Compound Profit Blog

Credibility in business has many aspects. For customers it may be your dependability, for other businesses it may be reliability, but when it comes to business fundability it is your financial credibility that is most important. You can make sure your business is credible by having the right associations, making sure your reputation is stable and you are adhering to your business plan.

Who Knows You?

It may be “who you know” that gets you ahead in the world, but it’s who knows you exist that makes you credible. Can people find you? Are you listed with the appropriate business associations in your field and in the business finance world? Your business should have a 411 listing, be in good standing with the BBB (also known as the Better Business Bureau), have the appropriate licensing for your city and state, have a Federal EIN number (the IRS Employer Identification Number) and a listing with Dun & Bradstreet.

To prove your business fundability, you also need to make sure your business credit rating is excellent, and public records do not show law suits or judgments against you. Some liens may be okay, but too many liens against your business will also make your credibility shakier with lenders. Find out what your bank rating is. This is a number that lenders will consider, and should be 5 or better to be considered credible.

Are You Following the Plan?

If you have a business, you should also have a business plan. That plan will have a detailed description of how you plan to make your business work. The longer you have been in business, the more credible that plan becomes if you are following it, and making your predicted goals. This will give lenders a reason to believe that future predictions you make concerning your ability to repay a loan are credible.

If you are just starting out, it is harder to prove your business fundability to lenders. However, a business plan that is not exaggerated and has reasonable expectations can still be an asset in negotiations for a loan.

Search for It

Yep, even banks use the Internet. It is very likely when you are looking for a loan, they are looking online to see who you are, and if your information stacks up. Make sure your business is searchable, and your online reputation is in good shape before applying for a loan.

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President Obama’s 2010 tax break for small businesses was a real boon for both the economy and the individual worker. Of course, the unemployment situation in the country was, and still is a serious issue. It is one of the main dangers to people’s ability to maintain their personal credit ratings. 

The initial tax breaks made it possible for small businesses to do more without getting extra small business loans. It also helped when more money was needed. The fact that the incentives helped business owners keep their personal credit scores solid made getting small business loans easier.

The old tax credit was issued to small businesses for hiring new employees between February 2010 and January 2011. In August of 2011, Obama once again brought about changes to allow for tax breaks for all businesses that hire. This time he made it available to businesses that hired veterans. This will help the economy and those people who are entering the job force after serving the country.

The new bill is called the “Returning Heroes” credit, and is for the 2012 – 2013 term where businesses can earn a $2,400.00 tax incentive. As an added bonus, those businesses that hire veterans and keep them on the payroll for six months or more can get up to $4,800.00.

As a further incentive, there is a “Wounded Warriors” credit where businesses that hire veterans with disabilities from service can earn $4,800.00. This same incentive will allow for up to $9,600.00 for those employees kept on for six or more months.

There are some who complain about the cost of the bill if it passes Congress. It would end up meaning as much as $120 million dollars lost revenue for the government. President Obama countered the arguments against the bill with the need to recover from over 8 million jobs lost during the recent recession.

Veterans, especially wounded vets, have an even harder time fitting into the employment workforce, and they deserve to find some normalcy upon returning from duty. This tax incentive benefits everybody and is a great way for the country to find some stability, increase job rates and become more productive.

It certainly doesn’t hurt your financing appeal to hire veterans, and banks will also look favorably upon those efforts when you apply for small business loans.

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There is a lot more to a business credit card than simply providing available cash. It is very important to have credit cards in your business name in order to protect personal credit ratings. However, depending on your needs there are other things to consider when it comes to what makes the best business credit card for your business. 

There are things like frequent flier miles and hotel savings that the right business credit card can provide for those that have to travel often on business. These are just a couple of the incentives that business credit cards offer. If your business doesn’t require you to travel, however, those may not be the right business credit cards for you, but that doesn’t mean that there aren’t others that will give you the bonuses you can use.

