Looking to expand your law firm or maybe thinking about venturing out on your own but don’t have the financial resources to do so? Ty Crandall can tell you how.
In this interview, Ty shares insider tips on how any business can obtain credit without supplying a personal credit check or personal guarantee.
Listen up … Ty’s formula for building business credit works even if you have none now.
Announcer: Welcome to the ‘Attorney Marketing Secrets’ podcast. Richard Jacobs is the best-selling author of “Secrets of Attorney Marketing That Law School Dares Not Teach,” available on Amazon, Kindle, and Audible.com. Richard has helped over 650 attorneys nationwide in 17 different practice areas to attract more clients and grow their law firms. This podcast gives you the details and strategies of how top attorneys and industry experts became successful. You’re going to discover how to take their ideas and grow your law practice by leaps and bounds in the next 12 months. Now, here’s your host, Richard Jacobs.
Tracy: Good morning, this is Tracy Mera with Speakeasy Marketing and Secrets of Attorney Marketing. This morning, I would like to welcome Ty Crandall, an internationally known speaker, author, pod show host and business credit expert. Ty, thank you so much for joining me this morning.
Ty: Thanks for having me on, Tracy. I’m excited to be here.
Tracy: Could you tell me a little bit about your background and what it is that Ty Crandall does?
Ty: What we do is we help companies obtain credit for their EIN number that’s not linked to the business owners’ social security number. What we do is help companies obtain a lot of capital through business credit that’s not linked to their personal social. It helps separate liability. It also helps some access money when they typically couldn’t get normal loans.
Tracy: What brought you into this area of business?
Ty: I’ve been in financial services for about 16 years. I owned a mortgage company, when I thought things were easy, because the mortgage business was booming. I rode that too long, where everything crashed. I was one of those people that got caught up in that and was almost pushed to the brink of personal bankruptcy. Because I guaranteed everything in my business, because I didn’t know there was another way, I almost lost everything in my personal life because of what happened in the business. Years later, I would own a consumer credit company, helping customers and helping people improve their personal credit. A lot of people would ask me about business credit. I really didn’t know what it was.
As I started to look into it and realized that there had always been another way, that you could obtain financing. You could obtain credit that’s linked to your EIN and not your social, and create that separation. I was just really shocked that nobody was an advocate for this. Nobody was teaching this to entrepreneurs. I really just felt like that is my role in life. I ended up selling that company that I owned at the end of the year. Ever since, I’ve just been standing on the highest mountains I can stand on, screaming to everybody about how cool business credit is, that it exists, and helping entrepreneurs obtain it.
Tracy: Tell me what exactly business credit is?
Ty: When we talk about business credit, and your listeners are obviously familiar with their consumer credit. They get a social security number when they’re born. Then, as they get old enough, they start obtaining credit that’s linked to that social security number. Well, a business is no different. A business has its own social security number, which we call an EIN number. That business can build its own credit profile and score that’s linked to that EIN number. The big difference is that when you have business credit established, and you can start obtaining loans, you can start obtaining credit lines, credit cards, based on the quality of your business credit, not the quality of your personal credit.
Another big benefit is that a lot of new listeners, especially if they’re starting a law firm or they’re trying to get funds for marketing. In a lot of cases, surveys show that they go to their personal assets. They go to their personal money, especially in the beginning stages. They’re using their personal credit, or they’re obtaining credit cards for the business but they’re providing a social when they get that credit card, so they’re personally liable.
A lot of those credit cards report on their personal credit reports. This is a problem, because if they ever do default, then they’re personally liable for that. The bigger problem is that any credit that you’re using for a business that reports on your consumer credit report, even if it is a business credit card, as you utilize that credit card, it really lowers your personal credit scores. Business credit is a way around all of that. It’s a way to actually obtain credits really linked to the business. It separates the liability. You can use it freely without having any kind of adverse impact to your personal credit score that’s linked to your social.
Tracy: That ‘limiting the liability’ I’m guessing is pretty important when it comes to setting up your own firm and keeping that separate from your own finances?
