Corporate Credit

OPERATING CAPITAL

AN AMPLE SUPPLY OF CAPITAL

Capital = MoneyYour Money Tends to be limited Intrudes on Personal Life needs and desires Risks Loss of previous successes

Other People’s Money Wider sources and deeper pockets Ability to separate Personal and Business Life

BUSINESS CREDIT = OTHER PEOPLE’S MONEY

BUSINESS CREDIT = TIME TO TURN INVOICES TO CASH

BUSINESS CREDIT = ABILITY TO HANDLE THE UNEXPECTED

WHAT IS BUSINESS CREDIT

• Business Credit – Is also known as Trade Credit or Corporate Credit

• Trade Credit is the single largest source of lending in the entire world, even more then banks loan to businesses

• Trade Credit is when one business sells a product or service on credit terms to another business

• Why would so many businesses extend credit terms? It allows them to sell more goods and services Their clients want credit Their clients need credit

PERSONAL vs. BUSINESS CREDIT

PERSONAL CREDIT PROFILE

• FICO/Beacon

• Scores from 350-850

• Credit score determines

Loan/lease approvals

Interest rates

Insurance rates

• Three major credit bureaus

• Tracked by S.S.N.

• Consumer Protection Laws

• PRIVACY

BUSINESS CREDIT PROFILE

• Paydex/Intelliscore• Scores from 0-100

• Credit score determines

Loan/lease approval

Interest rates

Credibility of business

• Four major credit bureaus

• Track by

E.I.N./Name/Address

• No State/Fed Regulation

• NO PRIVACY

PERSONAL vs BUSINESS CREDIT

PERSONAL SCORE

• 35% Payment History• 30% Balances Owed• 15% Length Of Time• 10% Types of Credit• 10% New Credit

# Recently Opened # Recent Inquiries Time since recent

Open Time since last Inquiry

BUSINESS SCORE

• 100% Payment History• Not all vendors Report• VERY Interpretive by

Bureau• ‘High Risk’ & ‘No Credit’

Lists

Factors Affecting Score Compilation

BUSINESS SUCCESS

Two-thirds of new employer firms survive at least two years, and about half survive at least four years.

Major factors in a firm’s remaining open include: • An ample supply of capital• The owner’s education• Large enough to have employees• The owner’s reason for starting the firm in the first place,

such as freedom for family life or wanting to be one’s own boss 

Sources: Business Success: Factors Leading to Surviving and Closing Successfully by Brian Headd, Center for Economic Studies, U.S. Bureau of the Census, Working Paper #CES-WP-01-01, January 2001; Advocacy-funded research by Richard J. Boden (Research Summary #204)

BUSINESS ENTITY

Business credit can be built with any business entity, including a sole-proprietorship or partnership, however a Corporation or LLC is recommended.

• Corporation or LLC - many individuals incorporate to separate their personal and business liability

• When the owners or officers apply for credit, many times they provide a personal guarantee which now links them personally, defeating the purpose of the corporate structure in the first place

• By having a business credit profile and score, there will be many opportunities in which no personal guarantee is required

Mystery of Business Credit

Why is Business Credit so Widely Used?So Widely Misunderstood?

So Hard to Achieve?

No Laws Protecting the Business’ Rights from inaccurate information on the credit report

• Lack of information provided by business and the government

• Must research who are companies that offer credit• Must research who the companies are that report trade

experiences• Must research companies who don’t require a personal

guarantee• Must research companies that don’t require a personal

credit check• It can take hundreds of hours of research to find all this

MYTHS OF BUSINESS CREDIT

• Credit reporting agencies are serving you• Good credit is built automatically• No news is good news• Good personal credit = Good business credit

WHAT IF NO CREDIT?

