Learning From An Expert
A lot of the time, finance is a sore and confusing subject. It's easy to get lost in the massive world of dollar signs and numbers that don't always make sense. Sometimes, it's good to have a friend to help you figure things out!
Recently, our CEO sat down with Andrew to hear his financial wisdom. In this blog, Hollywood Branded learns how to obtain corporate credit to grow your business from the expertise of Andrew Ray, the CEO of Flow Business Funding.
A Little More About Guest
Andrew Ray is the CEO of Flow Business Funding, which helps entrepreneurs and business people obtain corporate credit, allowing them to grow their business without ruining their finances. Additionally, Andrew is the best selling author of Entrepreneurial Money Secrets, unlock the power of corporate credit to leverage access to business, and coaches people on how to repair their credit score to get funding approval.
Interview Transcript Highlights
Question: Can you explain what is, "get a tax ID," and what else you have to get?
Answer: Getting your DMV number, first of all, if you call in to get your number, first download my free guide, or get a copy of my book because I'll show you how to get the number for free.
We have a comprehensive program that walks people through it, and for less than the cost of what you're going to be paying to try and figure this out and try and go by people upselling you and doing all this stuff, you can actually have somebody hold your hand and walk through it with you, and pick my numbers. Okay, let's get back to the first step of your question. You get your tax ID number, you go get your Dun & Bradstreet number, even before your DMV number, what you want to do is become credit. What I mean by that is with the business, once you set your entity up and everything, then you start to see the separation, you want to become fundable as a company.
That means you want to have presence online, you want to set up a website, you want to have your listing, your phone number listed, a professional number, your cell phone. You want to have that listed with 411, you want to have an office. Even a home office is okay, better to have a virtual office if you don't have an actual office space. When companies are assessing the risk of lending to you, they're going to be looking you up. They want to see that you have a web presence, they want to see that they can dial 411, and your number is going to show. What it's going to do, even if you're a small one person operation is show that you're legit. You want to be legitimate, so we walk you through the whole process of becoming credible. That's really the first step of it.
From there, then you get your DMV number, then you want to get what's called vendor accounts, Net 30 accounts. Well, there's some lenders that will lend to a business right out the gate with no credibility and without your personal credit, without your personal FICO Score even showing up. You want those and then within the 30 days, then when they offer that 30 day Net account, you're going to want to pay about a weaker, because that's going to boost your score. In the business credit world, if you pay it a little bit early, it actually shows that you're a quick pay, and that actually boost your score. What you're shooting for, when a PAYDEX Score, which is what Dun & Bradstreet uses as their scoring system, you want an 80. That's like a 755 go score for a person.
This is your business score that you're shooting for is 80 plus, 80 out of 100. If you're doing the early pays, you can get up to 85 90% or 90 as a score. Then, that's the first tiers you're going after vendor accounts. Then, when you establish about four or five accounts, you go after your Office Depot, your Sam's Club, that's the next year. You don't have to store credit. You might get some gas cards, things like that. Then you go to the next step where you're actually able to get cash credit cards and things in. By that point, you realize that, "I might not even need all the business credit." Everybody thinks you got to pay for everything with money. "Oh, I need a business credit card with $10,000 cash." Well, what if you're leasing equipment? If you're a truck driver, you don't need that. You need a new big rig, so you don't have to pay for it.
When you built your credibility, where you could go qualify and get a vehicle, or get office equip. We get people Dell, we get Apple Computer, things like that. You can furnish your office with a lot of these supplies. Again, you're building your business credibility. In the meantime, you still want to have good personal credit, because that's where the magic happens, is when you got both, because then you're able to get cash credit lines that accelerates everything, and it just mushrooms from there. It's building it out, it's really a never ending process, obtaining capital is an ongoing thing.
We see this much, and then we gain altitude, and we start to see a broader vision. Then, we gain a little more altitude, and we see a broader vision. It's just like our learning process, we continue to evolve. Let's face it, things change. Lenders that are working now, weren't working six months ago. It's a constant updating, and our program addresses that, so that we stay abreast about who's lending, who's reporting, all that kind of stuff. Navigating through it is it can be a little overwhelming at times, but it's worth it. It's like anything else, it can be frustrating, and then you get these feelings of elation when you accomplish what your goals are.
Question: I think a lot of small businesses, midsize businesses learned that their big banks that they were with were not a help during COVID. Right? It was the small businesses, the small banks that were actually the ones that came up. That's put a whole new like mix into the equation too about where you should actually be banking and getting your funding and how you can get the best support. What you stressed, touched on a moment ago is whether it's Apple or whether it's Dell, so even if you come well funded to start your small business, you need to be thinking strategically about ways to build credit.
Answer: That's exactly right. Keep your capital where you have reserves, always have a path. If you want to borrow 50,000, get 100,000 if you can and stay within the parameters of 30% 40%, if you can. If you don't need it, don't use it. Use the other ways to do things. Use those vendor accounts, use those store credit cards. If you're flipping a house, and you got a $10,000 line of credit at Home Depot, use that instead of funds in your bank because they will fund you in many cases with zero till almost no interest or very low interest. Then the fees are all trackable, and whatever interest you're paying, your write-off, because those are costs of doing business. This is just a whole different paradigm shift for people to look.