Ty: We talk to a lot of attorneys that they specialize in helping business owners mitigate their liability, whether it is having images on their website that they didn’t get proper licensing for to any number of things. We all try to be proactive, not reactive. I think attorneys are probably some of the best and most knowledgeable people out there to help business owners do that. Part of being proactive is to make sure that as you’re building a business from the ground up, that you’re doing it where you’re creating as much separation in liability as possible. You don’t want to be any more liable for what happens in your business than you absolutely have to be. Business credit’s a great way to do that, both for your listeners and even for their clients, because this way, they’re not liable for what’s happening in their business on the personal side.
Tracy: Can any business really get business credit?
Ty: We talk to a lot of physicians, a lot of attorneys that have a really tough time getting money in the beginning. They’re coming into practice, they have large student loans, and they’re limited on the capital they actually can obtain. A lot of lenders won’t give them money to go through, especially to start a face. I was talking to a banker for Wells Fargo the other day, and her requirement was five years of tax returns to even apply for a business loan. That means they won’t even touch you until you’ve been in business five years. A lot of us, that’s the hardest time that we go through is that first five years.
What’s nice about business credit is even as a start-up the minute you obtain that EIN number you can start obtaining business credit. This is vendor accounts and store accounts at most major stores whether it be Office Depot, and Staples, and Amazon.com, and Walmart, with Apple, with Dell, with 5, 10 thousand dollar limits. This type of credit can be obtained very quickly in 60 days or so. Then, you can start getting the Visa cards and MasterCards with $10,000, $20,000 limits, even within 90 or 120 days. Again, all of this, where there is no liability. It’s not linked to personal credit. You’re not supplying a social security number when you apply. Your personal credit isn’t calculated or used for the approval decision, so you can get approved regardless of personal credit quality, and you can also get approved without collateral and without cash flow.
Business credit’s the only type of credit or financing you can get for a business that doesn’t require cash flow, credit, or collateral. It’s a great solution for that reason. You can obtain it as a start-up, you don’t need the cash flow, credit, or collateral that you need for basically all other types of business financing and loans that exist.
Tracy: What are they looking for, then, when they determine whether or not to give somebody credit?
Ty: I think of it the exact same on the consumer side. If I was in a store, and I didn’t know credit existed. I’m
like, “I really want to buy that.”
My buddy goes, “Hey, look. Why don’t … ”
I’m like, “I don’t have the money on me to do it.”
He’s like, “Why don’t you apply and get credit?”
I’m like, “What is credit?”
He’s like, “Hey, look. They’ll let you walk out of the store with all that stuff and not pay them a dime, just put it on credit.”
If you think about that, the first time that you’d ever be exposed to it, you’d be like, “That is the craziest thing ever.”
I get a lot of that reaction in the business. They’re like, “This is crazy that this even exists.” But if you think about it, it really isn’t. Michael Dell isn’t personally guaranteeing what’s happening in his company. None of these big CEOs are. It’s not because these companies are large, it’s because they actually have deep credit profiles and scores. If you look at Walmart, they have 500 trade lines. When you look at Apple, and you look at these types of companies, they have hundreds of trade lines. They’re building credit that is reported to the business credit reporting agencies and they’re using that to actually qualify for the loans and the credit lines they’re obtaining.
What a lot of people don’t know is that any business can do this. You don’t have to be big to do it. You just have to know the formula. Most of the larger companies have CFOs and financial savvy companies that are helping them make these decisions to do these things. While as a lot of start-up companies and start-up firms, for example, are bootstrapping their business, so they don’t have those financial-minded people to help them do it.
The key is that you’ve got to come in it and really do a couple things initially. You’ve got to first make sure your business is set-up credibly. You want to have a real physical business address or a virtual address, if you don’t have a physical address. You want to have a business phone, not a home phone, not a cell phone. Which, I’m sure a lot of your listeners already meet that requirement. They need to have the right licensing in the actual state, in the industry, in the county they’re in. You need to make sure there’s a professional website, and a fax number, that your phone number’s listed with 411, and that you have a professional email address.
The way that I look at it is that every line item on an application needs to reflect that you have a legitimate credible business. If you meet those requirements, then step two is you’ve got to get approved for what we call ‘vendor accounts.’ These are places like Uline and Quill, that sell office supplies and shipping supplies. But, what’s different about companies like Uline and Quill is one, they’ll give you credit for your business, even when you have none. You can apply. You can leave your social security number off the application. They’ll approve you for initial credit with small lines when you have none, but they also report that credit to the business credit reporting agencies.
