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Establishing and building business credit in a niche industry?

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Anonymous
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Establishing and building business credit in a niche industry?

Hi Everyone,

 

   I'm new here so please excuse any redundancy this post may bring but i just need a bit of clarification.

 

Both my fiancée and I have recently established our own individual LLC's, we are in 2 pretty niche industries, her, beauty and fashion and me, music and entertainment. We've both been in our respective industries for 5+ years and figured it was time to maybe put all the hard work and sacrifice into something that will be a little more beneficial to us oppose to allowing others to capitalize. 

 

 

So I've spent countless hours online researching, stumbled across this gem of a site and have spent even more hours reading through countless threads, we want to establish our business credit, build the business credit and have committed to taking small steps in order to work up to the point where we can get a CL or Loan for some substantial working capital. 

 

My question is (finally lol) with basically all of the Net 30 vendors being places i couldn't see either of us really having a need for, how can we establish business credit without PG or are there any other vendors or ways to approach industry appropriate vendors that can extend Net 30 tradelines? 

 

It's just very frustrating to see the same vendors over and over again in pretty much every thread, post, search, etc. knowing I'd either just be sacrificing money to buy things i don't need just to build credit for a bigger goal or if I'm just not searching deep enough to find industry appropriate vendors.

 

PLEASE HELP!!!!!! 

 

Sorry for such a long post, you guys are awesome I really enjoy how knowledgeable and friendly everyone is and I look forward to sharing my experience with you guys through this journey.

 

-A

Message 1 of 11
10 REPLIES 10
Anonymous
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Re: Establishing and building business credit in a niche industry?

As a new business or a business without established credit, it will be difficult if not impossible to establish credit without a personal guarantee. You can start with a business credit card or two if your personal credit supports approval. Once those have reported for a while and your business is showing some history, you may be able to setup some accounts without a PG.

Message 2 of 11
Anonymous
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Re: Establishing and building business credit in a niche industry?

We are really trying to avoid that for the first 9 months to a year if at all possible.  But it's starting to seem like an unrealistic thought at this point. 

 

With every post or article I've read, every thread on pretty much every site, the general flow of establishing and building business credit seems to go as follows 

 

 

I'll skip the establishing the business portion and oversimplify it

 

1. Get a Net 30 tradeline

2. Get DUNS number

3. Obtain 4+ more Net 30 tradelines, make very early payments to build Paydex

4. Open revolving lines of credit, start slow and small, work up to show growth, make early payments

 

so far this has been my understanding of the beginning phases of establishing and building business credit, I know much more goes into decisions when it comes to my end goal of obtaining a loan but with us being in the beginning phase i just want to make sure i take every precaution and step to building a perfect score and portfolio

 

Althought it may seem, frivolous or even financially irresponsible, would it be so bad to open the Net30 accounts with vendors I necessarily have no use for,  make small purchases and just eat the cost being the end result is more important to me than the initial loss? 

 

 

 

 

 

Message 3 of 11
Anonymous
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Re: Establishing and building business credit in a niche industry?

Also what about secured business cards? How effective are they in building?  I'm not in a major rush as i have a 5 year plan and have committed to taking small steps to ensure things are done correctly. I just want to make every move as effective and beneficial as possible.

 

 

Message 4 of 11
Anonymous
Not applicable

Re: Establishing and building business credit in a niche industry?

You can skip the DUNs number. It does nothing for your credit and D&B is basically nothing more than a scam. Nothing wrong with establishing some net 30 accounts that you only use a little bit. But again, even with the easy ones like Uline, it will be difficult at this stage without a PG. Even a secured business card will rely on and likely pull your personal credit profile. And, if your personal credit is good enough it isn't necessary to go secured. My SimplyCash was approved for $10K and my EX score was only 707 at the time. BUT, I would note that I've been in business for a long time so that may have helped.

Message 5 of 11
Anonymous
Not applicable

Re: Establishing and building business credit in a niche industry?


@Anonymous wrote:

You can skip the DUNs number. It does nothing for your credit and D&B is basically nothing more than a scam. Nothing wrong with establishing some net 30 accounts that you only use a little bit. But again, even with the easy ones like Uline, it will be difficult at this stage without a PG. Even a secured business card will rely on and likely pull your personal credit profile. And, if your personal credit is good enough it isn't necessary to go secured. My SimplyCash was approved for $10K and my EX score was only 707 at the time. BUT, I would note that I've been in business for a long time so that may have helped.


Cap,

I am coming out of the garden in 3 months to seek a Chase Ink + and a SimpleCash, been in business for 8+ years, using a Capital One business checking account but have not applied for any Business credit, would it be better to apply with my ein or just use my social. 

Any help and guidance would be appreciated.

Message 6 of 11
Anonymous
Not applicable

Re: Establishing and building business credit in a niche industry?

I really appreciate the info!!!

