking to start maybe even a part-time business that they should look to setting up a separate business entity? Again, I m not asking for legal advice, here, but would that be your suggestion from a credit standpoint? That s the first step of starting any business. The very first step you take to start a business is to set up an entity, to set up a business, whether it be an LLC, corporation, partnership, sole proprietorship. That s really the first step. The best way to do that is to go with a corporation or an LLC, because by definition, those entities are separate from you personally so your liability is immediately separate, based on your entity type. If you were to do a sole proprietorship or partnership, for example, you would be liable for your business debts because you are part of the business. The very first step anybody wants to do is set up an entity. When you set up, for example, a corporation, then the next natural step is that you get an EIN number for that company. Once you have the EIN, immediately you can start building credit for that EIN. Okay, so the fact that I, Charlie, do have a business entity, I do have an EIN, does that mean by default I do have a business credit report? You have a business credit profile, but whether it s blank or there s things there depends on you. For example, a lot of people are in business for 5 or 10 years, and they just say: Oh, yeah, I have business credit, I ve been in business 10 years, and they deal with a lot of vendors, but 95% of trade vendors don t report to the business credit reporting agencies. Page 3 of 14

4 In the consumer world, you can bump into credit accidentally, because almost everybody reports, but in the business world, not a lot of people report, especially initial credit. It s something that you have to intentionally get into, and decide that you re going to get initial credit that will build that business credit profile and score. Once you ve made that decision, then that s what will inevitably give you trade lines, give you a profile, give you a score, which is the basis of being able to move on to Dell and Amazon and Walmart type credit cards, and even Visa MasterCard cash type credit cards. Is there a way for me to take a look at what my business credit profile looks like? Yeah, absolutely. What s scary is anyone else can, also. You see, in our world, we re used to consumer credit where somebody has to have our permission to look at our credit report. Under the Fair Credit Reporting Act, this is referred to as permissible purpose. In the business world, there is no Fair Credit Reporting Act, which means I can go and pull your business credit right now. Anybody can. You can go right to DNB, which is which is done is Dun & Bradstreet's website, or you can just type in Experian business credit report, and even grab your Experian business credit report, or the same with Equifax, and for usually less than $50, you can get access to your business credit report to see what s on there. You can get access to a competitor. Your prospects can pull your credit, your clients can pull your credit, your competitors. Anybody can access that profile, including yourself. Earlier, you alluded to the fact that just because I have done business with someone, they ve given me some Page 4 of 14

5 credit, I ve paid that off, they might not necessarily have reported that to my credit profile. Correct? Correct. How can I get them to then do that, though? Inevitably, you really can t. There is a way to do it. You can go to pay for something known as the Dun & Bradstreet CreditBuilder, and they will basically supplement some of those type of accounts on your credit report. There s really an easier way to do it. Instead of trying to get people that don t report to report, you just go out and get credit with people that do report. There are companies like Uline, Quill, Laughlin and Associates, just to name a few. These are creditors that will give you initial credit, even as a startup business. It might be $300-$500, it might be $1,000, but they report the credit to the business credit reporting agencies. That s really the path of least resistance, is find these type of places, like Uline, and Quill, and Laughlin and Associates, have them give you credit, pay the bill as agreed, and then they will report those accounts to the business credit reporting agencies, which are done in Bradstreet, Equifax, and Experian Commercial, and then your business credit profile and score will be established. Once established, you can really accomplish some amazing things. You ll be able to get Amazon credit cards, and Best Buy, and BP, Chevron, Lowes, Home Depot, Walmart, all of these companies offer business credit accounts that are linked to your EIN, not your social. You re saying that, for example, if I didn t have a business credit profile or I didn t have a complete business credit profile, if I went to apply for one of these credit cards, I could very well be declined? Page 5 of 14