Once that credit gets reported in about 60 days, then what happens is you’ll get a credit profile and score established with the business credit reporting agencies and then you use that established profile and score to start getting approved for this type of revolving credit. Amazon, and Walmart, and Staples, and Office Depot. These type of creditors will approve you once they pull your EIN credit report and see that you have trade lines, which are accounts reporting. You have a profile established then. You have scores that should be good as long as you’re paying the bills on time or early. Just like you could walk into Staples with two or three consumer credit accounts and get a credit card with them, you do exactly the same thing in the business world. Once you have a few accounts and you have profile and score, then they’ll start to approve you for their credit even leaving your social security number off of the application.
Tracy: What are some of the dangers or some of the precautions that my attorneys could potentially face or get themselves into? What should they be looking out for?
Ty: Use credit wisely. Whatever you’re going to do on the consumer or business credit side, just because you think there’s no liability doesn’t mean that you go max out credit cards and default. I think that’s common sense, but it has to at least be mentioned that you always have to use credit wisely. You have to use credit responsibly. The benefit of business credit is you don’t have to look out for nearly as many things as you do in the consumer world. In the consumer credit world, your scores are based on the credit mix that you have and the utilization that you have on the credit cards, and how you’re paying on them, and how much new credit you’re applying for through inquiries.
There’s five factors that tie in to that actual business credit profile, or business credit score. In the business world, your credit scores are based just on how you pay. That’s something very important that all your listeners need to know is that when they start obtaining real usable business credit, your scores are with Equifax are completely driven based on how you pay. With Experian, it takes into other factors into account, but it’s still driven primarily, 65% of the score, based on how you pay. It’s very important in the business credit world that you not only obtain this credit, but that you pay the bills as soon as you can, because the paying the bills early is what gets you the best score. The best score is what actually gets you a lot of automated approvals as you start going in and applying for credit cards, loans, and credit lines.
Tracy: Does it matter when you’re building business credit when it comes to the type of entity structure?
Ty: Attorneys don’t always have that luxury. A lot of places, attorneys are required to have certain entities, because they want them to have liability involved in the actual business. The best choice is always an LLC or corporation. If an LLC or corporation are the best entities to limit liability in the entity itself. Now, business credit can be established for any entity. It doesn’t matter if you’re a sole prop. It doesn’t matter if you’re a partnership, or a corporation, an LLC. Whatever you choose, any entity can build business credit.
A lot of entities like sole proprietorship or a partnership, you are the business. You’ll always underlying be liable for what happens in your business in some which way or form, because you are the business. A corporation or an LLC, you’re separating yourself from the business. Your business is a different entity than you. You’re not linked. Then, that’s how you can really then add business credit and create even more separation in that liability.
Tracy: With business credit cards, are you looking at the credit issuers, at the credit limits, being similar to what someone might see in the consumer world?
Ty: Per SBA, the limits on business credit accounts are about 10 to 100 times higher than what you’re going to find on consumer credit. This makes sense, if we think about it. One of the core components of credit is called ‘capacity.’ As a consumer, we don’t have as much of an appetite or a need for a greater capacity as a business does.
A simple example of this is Dell. Dell is notorious for giving you a $10,000, business credit card, about 60 to 90 days into establishing your initial business credit. That might seem crazy to us because we never needed a $10,000 Dell credit card. There’s never a time where we’re going to go put 10 grand into home computers into our home. In a business, that’s conservative. We can spend well over $10,000 putting the actual computers, the actual machines into an office.
We just have a greater capacity for a business than we do in the consumer. We put more money on credit cards. We use more money than we ever do in the consumer world, so because of that, limits are substantially higher with business credit accounts. It’s easier to obtain very high limit accounts quickly, because of how the credit scoring works.
You’re talking about 60-90 days, getting these type of high limit accounts. Where as in the consumer credit scoring world, it really takes many years of well-disciplined borrowing to really start seeing limits anywhere as high as what you could see quickly in the business credit world.