Types of Incentives Available

• Cash Back: Many business credit cards give you a cash back bonus simply for using the card. These bonuses may be general cash back on all purchases, or they may stipulate certain types of purchases. In other cases there may be several types of cash back bonuses on a single business credit card. For instance, the bonus from “SimplyCash®” business card from American Express OPEN that offers 5% cash back on office supply purchases as well as on wireless services. It also gives 3% on gasoline purchases and 1% cash back on all other purchases.

• Bonus Miles: If you travel heavily for business, or just want to take a much needed vacation you can choose a card like Capitol One® Spark Miles for Business that gives you thousands of frequent flier miles with no limits. There are no blackout dates for traveling, or any airline restrictions and you can even use the miles for cash back or gift cards if you decide you aren’t going to travel. Capitol One® also has a Spark card for cash if you prefer bonuses rather than miles.

• Bonus Points: Another form of bonuses are given as “points” toward special purchases. InkBold with Ultimate Rewards gives you 50,000 bonus points if you spend $5,000 in 3 months. If you have a lot of large expenses, or use your credit card for regularly recurring expenses this can be a very beneficial type of bonus.

• Hotel Bonuses: If you travel on business or for pleasure this type of bonus can save you a lot of money. Marriott Rewards Business Card is one of these types of cards. It gives you 1 point for every $1.00 spent, plus 2 free nights at certain locations throughout the year, no limits on the amounts you can earn, plus if you use your card to pay for hotel accommodations at a Marriott you will get triple points for each dollar spent.

What You Should Consider when Choosing a Business Credit Card

Remember that along with helping you protect personal credit, your business credit card will help you build your company. However, it’s important to determine what you need your card for in order to pick a card properly. If you need a business credit card to finance big, long-term purchases look for a card with a lower interest rate rather than big bonuses. In the long-run, you will pay a lot less for the overall purchases even after you take bonuses into consideration.

If you are using your business credit card to finance monthly expenses and make accounting easier, you will be paying off the entire amount every month, so interest is not a concern. In those cases, get the most for your dollars by choosing a business credit card with the most useful bonuses for your needs.

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Invoice factoring is a form of financing where a business will essentially “sell” an invoice to a financing company for a slightly discounted rate, usually between 75 and 90 percent of the overall value of the account. The financing company than assumes full responsibility for the collection of the accounts payable, while the selling company receives a cash payment for the sale of the account. For many businesses, this is an ideal short-term solution to several issues.

Account Collection.

In the event of a delinquent or soon to be delinquent account, most businesses are not equipped to handle account collection through in-house channels. This necessitates the use of agencies and services designed to assist in the collection process. In the case of small businesses or start-up businesses, the loss of liquidity and time costs associated with the use of these services can be devastating. Invoice factoring allows troublesome accounts to be handled quickly and efficiently.

Growth Support.

Many new businesses are constrained, at least during the early stages of development, by the availability of capital to fund new projects. Invoice factoring ensures that growth and development is limited only by the overall volume and relative size of the projects being completed. Essentially, invoice factoring allows new business to grow at a rate directly proportional to production levels.

Time Sensitivity.

Financial investments are often defined significantly by the time sensitive nature of the specific investment. Invoice factoring allows business to take advantage of sudden and potentially profitable investment opportunities as they present themselves, regardless of current levels of liquidity.

Financial Records.

Unlike alternative forms of financing, invoice financing does not take into account the credit history or current financial status of the borrowing institution or business. When determining the terms and conditions of a specific account the finance company evaluates the value of the invoice account itself. This allows companies that may not have an extensive credit history, or even some amount of negative factors on their credit account, to obtain lines of credit. Additionally, the accounts can be evaluated much more quickly than a company wide evaluation can be conducted, speeding-up the overall process.

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The recent last minute agreement to raise the debt ceiling was only a temporary solution to our nation's biggest fiscal problem. No one really expected that the United States was going to default on its debt obligations, but the politicians certainly caused something of a world crisis in the financial markets.

While it is hard to say whether it is this administration's fault or the result of the previous administration's policies having to be addressed with an entirely different strategy, the fact remains that our country owes more than 14 trillion dollars.