6 Absolutely. If you re trying to it based on your business credit. This is what happens: In business credit, there are a few core steps you want to follow. First is to recognize that you re going to be applying for credit without using your social, and since you don t have credit yet established for your EIN, then you have nothing beyond what s on your application. You have to recognize that, and somebody has to make sure that what s on their application is solid; they have a legitimate website, they have a business professional address, that they have a physical address on their application, even if it s a virtual address that they re using. If they have a business phone number, not a cellphone number. It needs to reflect that they have a legitimate, credible business. With this, they can then take the next step of getting these type of vendor accounts; the Uline, the Quill accounts. They go in, they apply, they get approved for those type of accounts, they use that credit, it reports. Once you have about five of those trade lines, then you can start getting Staples, and Amazon, and Dell type credit cards. Once you have 10 total accounts reported, then you can get Visa and MasterCard. As you describe, what a lot of people do is they go: Hey, I heard this guy, he said I can leave the social off and go get money, so they try to go into their bank or Staples to start a credit profile. That doesn t work. Your bank wouldn t approve you for initial consumer credit if you had none, your Staples won t approve you for a credit card on the consumer side if you have none. But if you went into both of those sources with established consumer credit, they would approve you. Exactly is the same in the business world. It s just following the proper steps. Make sure you re credible, get vendor accounts which are account creditors like Uline and Quill that offer net 30 terms, not revolving. Then move into store credit that s revolving, then move into cash credit. Page 6 of 14

7 As I listen to this, the cynical part of me goes to this, it says: You know, Ty, it all sounds well and good, fine, I have a $500 credit line with Uline, but when I need that $100,000 and go to my bank, they re still not going to give it to me. What I hear you saying, and please correct me if I m wrong, is: Yeah, Charlie, maybe that s the case. Maybe you still don t deserve $100,000 from your bank, but wouldn t it be nice to have a $5,000 credit limit from your bank, or have credit limits with all these other vendors, which would preclude you from needing this larger credit line with your bank. Is that a fair comment? Yeah, absolutely. What I m saying is not going to lay the basis for you going into your bank and getting a $200,000 credit line without personally guaranteeing it. Can you really reach that level? Absolutely. Every large privately owner and publically owned company does it. If you look at a company like Walmart, Walmart has 16,000 trade lines on their Equifax credit report. They use a lot of credit. If you look at most of these companies, like Walmart as an example, they have $50 million credit lines. That s not because one of the Walton s is personally guaranteeing that money. What happens is the business is so strong on its own that inevitably, it will qualify for credit well beyond you as an individual. That s what this is all about. When we talk about credit, we talk about capacity. The capacity that a business has and the amount of money it needs access to is substantially more than you ever will as an individual. This is why per SBA credit limits on these type of business accounts are 10 to 100 times higher than in the consumer world. We often see Dell approve clients for $10,000 credit limits within 90 days of starting a credit profile. You would probably never accomplish that on the consumer side, because let s be honest, you re never Page 7 of 14

8 going to need to buy $10,000 dollars worth of computers for your home, but for your business, you will. Capacity is a lot higher in the business world, and you can get $5,000, $10,000, $20,000, $50,000 credit cards, and with those kind of limits, then inevitably, that will help you to have a greater chance of getting approved for larger even credit lines and loans from banks, without personal guarantees. Until you get your limits as high as what you re trying to borrow at the bank, then they re going to want to see a personal guarantee, especially if your highest credit card limit you have is $10,000, and you re asking for $100,000. Your business is called Credit Suite, correct? Yes. Tell us about Credit Suite. What products/services do you offer to small businesses? Our company, we help anybody, whether they re a startup or existing business, walk through the steps to be able to establish business credit. Business credit profile score, get access to vendor credit, store credit, and cash credit. We also help entrepreneurs with all types of capital, whether it be money to start a business, no-doc, light-doc, even full-doc SBA loans, so all aspects of funding. We re also in the business to help anybody that s interested in offering business credit and financing as a service to sell. The way I have approached this is my bank has been very generous to me, and they ve given me a Visa card, with again, a nice, generous limit. Uline, I have an account with Uline, yes, I use their credit. In lieu of going for these other kind of credit cards, I just fall back and use my credit card from my bank when I need to do that. Is that a good strategy, a bad strategy, or really it depends? Page 8 of 14