Tracy: Does the amount of credit that you’re using, or anything having to do with the business credit side effect or impact someone’s personal credit at all?
Ty: No, that’s the benefit of business credit. One of the things that’s a pet peeve that I really don’t like are people like Capital One Spark Card. You go apply, they ask you these questions about your business. You give them the EIN number. They give you a business credit card that’s fancy and nice, and it’s got the new chip in it. It’s got your business name. But then all of a sudden, you pull your personal credit report and that credit card is on your actual personal credit report. Well, that’s really, really harmful. 30% of your credit score, almost a third, is comprised of utilization. It means what percentage of your high credit limits you’re actually using. If you have a $10,000 credit card that reports on your personal credit report, if you owe more than $3,000 on that credit card, you’re damaging your personal credit scores. Which is really one of the main reasons you’ve got to create real separation.
What’s nice about business credit is that you can use business credit freely. It doesn’t report on your consumer credit reports if you do it the right way. You’ve got to get credit where you’re not providing your social security number. When you provide your social security number, there’s always a chance that they’re going to report that account on your personal credit report, like Capital One Spark Card. My best advice there is to ask the credit issuer, if you’re providing your social for a business credit card, “Does this report on my personal credit reports?” If they don’t know, then find somebody else there that does. If you can’t, then don’t apply for that card.
The only kind of accounts you want to get are business credit cards and business credit accounts that report on the business credit reporting agencies reports, not the consumer reporting agencies. As long as you’ve done that, with real business credit especially where you’re not providing a social, then there is no impact for what you’re doing with that credit on your personal credit report.
It is important to note that Experian does have what they call a blended score. Experian commercial does offer actual people that are inquiring into people’s business credit, the option of getting a blended score where they can get information from the person’s personal side and the business side. The FICO SBSS score does take into account also what’s happening on the personal credit. What happens with real business credit accounts doesn’t adversely or at all affect personal credit, but it is important for your listeners to know that Experian has a score, FICO has a score, that does actually take into account both personal and business credit quality.
Tracy: When I’m looking, as an attorney, going to start my own firm or improve my firm, do an overhaul, those types of things, what are the kinds of things that you find small firms using their business credit for?
Ty: There’s a few different kinds of business credit accounts. You’re going to initially get started with vendor accounts. We mentioned Uline and Quill. There’s companies like Lockwood & Associates that do corporation services and Monopolize Your Marketplace, that does marketing services. These are all vendors, and usually they’re going to give you net 15, net 30 type of accounts. Not what you want. You want revolving accounts. Those are accounts you want to use. You want to spend $50 or more on those type of accounts. Then, that’s what will build your initial business credit profile and score.
About 60 days into this process, then you’re moving to store credit. Most major retail stores offer business credit without the personal guarantee, without the personal credit check, if you have some business credit established already with those type of vendors that we mentioned. It’s endless, the amount of stores that you could access, and how it could benefit. When you’re setting up an office, when you’re expanding an office, or just refurbishing, even, you need things like office supplies. You might be doing Buildout, or Home Depot and Lowes, and those type of things. ABC can actually help you. They’re more of industrial supplies, and things where you’re going to use for build-outs and things of that sort.
You’re going to have your office supplies. You’re going to have your Staples. You’re going to have your Office Depot, where you’re always going to need pens, and paper, and all the things that you’re using to actually put in and grow a firm. Then, you’re going to need things like computers, where you can get credit with Dell and with Apple to actually put computers in your office. You could use gas cards. With almost all major retail stores you can get business credit accounts with Sam’s Club and Costco that are often used to put water in the refrigerator, and all those type of things that you’re using to stock the kitchen in the office. Store credit really is endless. Almost all major retailers offer some sort of business credit. There’s a lot of different retailers that are going to help your listeners in different ways as they’re starting and growing their business.
You get to a point when you’ve got about 10 accounts, and you’re about 4 to 6 months into this process, where you’re getting a Visa card, where you’re getting a MasterCard. Where you’re getting credit that you could use anywhere, there’s so many different types of things you could buy. All the stuff you can’t buy at stores, you can typically using that kind of cash credit. You go from starting with vendor credit going to store credit to going to cash credit, and along the way, you have more and more ability to be able to use the credit for more and more things because the type of credit gets better. It goes from debt accounts, to revolving store, to revolving cash. Your ability to buy more and more things grows as you continue to build your business credit profile and score.
