Getting & Building Credit

As I start to build my business, I keep getting the recommendation to build business credit earlier and often…as when I actually need credit, I won’t be able to get it…

So, I’ve been focusing this week on finalizing my financial setup (opening a business bank account, setting up Quickbooks, etc), and I’ve put together a plan to start building credit and credit lines for the business. From what I’ve read, it essentially takes two years and at least 5 credit accounts before a business can start getting credit lines without a personal guarantee from the owner. So, I guess we’re at T minus 2 years and counting.

Here’s my short-term plan:

• First and foremost, I’ve registered my company (as an LLC) and I’ve established an Employer Identification Number. This will be the basis for establishing some credit. I’ve also opened up a business bank account.
• The other day I called and ordered an American Express Business Card. While Amex doesn’t report business credit activity (positive or negative) to any credit bureaus, it is a line of credit that I can take advantage of when I need it.
• I will be registering for a Dun And Bradstreet D-U-N-S number; D&B is to the business world what Equifax, TransUnion and Experian are to personal credit. If you want to build strong business credit, you need to register with D&B.
• I will be applying for another credit card through a company that will report my business credit activity, which will allow me to start building credit. I’ve heard very good things about Advanta, so I’ll probably get my second card through them.
• I will opening up several lines of credit (LOC) at various stores where I do business shopping, including Home Depot, Lowe’s, Staples, etc.
• I plan to talk to both my personal and my business banks about the possibility of getting an LOC for the business. Even if I have to secure/collateralize the LOC with my own cash, I think it’s probably worth it.

Speaking of banks, here’s an interesting (and scary) story…

I stopped by my local bank the other day to take care of some paperwork regarding my real estate financing. Then I stopped by my personal bank to deposit some checks and open up a business account for Lish Properties. I walk into the bank, and directly up to an open teller; there are only two tellers currently working, and the other one is handling his own transaction with the guy next to me (who arrived in front of me). As I’m filling out a deposit slip, the other “customer” quickly walks out the door. The teller who was helping him calls across the bank to the bank manager, “Kitty, we were just robbed.” No emotion or anything.

The bank manager starts ordering employees around, asking people to lock the doors, secure the drawers, call police, etc. The teller helping me walks away for a minute, and I lean over the other window and see a note sitting there, which says something along the lines of “Give me all the money in your drawer. No dye packet and no alarm. Do it quickly and quietly.” A minute later, my teller comes back with my deposit receipt and asks if there’s anything else I need help with!

As I walk towards the door, I realize that I’m not going to be leaving very soon; the door is locked, and bank employees are calmly going through their “robbery” process (not sure how often it happens, but they were very well prepared and organized). I ended up sitting in the bank with a couple other customers for about 30 minutes, at which point the bank manager starts asking each of us questions. “Did you see anything? Could you describe him?”

Unfortunately, I didn’t see a thing, so after giving my name and phone number, I was allowed to leave. Despite the calmness inside, the outside of the bank was in chaos. About 10 police cars, detectives, etc combing the area. As I was driving off, one of the cops was picking up the money sack from the ground. Apparently a red dye packet had been inserted and had exploded and the robber dropped the bag.

Guess I’ll be going back tomorrow to open that account…

🙂

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