9 The problem with that is if anything were ever to happen to your business, and we saw a major shift in the economy a few years back, and a lot of entrepreneurs were put out of business for things they couldn t control. What happens is with what you re doing now, you are personally liable for everything that happens on that credit card. You are using your credit, even if it s a business credit card, you re signing with a personal guarantee, you re providing your social, which means if anything were to ever happen or you were to default or go late, it impacts you on the personal side. They can pursue your personal assets, they can come after your stocks, your bank account, they can come after your cars, your home. The way I look at this is: Why? If you have a choice between being personally liable for your business debts and not being personally liable, why would you ever choose to be personally liable? Don t get me wrong, your bank has been generous, because you re personally guaranteeing it. They want you to do that. The reality is that that s because they have more to pursue if you were ever to default. It s more security for them. I believe in flipping the tables a little on that, where you shouldn t be personally guaranteeing your business debt. You should be able to use your company to be able to stand on its own and be able to get its own credit where you re not personally liable, and the capacity of the credit that you get is substantially higher. Ty, I m your friend, I m your neighbor, I come to you and I say: Hey, Ty, I am pretty well-versed in what you do, I totally get it. I m working for somebody else, I m looking to start a side business. I m going to start selling some things on ebay, and who knows, maybe I ll sell $100 worth of stuff a month or something like that. With that data point, as my friend, as my neighbor, just as friendly counsel, would you still say to me: Charlie, I don t care, let s start a business now, or do you think Page 9 of 14

10 there s some level at which I should be operating from a revenue generation standpoint before I actually start a business entity? Any business has a much larger chance of success when it has access to capital. When you look at business failure rates, they re as high as 90%. Almost none of us think we re going to fail, but statistics are against us with that. That being the case, when you look at SBA s two main reasons for failure, it has to do with management issues. People get into business and we don t know what we re doing; we kind of just figure things out as we go. That s the way a lot of us are built, as entrepreneurs. The second biggest reason is lack of capital. The more money we have, the easier it is for us to make mistakes and not lose it all. Twitter is a perfect example. I think they ve lost a billion dollars so far, and they re still figuring out their model. Hey, they ve got plenty of money to lose, so they can afford to do so. But your average small business startup doesn t have that much money to lose; they re playing with their own personal credit cards, they re playing with family s money, they re playing with their own savings. What I would tell somebody who is my friend is: Don t do that. You don t have to use your family s money, your money, your credit to do this. Your business itself can stand on its own. There s a few of these steps you have to follow right from the beginning, and even as a startup, within 90 days or less, you can start getting real store credit, the credit you need to be able to fund and fuel your business. In doing so, I m going to give them a significantly greater chance of success, because they have money backing them in their endeavor, versus them trying to take it on based on only their own personal credit capacity. I guess a derivative benefit, there, as well is that if I am this person I was referring to earlier, I m just starting this business by mentally and I guess legally segregating this, Page 10 of 14

11 my business from my personal life, it would also encourage me maybe to take X amount of dollars from my savings, put it into my business account so that I m not just constantly going into my savings account, personal savings account, personal checking account, or other personal accounts to fund my business. Absolutely. When you look at this, and I ll give you an example, Walmart has an amazing, amazing use of credit. They have probably the best platform or the best model I ve ever seen. What most people don t realize is that Walmart gets paid on 80% of the products that they actually sell before they buy the product. It s amazing. What they ultimately do is they ll come in, they ll buy Bounty paper towels on credit, using business credit from Bounty. They put the paper towels on the shelf, you pay Walmart for the paper towels, they take your money and use it to pay off the credit they used to borrow it. It s brilliant. They do this on 80% of the products they sell. They re the biggest retailer that exists in the world. That s a model that even the biggest of big companies have followed, is being able to use this type of credit to be able to use other people s money to kind of fund and fuel your business so you don t need to have as much as your personal money sitting in that bank account as you necessarily would if you re not using corporate credit. Wow, that s really interesting stuff. Let s shift a little bit to online, Ty. You have a website, you have an online presence. How do you use online to either let people know about the work that you do, or maybe provide products and services to individuals or small businesses? We have a model that works extremely well for us, and I believe works very well for everybody. We re in a society where people tend to sell, sell, sell. We see, whatever, 4,000 plus advertisements a day. Our strategy with online is very simple, Page 11 of 14