• Costly• Limits options• Limits growth• Puts personal assets at risk• Forces you to deal in cash• Increases likelihood of failure

Business Statistics

(Small Business Advocacy Stats)

• 23.7 million business in the United States in 2003

• 99.7% are small businesses less then 500

employees

• 572,900 new companies were formed in 2003

• 584,800 business closed in 2003 a drop of 11,900

• 1.08 new businesses are formed every minute

• 1.2 businesses fail every minute

• A change of share ownership occurs every 6

minutes

• A company changes control every 15 minutes

Business Credit Activity

In any ONE Minute There are:251 Suits/Liens/Judgments Filed

246 Telephone Number Changes

58 Address Changes

81 Officer Changes

82 New Business Openings

83 Name Changes

7 Bankruptcies

This Volume of Activity is vulnerable to MISTAKES:

• Wrong names on Applications• Clerical Errors• Wrong or Misread SSN, EIN• Payments Applied to Wrong

Vendor/Business

WHY DEVELOP BUSINESS CREDIT & INCORPOPRATE?

You as a Sole Prop

LIABILITY

Personal

Life &

Assets

Business

Life &

Assets

CREDIT CREDIT

LIABILITY

SAFE, SECURE, FLEXIBLE & EXPANDABLE

You and a Corporate Entity

LIABILITY

Personal

Life &

Assets

Business

Life &

Assets

CREDIT

RISKY & LIMITING

W2-Individual Sole Prop Entity

Corporate Entity

Personal Credit Only

Personal & BusinessCredit NOT Separated

Personal & BusinessCredit Separated

Business Creates:- More Inquiries- Higher Balances- More Late Pays- Less Available Credit

Business Credit Stats Apply To Business

Personal Credit Control Biz Qualified For Credit

Personal Credit Score Out Of Control/Drop

Credit Score Control

Avg. Statistics Apply

Avg. Statistics Apply To Personal Credit

Avg. Statistics NO Longer Apply

Personal Credit And Business Growth

GROWTH TARGET

STEADY STATEPersonal Credit Brake Applied

Revenue Curve

Personal Credit

Curve

Personal Credit No Longer Supports Business Credit Needs

More Inquires = Lower Score

Higher balances = Lower Score

Less Available Credit = Lower Score

Late Payments = Lower Score

The ‘Braking Factor’

BENEFITS OF BUSINESS CREDIT

• Reduces the need for personal credit checks• Reduces the need for personal guarantees• Access to lines of credit for business expansion• Increase your monthly cash flow• Save money by lowering the interest you pay• Prepare for current and future lending needs• Save time with major convenience of purchasing

with open lines of credit instead of cash• Establish a business image and credibility• Greatly increase your ability to succeed long term• Achieve compliance with the business credit

market • Peace of Mind, knowing business creditors cannot

attach your personal assets• Get Personal Credit back to averages for higher

score• Separate Personal and Business Credit

• No Business Credit

• Burdened/Poor Personal Credit

• Not Able To Pay Yourself

• Every $ In Goes OUT Again

• Personal Assets On The Line

• Loans Declined

• NEED $

• Available Biz Credit Lines

• Limited Personal Guarantees

• Strengthened Cash Flow

• Qualified For More Credit

• Personal Liability Reduced

• Sleeping Easier

• $s Remaining In Pocket

Build The Business Credit

Bridge with NBSS

HOW?

Profile Basic Credit

Report &

Score

More $

1 2 3 4

FROM THIS TO THIS

What Business Credit Can Do For You

HOW NOT TO BUILD CREDIT

• Don’t “buy” good credit

• Don’t only rely on personal credit

• Don’t start without being in compliance

WHEN TO ESTABLISH CREDIT?

• Before your credit profile is created

• Before you need it

• Now!

BUILDING BUSINESS CREDIT

BUILDING BUSINESS CREDIT• Be in Compliance• Establish lines of credit• Build trade references & payment history• Get listed with the bureaus• Continue to work with vendors and up limits• Follow a structured program and work with the

experts

CREDIT BUILDING TIMETABLE• Not easy, but possible to do on own• Need to start today• 3-4 year process (possibly never)• Our expertise accelerates the timetable to less than 1

year

ESTABLISHING BUSINESS CREDIT

• The following are ways to establish a Business Credit Profile:

• How: Business credit profiles can be built without

trying, if you are willing to wait years for it to happen on it’s own, however there is no guarantee you will ever have a score • Problem:

Business owners can operate their companies for years and never build a business credit profile or score - we have one client who set up his company 22 years ago and was still using his personal credit before coming to us