The number is so big, it is hard to understand. Imagine 14 million attaché cases (18"x12"x4.5") each filled with a million dollars in hundred dollar bills. A trillion dollars would be more than enough to buy all of the homes that were foreclosed in 2007 and 2008. The 14.3 trillion dollars the United States is equivalent to being able to write a $2,000 check to every one of the roughly 7 billion people living on our planet.

Now that you have a clue as to the enormity of our debt, what does that actually mean? What impact does the current debt ceiling deal have on you and me? How does it affect small businesses?

When the powers that be finally came to some sort of agreement, the result was to add 2.4 trillion dollars to our nation's borrowing limit. As part of the deal, promises were made to cut spending by the same $2.4 trillion dollars. It is an attempt to stabilize our debt crisis and still allow the country to function normally and without having to go through a major financial disruption.

There is a price to pay for carrying so much debt. Standard and Poors, the financial rating agency recently downgraded the credit rating of the United States. The unprecedented move does not actually affect our ability to pay debt, but does create a question both at home and abroad about the financial stability of the world's greatest economy.

The Federal Reserve has promised to keep interest rates low over the next several years so not to cause a panic in the business community. While interest rates may go up on all types of consumer and business debt, they are unlikely to spike high enough to bring our slow economic recovery to a sudden halt.

Small businesses may suffer the brunt of the impact as not only may it be harder to borrow money, but the costs of running their businesses may increase. The fact remains that there is great uncertainty in what will be cut and if/when taxes will be raised.

Small businesses that are already struggling can be forced to close if taxes get any higher. The cost to hire an employee will rise. Government programs will be trimmed or completely eliminated. Who knows what will happen with Social Security and Medicare? Without doubt, everyone will be asked to cut back and sacrifice and that will mean additional hardship for the millions of small businesses in our country.

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Building commercial credit is a absolute must for many businesses to grease the wheels of commerce both inside and outside their industry. However, especially for those businesses just getting started on the road to commercial finance, building commercial credit can be a daunting task without the aid of a partner company specifically geared to help with that goal.

Here are some of the ways that a commercial credit building company can help to build the business credit of a company more quickly than a company could do on its own.

1. Combining accounts.

A commercial credit building company will combine the many smaller accounts of start up and small businesses into one large account to present to a financial institution, which is much more appropriately designed for loans of a large size. Presenting many loans as a group will alleviate much of the risk of the financial institution, as the credit company will often offer added incentives for principal repayment should one of the loans default.

What this does for the small company is get them loans that they simply could not get on their own, giving them the opportunity to build a credit history with even a small or short term loan.
 

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Though building business credit has to be one of the more tedious activites of the entrepreneurial lifestyle, it is also one of the highest ROI activities that a business can undertake. Building and maintaining good business credit has many advantages and pays dividends far beyond the effort that it initially takes.

Some of the advantages of taking the time to build business credit:

1. Immediate respect from other businesses.

If your business is primarily B2B or if you have need of partnership with suppliers, having business credit simply greases the wheels of commerce as your business is immediately seen as more professional with a line of business credit. Some businesses go as far as to not do business with companies without a line of business credit, which could prove a make or break type of decision, especially if a business is planning a growth stage.

2. Ease of filing taxes.

Separating business expenses from personal expenses is never a bad thing in the eyes of the Internal Revenue Service. The hassles and money that you will save yourself in IRS audits, accountants, lawyers and lost time and manpower means that the effort you expend in obtaining business credit will more than pay for itself.

3. Getting business credit gets easier.

Once you have made that leap into getting business credit, you begin to build your reputation with your loan officer. The next time that your business has need of a credit line, you will find the wheels much less squeaky. So start early and do it now, because when you really need a line of business credit in the future, you will not have to make a scene to get it.

4. Peace of mind.

There are few things better than knowing that your personal assets are safe even if the business fails. This is perhaps the greatest advantage of separating personal and business credit - not having to guarantee your business with your personal assets.