Question: You mentioned corporate experience, these whole other tax reporting bureaus, but that do it on the corporate base. Can you share more information on that? We all will run credit checks on ourselves right? How and what do you do in regards to your business and approaching with that?
Answer: We have these resources and I'm sure at the end we'll offer that. I get with credit monitoring, just like with your personal credit, you're going to want to monitor your business credit. A company like NAB, N-A-B, who monitors your Dun & Bradstreet, your business experience, your business Equifax, and even your personal scores. That's a good way to be aware of what's going on in your credit. Just like personal credit, there's going to be inaccuracies. You want to make sure that those are good, so that it's not hurting your credit scores.
It's just like anything. We've got to constantly monitor analytics and numbers of companies. You're increasing your accounts, who's reporting, who's not. Are they right in reporting? You're going to want your Dun & Bradstreet, your business Experian and your business Equifax. Those are the three to pay attention to. More so, they're going to look at your PAYDEX score as well. You can't have the other ones without the base. You build the foundation first, and then you start to build your house, your profile. Again, you can accelerate, you can get these business credit cards at 0% interest under a tax ID with a 680 plus FICO Score, that will jump you into the Experian and Equifax because they're reporting and it's reporting under your tax ID.
You might qualify with your personal credit, but if done correctly, a lot of these credit lines will disappear off your personal credit and go under your tax ID. All you're doing is showing, "Hey, I'm a little risk, because I'm responsible with my personal life." That's why I say how the boat is a huge boost. The 0%, let's be clear, it's usually an introductory 12/18 month offer, so it's not like you're going to have 0% forever. Why do they offer that? For one thing, they want you to start using their cards. Banks and lending institutions are in the business of lending money, that's how they make their money. Them offering these things to get you started and then prove yourself is really what it's about.
Learning these things, utilizing this space, and then exercising these things, like getting in the gym. You get with the personal trainer, the first three months, they put you on a program and get you going, then it's just consistency over time, and then you're going to get to your goals. It's the same with this too. It's your financial fitness. Having good guides, good mentors, good people too and resources that you can turn to when you have questions, because you're going to have questions. It's a constant learning process, but it gets pretty fun once you get going, and once you see the power that can unleash.
Question: What are other sources of potential lines of credit or borrowing that a lot of businesses don't think about?
Answer: Well, if you haven't already, if you've been in business, you go apply for PPP, or some of these government programs right now. I'm seeing people get approved. If you're a gig worker, you're a Uber driver, you're self employed, and you have a dog walking service or something, you might be able to get some money. It doesn't hurt to try. All they can say is no, so you try, you're legit, and if they give it to you, great, it gives you a boost. If not, then at least you tried.
I know a lot of people are afraid to even try. If you fall down, get back up, learn from the experience and keep moving on. Any of these resources can be helpful. Go to our website and download the free guide, download as much information. There's so much on there, and we're constantly trying to update it, because the first thing to do is learn. You're not going to be as fearful about taking action if you take away the mystery. People that don't know, they get handicapped and paralyzed to even move. I say just take baby steps in the beginning, until you get this. It's a subconscious thing.
Take that fear away, look at it like that's your avatar, "This is this is my body in my business, and I'm going to help build credit to it and it's going to feed me, and I'm going to feed it back." It's a back and forth thing. Just take the mystery out and take some action.
Question: If you had to say three things that you want to keep people in mind of what we just talked about, or else something that would drive them and change their lives as far as how their approach? What would those be?
Answer: First of all, be honest with yourself, because it starts with you. Credibility, when I was talking on the Voices this morning, I said, "Credibility starts with integrity. It's who you are." Taking personal responsibility is go look at where your credits are. Most people don't even know where their credit is. Look it up, look at where you are to start with. Then where are you in your business game? That would be the first thing, self assessment.
The second thing is, make some goals, dream a little bit. Just take 10, 15 minutes and off the top of your head start drawing out the life that you're trying to make. Let's face it, business is a vehicle for a life that we want, a lifestyle. Is it more time freedom? Is it a certain number? You want a Lamborghini? What is it? Be specific and think about that, consider that. Then, take action. If you don't have an entity now, go on our website, at least check out the information. Flowbusinessfunding.com is a great resource center. We built it that way to be a resource center. Download some guides, educate yourself, get on some videos. We've got a YouTube channel, we're going to be spending more time making more video content as well.
Just take baby steps in the beginning. Look at your personal credit, set up your entity, get your business plan idea that you're going to do, and then start going after fund. Get on the phone with us and see where you're at, and we can guide you. If you need some credit repair, let's work on that first. If you've got great credit, you want to go after credit lines right away. You want to build corporate or business credit, completely separate from your FIFO.
Believe me, you think it's going to cost a lot of money like $3000, but it's an investment that's going to save you money, because if you get with Dun & Bradstreet, all the resources that we provide for you, you're going to pay well over that in fees, not to mention you make mistakes, and then it's going to put you back even further.
Check Out The Podcast!
Andrew has so much more great information from his experience in business funding, check out the podcast below to learn more about how to drive your business from his advice and expertise!
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