3 Levels of Business Credit

There are 3 distinct levels of business credit ranging from “Easy to get” to “difficult” to get. The key to obtaining business credit is to make your business worth the risk for lenders. This may take time and is often achieved by taking steps up the various levels. How fast you take these steps depends on your “fundability” — your business needs to make itself “Fundable” for lenders.

Here are the 3 levels:

Level 1: Vendor and Trade Lines

• A “line” is when a company (vendor) extends a line of credit to your business on a net 30, 60, 90 or other day term. This means your business can purchase products of services from that vendor up to a predetermined dollar about and have whatever the day term is to pay it back. For example, a vendor may give you 60 days terms to buy computer equipment. If you buy $1000 worth of equipment, you have a couple of months to pay for it.
• This is extremely helpful for folks who carry inventory or who manufacture. If you have a major supplier and they give good terms, you may not need other types of credit.

Level 2: Credit Cards

• There various types of business credit cards available that report only on the business credit profile. They range from pre-paid cards (when the business owner has low credit scores and the business is new) to completely unsecured credit cards where the owner’s credit is not used and there is nothing securing the credit available (when your business has a certain amount of history and has established its own business credit through our program).
• Knowing which cards report on business credit and the requirements to get approval are the keys to business credit success. Part of our program is access and assistance with these keys.
• We have worked with companies where there are virtually unlimited credit limits on business credit cards. Depending on the card, many businesses find them better than banks.

Level 3: Banks & Private Lenders

• Once you have an established business and an established business banking relationship, you will find a whole new world of possibilities for funding. Whether you are interested in a traditional SBA loan or a merchant loan, the BOSS business credit program will assist you in the application and qualification process.

Most banks and private lenders are interested in seeing comprehensive business financials and tax returns (for the separate business) for at least two years and may require a formal business plan. This is when it is critical to have accountants and attorneys that know what the lenders are looking for and who have existing relationships with lenders.

It is extremely tough to get second chances at this level. You want to make sure your do things right the first time when applying for such financing.