12 it s the same as why I m here with you today, it s education. We re very big on providing education; on teaching people the steps to get money, to get credit. In doing so, we re building a lot of trust and rapport with that actual prospect, and in a lot of cases, they re going to hire us, no questions asked because they know we re credible, they know we re experts, they know we know what we re talking about because we ve provided substantial education to them on the topic. When it comes time for them to make a buying decision, there s really no buying decision to be made. We rule that conversation because, subconsciously, they immediately go to us and choose us as the obvious choice, because again, we re the only ones that have stopped trying to sell them something and start helping them understand and educate. As a result of that, credibility is built, trust is built. Again, we just naturally become the obvious choice. That s really our online effective strategy. We lead with something called lead magnets, which are free reports, guides which give good, valuable content. For example, one of the best lead magnets we have is How to build credit for your EIN that s not linked to your SSN. A lot of people come in and will grab that free resource. We then continue to drip information to them through s, giving them good, quality content about business credit, and financing, and anything anybody would want to know about getting money and credit for a business, and then we also include opportunities for them to join us, whether it be to hire us for our services, or apply for financing. Once we ve built that credibility and trust, then we have a large portion of those people that initially opt in, become our clients as a result of that strategy. My option in becoming a client, am I availing myself of a one-time service, you re going to do X for me for X amount of dollars, or is there an ongoing service you provide to me Page 12 of 14

13 to monitor my credit reports? What are some things that you provide to small businesses? With our services, we work in a few different areas. If you re coming in and you re in our prospect sequence, for example, you re going to get opportunities to just apply for financing without paying anything. You meet certain criteria, you can get a loan. We re going to come and help you with all aspects of getting a loan, and you re not going to have to pay any application fees or any fees to us whatsoever. We also then have another opportunity where you might choose to, instead of just taking our free education on business credit building and doing it yourself, actually work with our technology, work with our team to help you with all aspects of that, in which you re buying our business credit building product and access to our team for one year to build your business credit, five years to get financing. Then we have the other aspect, which is a lot of people join us because we re the only source out there that puts people in business to offer business credit and financing, and those clients actually are coming in and we re helping them actually build a business, whether it be a primary or secondary business, offering business credit and financing as a service, whether it s something they want to do alone or whether they just use the financing to get their customers approved for more money to buy their primary product and service. There s a few different opportunities that clients have with us. I want to make sure that I understood what you just said. You have a situation where I, Charlie, can say: Hey, Ty, I d like to, for lack of a better term, be a distributor for you. You do whatever you need to do to certify me as a distributor, then I can go out to small businesses and offer them the products and services that you offer. Is that correct? Yes, absolutely. Page 13 of 14

14 Okay. Gosh, this has been a very, very informative conversation, Ty. For anyone who wants to reach out and connect with you, and find out more about what you do, what would be the best way for them to connect? Actually, I put together a special guide just for your audience, and the website is On that site, they can grab a free guide that walks them through, in-depth, the four steps of building business credit that s linked to their EIN and not their social. Wow. Who knew? That s great stuff, Ty. All of the great resources mentioned in today s episode, along with a full transcript of today s episode and the details that Ty just mentioned will be available on the show notes page at Ty, thanks again, so much; we really, really appreciate your help. Thanks for having me on. I really enjoyed our time today. Page 14 of 14