The Credit Game: Entrepreneur Secrets to Building Business Credit Without Personal Liability Using EIN (The Credit Game Series) by Patrick Chevon

Author:Patrick, Chevon
Language: eng
Format: epub
Publisher: C.K. Patrick Publishing Group
Published: 2023-04-15T00:00:00+00:00

CHAPTER 4

BUSINESS CREDIT TIER 1: NET 30 ACCOUNTS

Now that you’ve set your business up as an independent entity with its own credit score and credit reports, it’s time to secure your first business credit. I recommend doing this by establishing your first store account with a vendor or supplier.

Store accounts are low-risk for borrowers and lenders alike precisely because they are restricted to buying from only one store.

For you, this means that you are unlikely to spend huge amounts of money and find yourself struggling to pay it back. If you can only use this line of credit on certain items necessary to your business's operation, the risk of budgeting errors or spending money on items that do not have a direct benefit for your business is low.

This, in turn, means that the creditor is less likely to lose money from nonpayment. The creditor is also likely to make more profit by selling you more products over time if they know that you have a special arrangement to buy supplies your business needs from their brand. They win customer loyalty and you win store credit. Everybody wins.

As we mentioned earlier, these come in different varieties, including net 10, net 15, net 30, and net 60. The number in these designations refers to the number of days you have to pay for the purchases you make using these lines of credit. I recommend starting with net 30 accounts to grow your business credit with the best mix of speed and reliability to ensure that your scores are reported to credit bureaus every month while minimizing the chances that you will forget to pay on a payment time.

These lines of credit may seem unimpressive at first glance. Obtaining a line of credit to buy shipping supplies, coffee cups, or car parts may feel less glamorous than obtaining a five- or six-figure bank loan. But that’s exactly the point: these lines of credit are easy for anyone with a legal business entity to apply for, and they serve as the proving ground for later more challenging approvals.

Loans also, of course, help you to build your business. When you’re first learning your business model and discovering what will be most profitable for you, you don’t necessarily want to be making big money moves at that point. You are more likely to get the best possible return on your investment if you do your major spending after you have determined how to optimize your profit through trial and error in the early months or years of your business.

For their part, banks and other potential creditors are likely to reject someone with a brand-new business and no credit history who asks for tens of thousands of dollars, but they’ll sit up and pay attention if a business owner who already has a history of paying off thousands of dollars per month in trade credit for six months or more offers to pay them back tens of thousands of dollars with interest.

When you have an excellent business

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