Tracy: What are some tips that you could lend to a business owner to keep a good business credit profile and score?
Ty: There are several things. Be conscious at any time, we are conditioned that when there’s a social security number field on an application, we put it on there. What I really urge your listeners to at least pay attention to is that when you get that application for a business loan credit card, credit line, just know that when you put that social there, you’re going to be taking on the liability. There’s a good chance it might report on your personal credit report. Be conscious of that. If you don’t want that to happen, especially on business credit cards, you need to make sure you’re asking that credit issuer if they report to personal or business.
My best advice is to come in and build vendor credit accounts, get your initial business credit profile and score. You’re still going to need your social for loans and for high limit credit lines. It’s still going to be needed. All though, once you build your business credit, your chances of getting approved are much greater. Your chances of getting more money are much greater. When it comes to business credit cards, then start leaving the social security number off the application. They might even tell you they have to. You might be applying online and have to call them instead. Once you have business credit established, try to make sure that all the credit cards you get for the business, you’re leaving the social off the application. Just separate the liability so there’s no personal credit check, there’s no inquiry. You don’t have a risk of these things reporting on your consumer credit report.
As you start to get business credit accounts, you have to remember to pay these things early or on-time. That determines your score. We’re very blessed in the business world because of this. We don’t have this convoluted, complicated credit score that’s made up of all these factors. We’ve got one. We pay our bills on time, we get a good score. It can’t be simpler. You’ve got to make sure you do that one thing of paying those accounts on time, so that way you can have the best scores. Just like you do with consumer credit, as you start to build business credit, it’s not a bad idea at all to keep an eye out on your business credit profile and scores to monitor them. Monitoring with Experian or with Dunn & Bradstreet. Just pull a report once or twice a year, just to see the condition of your business credit.
Experian, for example, you could pull your Experian report and they don’t even tell you how much you’re being recommended, how much they’re recommending to others that you be approved for when others are inquiring. There’s so much information from these type of reports. A lot of your listeners will be shocked at what’s on their reports. Anybody can pull a business credit report that wants to. They don’t need your permission. They’ll know how many employees you have. They’ll know your revenue. They’ll know what payments you’re paying on time, quarterly trends of how you pay your payments. It’s a good idea to keep an eye on your business credit reports because your competitors, your prospects, your clients, they all can do exactly the same thing.
Tracy: If someone is looking for some additional information or would like some help with coaching, it seems like this is a great power comes great responsibility. What is a great way for someone to get in touch with you?
Ty: They can go to get a free guide that maps out the steps to build business credit on our main website, which is CreditSuite.com, and that’s Credit Suite spelled S-U-I-T-E. It’s CreditSuite.com/EIN. At CreditSuite.com/EIN, there’s a great guide that will walk through exactly how to build business credit. I’ve got another way that if they’re interested in getting a free copy of their actual business credit report, and we’ll pull their Experian business credit report and review that with them without them having to pay anything to do so; even give them free advice on building business.
We’ve got a link, which is CreditSuite.com/Free-Business-Credit-Consultation. Each one of those words is separated by a dash. So CreditSuite.com/Free-Business-Credit-Consultation. There we’ll get you, again, a free copy of your business credit report, go over it with you. Even go over your Experian report and scores with you, tell you exactly how much you’re being recommended for credit. Everything the reporting agencies know about you, all those type of things.
Tracy: A special thanks to my guest this morning, Ty Crandall, speaker, author, podshow host and business credit expert. Ty currently serves as a CEO at Credit Suite, where he has helped create and grow one of the biggest and most credible business coaching operations in the United States. Ty, thank you so much for being with us and sharing this awesome information. This has been a very insightful for me, and I’m sure it will be for all of our listeners.
Ty: Well I’m just really excited that you gave me an opportunity to be here. Thank you so much, and I’m really glad I had an opportunity to share.
Tracy: Awesome. Thanks, Ty. We’ll talk to you soon.
Ty: Sounds good, thank you so much.
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