02/26/2022
Fellow Small Business Owners & Entrepreneurs; let's talk about business credit.
I recently opened a business account with Quill dot com, Uline, and Grainer online. This allowed me to purchase some business supplies. Grainger allowed me to check a box during the registration process to ask for a line of credit for Net-30 terms. The other two allowed me to do this at check-out of my first purchase. Significantly, all three of these companies regularly report their trade lines extended to small businesses, to one or more of the business credit reporting agencies Dun & Bradstreet, Experian Business, and Equifax Small Business. This is separate from the Experien and Equifax consumer credit reporting bureaus and your credit file as an individual. They go on stated income without verification, and do NOT do a hard pull on your personal credit. The limit will probably be low, like $1,000 so when you exercise this trade line (it will not report anything to a credit bureau until you have used it and paid it) keep the purchase low so it is not hurting your % of utilization factor. And make sure you pay it as soon as you get the invoice. 30 days goes past too fast if you forget.
The Amazon Business American Express card may be another good option for establishing or building your business credit. Stated income and a hard pull on my personal credit (Experian only) yielded the card. Your business must be a registered entity with a Secretary of State (LLC, LLP, S-Corp., etc. - no sole proprietorships). Mine is a single-member LLC, so my income is not yet separated for tax purposes, but I can move from being a “disregarded entity” to being treated by the IRS like a Corporation by filing a form, I I choose to do so in the future.
I projected my farm earnings, but I wasn't asked to provide proof. I started the app online and had to follow up with a phone call to verify a couple pieces of information related to business address and contact info. I actually have two separate LLCs, one for my farm and one for my training & consulting business. I applied for a credit card for each one, both in the same day, and was approved for both. It is important to keep your finances straight when using an LLC. You can put money into it however you wish, but you have to take it out in certain ways so as not to “pierce the veil” between yourself and the legal entity of the company. So I have to strictly use my credit card for one business, in that business only and cannot use one for the other, or for personal uses. Keep that in mind always and if you intend to form an LLC, study up on it.
This is a great step in separating my business expenses from personal finances, tracking spending, and establishing credit for my company (with Dun & Bradstreet, Experian Business, and Equifax Small Business bureaus, this account reports to all of them). Option for 3% cash back or 60 days interest free with each Amazon purchase (drop down menu at shopping cart checkout). This is NOT A GREAT CARD, as interest rates are HIGH (14-22%), but I won't be carrying balances; the strategy here is to make a few small purchases once or twice a quarter, and PIF within the 60 day grace period to build some credit history as a business. When it comes time to make loan requests for significant capital equipment or large property improvements like buildings, the business itself will have credit history, and balances in the business name won't appear on my personal credit history, bogging me down in my personal credit cards.
Overall, easy application and approval is automatic for 700+ score- for a very useful card. They gave me a very good large limit on one card, and on the second one I applied for that day, they gave me a usable amount; $3,000. I expect I can grow this limit if I need to with judicious use and good payment history on the card.
Open an Amazon business account at http://business.amazon.com. Do this specifically as a business account, not as a personal account, and start from scratch preferably with a separate a phone number not used with another Amazon account (if it is duplicated it will be something that requires a phone call, and (preferably branded) email. I.e.”bizowner @ myfarmbiz.com”, not a gmail account. You'll be asked to submit a document containing EIN # plus another proof document (I used LLC formation certificate which included my UBI). I added both my business checking account (routing and acct #) and my business debit info when registering as a business. I don't know that this is necessary for subsequently applying for the Amazon credit card, but it didn't hurt.
There is also a significant discount on Prime membership for businesses, and the annual Prime subscription is going up again soon.
Once you have the business registered, find something you might want and put it in your shopping cart. A significant dollar item(s) at least $500 (don't worry you don't actually have to buy anything today.) Get to the checkout dialog and look for the credit card application at checkout. Apply, and fill out the information there. Some will be duplicate so keep that EIN # handy. There will be a page with dialog about your business revenue, and another page abut your personal income (from a day job or any other outside sources including non-taxable income.)
You may be able to get thru this entire dialog and be approved entirely on your computer without a phone call to an agent. And they are currently giving you $100 Amazon Gift credit with the approval (I used it today on the purchase) and you may get another $50 credit with the discount code “FIRST35OFF” (which is more specifically a 35% discount on certain items, up to $50 maximum). This discount code is only good for the first 5 days after you get the approval. They want you to spend some money.
After all the discounts, I ended up putting about $1500 on the farm business card for a couple chest freezers (not available in stock anywhere local, for love or money), and took the Net-60 terms for no interest for two months. I put about $100 after discounts on my consulting business and also took the Net-60. Exercising a card does prompt it to be reported to a credit bureau more quickly and reliably. It also helps a lot to have a DUNS #. If you don't already have one, it is free, so go ahead and get one. It is possible to have a business credit file without it, but it is more reliable with one. And it is FREE and also required if you are ever going to apply for any federal grants or loans. So GET YOUR FREE DUNS #. (Okay?)
Final note: Don't get too froggy with those credit lines. Buy stuff you NEED to MAKE MONEY. Credit is not for "good to have" stuff; it's for "need to have" and short term cash flow management. Carrying balances, especially on consumer credit cards is a trap. I have recommended some small purchases here for purposes of building credit, this is not to suggest you should use credit for any little thing that catches your eye, but rather that a deliberate strategy of using credit for purchases you PAY IN FULL (PIF) right away can help you play the game strategically. This is a tactic that gets you lower rates on bigger loans someday... don't get bogged down in it so that it ruins your ability to get bigger loans. Swimming with sharks is fun and exciting, but much less so when you're bleeding. Don't carry this credit card around with you on date night. Put it away unless you have made a solid decision to use it for a farm improvement or for necessary travel perhaps. Keep track of expenses on it and KNOW don't guess, how and when you will pay this bill before you ever pull the card out.
Amazon Business combines the selection, convenience, and value of Amazon with features that help improve business purchasing.