How do I get business credit?

If you are having trouble obtaining business credit, there are companies which specialize in helping you to get it. These companies have already built relationships with financial institutions and will combine your account with many others to leverage better rates from the institution while decreasing the overall risk

 

for the institution. In this manner you can receive business credit lines that you would not be able to get on your own.

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If you need to work from home because you are raising your children or you want to quit your job and start a new journey as an entrepreneur, this is a great year to do it. And while some people have had unique, original business ideas that have brought them a lot of money and fame, I recommend that you should simply copy what works – this will guarantee your success, especially if you manage to offer better prices, better customer support, or just a better overall shopping experience (this could be as simple as a friendlier, easier to use website, and so on).

Starting your own home business isn’t an easy task, especially when you need more than a couple of hundreds of dollars for the initial investment. And while keeping your job until your business starts to produce a consistent income stream is a sound advice, some of you might not be able to make use of this personal financing source. So how do you get the money for the initial investment in your company?

An obvious, and yet often overlooked financing method is to get a loan from one of your friends or family members. While this can also generate potential problems, because it can affect your relationship with the lender, everything should be OK, provided that you manage to repay him / her without any delay. If you go this way, make sure to keep the costs (and thus the loan) to their minimum possible value; you won’t need separate lines for phone and fax from the very beginning, you won’t need an expensive, color laser printer, etc – just borrow and buy the equipment that is essential in order to get started.

OK, so maybe your friends and relatives can’t lend you money, but I am sure that at least some of your friends or relatives run a small business, so don’t be afraid to ask for their help. Feel free to ask them as many questions as possible; most of them will be more than willing to answer your questions because they’ve been through this several years ago, so they can relate to what you are trying to achieve. Also, make sure to create an account at a social media website such as Twitter, Facebook or LinkedIn; follow several small business experts or join the proper business groups and you’ll discover many great resources that will help you learn the ropes. In fact, many experts are offering free seminars on these websites on a regular basis, so you can have access to quality training and information without paying a dime for it.

Your relatives or friends can’t be of too much help? Then start browsing the net, looking for small business loans. In fact, since you are reading this article, why don’t you contact us, Compound Profit? We have financed many small businesses and startups, so we might have a business financing solution that’s perfect for you.

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A business credit card is very similar with a personal credit card, but it is owned by a company, and not by a person. In fact, the evaluation is very similar with the one that takes place when you compare business bank accounts and personal bank accounts.

Any experienced company owner will tell you that a business credit card brings in several important benefits when compared with a personal credit card, starting with flexibility, higher credit limits, low APR and several other business-specific advantages.

When it comes to business credit cards and small businesses, I strongly believe that one of the biggest advantages is the business expense tracking. Every small business owner knows that tracking all the company expenses can be a huge overhead; nevertheless, through the usage of business credit cards, this is done automatically, as long as you make sure that all your company’s purchases are made using your business credit card, while your personal purchases are made using your personal credit card.

It might sounds like a simple thing to do (and it is very simple indeed!) but most people forget to do this on a daily basis. Separating your personal expenses from your company’s expenses will allow you to have most (or all) of your company’s expenses listed on your business credit card bill, provided that you use your business credit card for most (or all) of your small business’ purchases.

Fortunately, the good news doesn’t stop here: many of the business credit card suppliers are aware of this expense tracking need, so they have set up their bills properly, in order to make the data on them as easy to use as possible for the small business owners. Some of these card suppliers will even offer the transaction records in a format that can be imported directly by the most used accounting software applications.

This benefit alone can save any entrepreneurs tens or hundreds of hard work, as well as hundreds or maybe even thousands of dollars spent with 3rd party accounting services. If you also take into addition the high credit limit offered by the business credit cards, you will see that these financing instruments can easily cover the costs associated with them within the first month of activity.

Compound Profit offers free information about building business credit, as well as a powerful business credit builder that guarantees results in only a few months. Contact us for more information.

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