Zero To A Hundred – Episode 9: Mastering Business Credit For Explosive Growth With Ty Crandall!

Hey Accelerators! 🚀 In this episode, we sit down with business credit expert Ty Crandall to uncover the secrets of building and leveraging business credit. Learn how to create a credit profile that helps your business secure funding, scale rapidly, and increase profitability. 💡

🔹What’s on the Menu:

• Understanding the essentials of business credit. 🏦 
• How to build a credit profile linked to your EIN, not your SSN. 💳 
• Strategies for using business credit to drive growth and profitability. 📈

🔥Why Tune In?

• Ty shares his 20+ years of experience in helping businesses like yours unlock the power of business credit. Whether you’re just starting or looking to scale, this episode is packed with actionable insights that will take your business to the next level.

💬 Gem from Ty: “Business credit gives your business the ability to fund itself—creating a sustainable and scalable growth engine.”

📞 Get in Touch with Ty:

🌐 Visit CreditSuite.com and info.creditsuite.com/ein for a step-by-step guide to building business credit.

Don’t miss out—hit that subscribe button and let’s accelerate your business from zero to a hundred! 💥

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Mastering Business Credit For Explosive Growth With Ty Crandall!

In this episode, I’m very proud to introduce Ty Crandall. He is an internationally known author, speaker, and business finance expert. With over twenty years of experience, he is looked at as an authority in all things business, credit scoring, and financing. He is also a two-time best-selling author. His books Perfect Credit and Business Credit Decoded are leading books in the field. He sits as CEO of Credit Suite, a leading authority and advisor to companies on business scoring and building business credit.

We’re going to cover some awesome topics that are going to take your business to the next level. Business credit, what is it? How do you create it? How do you become more attractive to a lender and become fundable? Most importantly, because this is what the secret that the big dogs do, is how you use business credit to create more profitability in your business. I am very excited to share my 25 years of entrepreneurial experience and my network to help you grow your business and ultimately become more profitable. Ladies and gentlemen, let’s accelerate together.

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Ty Crandall, thank you for joining us on the show.

Thanks for having me.

We’re going to have a very dynamic conversation, which is going to be super helpful to our audience of entrepreneurs and business owners. We’re going to talk about business credit, funding, and all the fun things around that help your business be more profitable. Before we kick into the nitty-gritty, in general, what is business credit?

Business Credit

I want to say that you said one of the sexiest sentences I’ve ever heard when you combine business credit, funding, and profitability all in one sentence. I wanted to start with that. Ultimately, when we look at business credit, you’re talking about credit net for a business that’s linked to an EIN. You’re familiar with consumer credit, credit linked to your social that you’re using to buy cars and mortgages, and consumer credit cards. Business credit is similar. It’s a credit profile and score that a business uses to be able to go out and get loans, credit lines, business credit cards, and even qualify for real estate as well.

With the business credit, is it completely, “I’ve gone through whatever the process is,” which we’re going to talk about? Your social security number and personal credit do not come into play at all?

It shouldn’t if you do it correctly. That’s why we’re talking. A lot of people do it incorrectly. When you supply a social, there are a couple of different answers to that. As of 2018, the government requires a social to verify your identity. They want to know that you are the owner of the business. The problem is that we are using a social to apply for credit or financing for a business. You’re also typically attaching a personal guarantee or personal liability. It’s linked to you as a signer.

When you’re building business credit the right way, you’re building your credit profile and score that’s linked to your EIN. You are not a signer. You are not personally liable for that business debt. There is no consumer personal credit check. The approval is not based on personal credit quality when you’re building business credit the right way.

How long does it typically take for you as a business owner to build that business credit to go out and get a loan, a line of credit, or whatever it may be?

It depends on what you’re looking to get. If you’re looking to get a $40,000 limit credit card through Visa, MasterCard, or a store, you can start getting that credit right away. If we look at our clients, for example, our clients are usually getting their first approvals within the first week. The first approvals that they’re getting are arranged from, let’s say, $1,000 to $3,000.