If you don’t have the knowledge of how business credit is established and maintained you may never have it

DON’T FAIL IN COMPLIANCE

ESTABLISHING BUSINESS CREDIT

• How: You can try to work directly with each business

credit bureau to obtain a score and profile,

• Problem: DON’T FAIL IN COMPLIANCE If you have not prepared your business properly

before going to the bureaus you can put your business in a HIGH RISK status

High risk is a status companies can be placed in with very little opportunity to get out

High risk will stop companies from granting your business credit and those who already have granted credit may cancel your account

Most bureaus will not work with you, they just want to sell credit reports

Continued

• How: You may use your personal credit to obtain

credit for your business with companies who report to the credit bureaus

• Problem: DON’T FAIL IN COMPLIANCE This will start the process of building a business

credit profile, yet you are still using your personal credit and have the possibility of lowering your personal credit score

You are still personally guaranteeing the debt Once again if you have not prepared your

business for the bureaus you may end up in high risk

There is also no guarantee the profile will ever provide a score

ESTABLISHING BUSINESS CREDITContinued

SOLUTION

• Work with National Business Support Services, LLC, a separate company from the credit bureaus that will work for you and educate you on how the system works

• Will verify and certify the business’ requirements that lenders and credit bureaus require, in order to stay out of the no credit status

• Will provide you with lists of businesses who will grant your business credit without the need for personal guarantees or credit checks

• Will insure you develop and establish a business credit profile

• Will list your business with several business credit bureaus and not just one

• Will make sure you are in COMPLIANCE

Credit our Clients Are Enjoying By Participating In Our

Credit Builder Program!

Computer Line of Credit -------- $25,000 Equipment Lease ------------------$15,000 Hardware Store Credit Line ----$15,000 Electronics Store Credit Card -- $7,500 Department Store Credit Card - $5,000 Printing Company Credit Line -$2,000 Office Supply Credit Card ------ $1,000 Corporate Gas Card --------------$1,000

Auto Lease and Loans – Cadillac, Ford, BMW, Mercedes, Hummer, GM Trucks and

more

All Without Personal Guarantees or Personal Credit Checks

HOW DID THEY EARN THAT CREDIT?

FIRST: We Made Sure They Were IN COMPLIANCE Smaller lines of Trade Credit

• No Personal Guarantee• No Personal Credit Check • No Business Credit Check• Reports to Bureaus +ve and –ve

ActivityLarger lines of Trade Credit• No Personal Guarantee• No Personal Credit Check• WITH a Business Credit Check• Reports to Bureaus

Banks & lending Institutions• With a Personal Guarantee• With a Personal Credit Check• With a Business Credit Check• Reports to Bureaus

Tier 1 Credit:

Tier 2 Credit:

Tier 3 Credit:

THE BUSINESS CREDIT BUILDER PROGRAM

• The Business Credit Builder is for those companies

who have a need to establish their business credit

profile and obtain various lines of credit for their

business

• The goal of the program is to educate business

owners and assist them in developing a business

credit profile and trade credit with various

companies around the country.

THE BUSINESS CREDIT BUILDER PROGRAM

Deliverables

Detailed Research Report for compliance and problem areas

Credit Profiles with the Major Business Credit Bureaus

Open Lines of Credit with Various Companies

Calls from your Credit Coach to walk you through the steps of the Credit Building program

• Access to our Business Resource Center online with Complete status of your business in the credit

builder program Access to research and education materials

YOUR NEXT STEP TO SUCCESS

• START TODAY – USE OTHER PEOPLES MONEY TO GROW YOUR

BUSINESS– Obtain the education needed to grow your business

• CONTACT NBSS FOR A FREE CONSULTATION:– Review your Business Credit Situation and

requirements– See where Business Credit would benefit your

Business– Assess how your Personal Credit is being affected by

your Business activities.

Incorporate In Nevada

Nevada Business Solutions Group, LLC

5550 Painted Mirage Road, Ste 320

Las Vegas, NV 89149

(Office) 702.818.1705

(Fax) 702.818.1706

info@nbsgllc.com

www.nevadabusinesssolutions.com