Also I should have added, any credit we establish now is solely to secure a loan in the long run, we both have the financial stability to maintain operations for our businesses but as far as growth goes in the future we will need more working capital and feel to reach our goals and put our businesses in the positions we need them to be to see substantial growth that large sum is definitely necessary.

Saving is also an option and something we of course do, but with business there's always unforseen costs so savings aren't necessarily something we can feel 100% confident with leaning on as far as our business plans and goals go.

The credit lines we'd be establishing now would basically work like this, use credit to make purchases and immediately pay them off as we wouldn't spend what we don't have at that moment, my thought is that this would show a great payment history, but i wonder if this is the most effective way ?

I have this lingering thought that maybe this tactic is too transparent and safe and might affect any future lender's decision-making. Am i just being overly safe and worrying too much or is this a legitimate "fear"?

I'm thinking maybe going secured, opening maybe 2 or 3 net 30's and then a gas card or 2 should show great history? But is this enough?
Message 7 of 11
Anonymous
Not applicable

Re: Establishing and building business credit in a niche industry?


@Anonymous wrote:

@Anonymous wrote:

You can skip the DUNs number. It does nothing for your credit and D&B is basically nothing more than a scam. Nothing wrong with establishing some net 30 accounts that you only use a little bit. But again, even with the easy ones like Uline, it will be difficult at this stage without a PG. Even a secured business card will rely on and likely pull your personal credit profile. And, if your personal credit is good enough it isn't necessary to go secured. My SimplyCash was approved for $10K and my EX score was only 707 at the time. BUT, I would note that I've been in business for a long time so that may have helped.


Cap,

I am coming out of the garden in 3 months to seek a Chase Ink + and a SimpleCash, been in business for 8+ years, using a Capital One business checking account but have not applied for any Business credit, would it be better to apply with my ein or just use my social. 

Any help and guidance would be appreciated.


Either number is just fine. Of the two cards, the SimplyCash is easier. With the Ink, using the EIN might give you an edge in avoiding the grilling they tend to give for the card. But then again, maybe not.

Message 8 of 11
Anonymous
Not applicable

Re: Establishing and building business credit in a niche industry?


@Anonymous wrote:
I really appreciate the info!!!

Also I should have added, any credit we establish now is solely to secure a loan in the long run, we both have the financial stability to maintain operations for our businesses but as far as growth goes in the future we will need more working capital and feel to reach our goals and put our businesses in the positions we need them to be to see substantial growth that large sum is definitely necessary.

Saving is also an option and something we of course do, but with business there's always unforseen costs so savings aren't necessarily something we can feel 100% confident with leaning on as far as our business plans and goals go.

The credit lines we'd be establishing now would basically work like this, use credit to make purchases and immediately pay them off as we wouldn't spend what we don't have at that moment, my thought is that this would show a great payment history, but i wonder if this is the most effective way ?

I have this lingering thought that maybe this tactic is too transparent and safe and might affect any future lender's decision-making. Am i just being overly safe and worrying too much or is this a legitimate "fear"?

I'm thinking maybe going secured, opening maybe 2 or 3 net 30's and then a gas card or 2 should show great history? But is this enough?

Not only will it be effective, it is essential for a new business. The absolute last thing you want to do is run a tab for an embryonic business. Without history to give you some kind of measure of revenue in total, revenue fluctuations, and net cash flow it's far to risky to carry any debt at all - even for a short period of time. Once you've been at it a while and have measurable metrics, you can ease in to that. But it is still very important to be judicious in your use of credit.

Message 9 of 11
Anonymous
Not applicable

Re: Establishing and building business credit in a niche industry?


@Anonymous wrote:

@Anonymous wrote:

@Anonymous wrote:

You can skip the DUNs number. It does nothing for your credit and D&B is basically nothing more than a scam. Nothing wrong with establishing some net 30 accounts that you only use a little bit. But again, even with the easy ones like Uline, it will be difficult at this stage without a PG. Even a secured business card will rely on and likely pull your personal credit profile. And, if your personal credit is good enough it isn't necessary to go secured. My SimplyCash was approved for $10K and my EX score was only 707 at the time. BUT, I would note that I've been in business for a long time so that may have helped.


Cap,

I am coming out of the garden in 3 months to seek a Chase Ink + and a SimpleCash, been in business for 8+ years, using a Capital One business checking account but have not applied for any Business credit, would it be better to apply with my ein or just use my social. 

Any help and guidance would be appreciated.


Either number is just fine. Of the two cards, the SimplyCash is easier. With the Ink, using the EIN might give you an edge in avoiding the grilling they tend to give for the card. But then again, maybe not.


Yea, I've read quite a bit about the grilling, but have heard it's worth it to get approved.

I'm also trying to talk myself out of the Business Platinum.. but it would be nice to have for our trip to Eurpope this Summer.

thanks for the insight Cap.

Message 10 of 11
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