Those accounts report to the business credit reports within 30 days. Within 30 days, they’re jumping up to $5,000 to $10,000 limited accounts. Those are accounts like vendor stores, Home Depot, Lowe’s, Apple, or Best Buy. You name a retailer and they’re in that category. It could be fuel stations and things like that. Usually, our clients are getting to the end of the process in about 4 to 6 months.

At the end of the process, you’re getting hundreds of thousands in auto financing. You’re getting a Visa card, a MasterCard, or what we call Universal Credit. You’re able to get all of that without a personal guarantee credit check. The reality is it never stops. As you continue to build business credit, then lenders start to see the credit history. You start to be able to get credit lines and loans not exactly based on business credit, but business credit is helping make it significantly easier for you to get those kinds of financing. You have to have really well-established business credit to be able to get away from personal guarantees on major loans like SBA and things like that, which sometimes takes years.

Setting Up A Business Credit

I’m a business owner. I come to you and say, “I’m ready to set up business credit.” What does the process look like that I’m going to go through with you? What do I need to have prepared when I walk through the door?

To walk in the door with us, nothing. Ultimately, what we are really good at is helping a business owner from inception or launching a business to do it the right way to be able to set themselves up to get credit financing. That first step is crucial though. It doesn’t matter if you’re getting business credit. It doesn’t matter if you’re applying for business loans. It doesn’t matter if you’re buying for credit lines. You want to set up your business where you’re fundable.

Fundability is the term that lenders use to determine if you’re credible or not or if they should lend you money or not. We all know that lenders, when they’re little wheel is turning, are making the decision on whether or not to approve this. Fundability is everything they’re using in that decision. It ultimately is the step before they look at your revenue, your credit score, your time in business, and how your business is structured, like what entity type you set up. You have a business address. You have a business phone number. You have a business bank account. You have a website. You have a business email address, not like an AOL type of email address. You have a business license. You have a business bank account. It’d be saying separated.

The idea of business credit is separating consumer and commercial credit. The first step of separating consumer and commercial credit is to separate you from the business. You don’t want to go in as a sole proprietor where you are the business using your home address and your mobile phone. In that case, you can’t build a separate credit profile because you are the business. The first step is to make sure that you clearly have a separate business from yourself and that you set up that business where it is legitimate, credible, and fundable from a lender standpoint. That’s the most crucial step to getting approved for any kind of credit financing.

I want to make sure that I’m hearing this clearly from the audience. When you go on the journey to set up your business credit, you need to have certain things in place so that the business looks like it lives and breathes as its own entity. That is a physical business address to an office with a commercial designation, a phone number, and a website, and the entity is established as a professional entity. If there are licenses that you have to have, it is having those in place. It’s making sure that all of those key elements are in order so you can become fundable to a lender or a credit card company.

If you think about it, I can go on Sunbiz.org here in Florida. It’ll take me about 7 to 9 minutes to go through their process and pay $70 to set up an entity. I can then go right behind that and go to IRS.gov. I can get an EIN number in about five minutes or more than that. In about fifteen minutes, I can officially have a business and I can have an IN number.

Due to the ease that it is to be able to set up a business like that, what lenders and credit issuers are looking at before they even think about revenue, time in business, credit, and any of that is, “Are you a real business or are you not a real business?” Everything you described there is what separates a true business from somebody who’s experimenting with an idea per se.

That’s how SBA refers to sole proprietorship. They say, “This is somebody that’s experimenting with a business idea or a concept, not even a true business.” A true business launches an LLC or a corporation. It has all of you described. It has a separate address, a separate photo number, and a separate bank account. When you’re doing all those things, then a lender and credit issuer clearly sees that you have a legitimate, real business that is not linked to you personally.

Business Classification

That makes sense. There’s something that I’ve heard of in the ether, and I don’t really know so I’m going to go to you as the expert. I’ve heard that business classification is very important when establishing business credit. Is this true? If so, what business classifications should you seek out for your business? How do you provide the correct business classification?

Classification of a business is exponentially more important than when it comes to business credit. If we look at the classification of a business, it is ultimately determining the industry you’re in. Let’s say that. We started with SIC codes. As the internet came around, we had all these new industries that were created, and the system morphed into what is called the NAICS code.

The NAICS code ultimately determines the industry that you’re in. This is used for a lot of different reasons. For example, the IRS uses this for audit purposes. If you’re submitting expenses, they’re looking at your NAICS code and comparing it to others in the same industry to make sure that there are no red flags. If you’re submitting expenses that are way out of line with your industry, it’s what triggers audits. 

The SEC is looking at this. Everybody’s looking at NAICS codes to see how your business behaves that might be out of sorts with others in your industry. The shocking thing is most people have no idea what their NAICS code even is. If I ask a typical business owner, “What is your NAICS code?” They truly either don’t know what a NAICS code is or don’t know what their NAICS code or the actual number itself is.

That’s very important for everything you’re doing in your business. When you are setting up the business, initially, you should go and look at NAICSCode.com, and then you should also do a simple Google search for high-risk NAICS code. The first thing you want to do is make sure that you are not in a high-risk industry. You want to choose a code that is relative to what you do but doesn’t reflect your high risk.

I’ll give you an example. We are a software company. We also are the biggest in the space of business education. We also deal a lot with capital. You could look at us and put us in multiple NAICS codes. We could be an education company. We could be software. We could also be lending. We could be in the finance space. We choose software because the software gives us the best multiple if we ever go to exit and sell, but then it also is important because it’s not high-risk. We wouldn’t choose education because it is not as good of a multiple if we exit and we wouldn’t choose finance because it is a high risk when it comes to getting money, so we go with software.

Ultimately, you often have choices of what you choose. You want to avoid the high risk. You want to then go to NAICSCode.com or NAICS.com. You want to do a search and find your best designator. Whenever anybody on paper asks your industry, the IRS, business credit reporting agencies, lenders, or credit issuers, you should put in there, “I’m a software publisher NAICS code 31142,” or whatever it is. That’s exactly how that question should always be answered. That way, you’re not associated with industries you’re not in.

I don’t want to keep going on and on, but even the business credit reporting agencies have comparison scores where they’re comparing you against others in your industry. Lenders have restricted industries. Lenders have prohibited industries. It’s a mess when you don’t know what your NAICS is because your scores usually are out of alignment. You’re triggering IRS audits. Lenders and credit insurers find it harder to lend to you. That’s why it’s such a crucial thing to get done and a great question on your show.

What’s really interesting is that the codes for your business or the business designations for underwritings for banks or lenders are incredibly important. I even see that in our world of payment processing. Sometimes, when a business, if it goes to underwriting, does not have the right designation for what they do, an account can get turned down.

This happens a lot of time with merchants who are with the stripes and the squares of the world where they could be put into a box and all of a sudden, their account is frozen. They can’t access their money. Their account is shut down overnight but they don’t necessarily have someone to communicate with. Figuring out what your NAICS code is or working with someone like you is important because it helps your business get access to that capital. There’s something that you talk about which is great, which are the three Cs of lending. Can you elaborate on that for the audience?

Three C’s Of Lending

Yeah. When we look at a lender and what typically they’re looking at, they’re usually looking at 1 of 2 things. I call it the three Cs because our audience finds it really easy to understand where you fit in with what you can qualify for. That’s  Cashflow, Collateral, and Credit. When you understand the three Cs, then it’s easier to get financing because you’re applying for the financing you can get.

The way the 3 C’s formula works is that lenders usually focus on 1 of the Cs and they don’t really care as much about the other c. I’ll give you an example. If I have consistent revenue in my business, Cashflow, then I want to go for something called cashflow financing. Cashflow financing is only primarily looking at how I manage my cashflow.

If I manage my bank account responsibility, if I don’t have a bunch of NSS, if I have positive ending bank balances, more money going in and going out, and all these factors they look at, then I’m typically going to be able to get approved. I might even be able to get funding within 72 hours or less even with bad credit. A lot of lenders don’t even do credit checks. They don’t look at collateral. They don’t look at anything other than the fact that my Cashflow is consistent.

On another end, let’s say that I have inventory. I can use my inventory to go out and get a credit line leveraging the inventory as Collateral. In that case, they don’t care about my credit score and revenue. All they care about is the asset itself, the Collateral. With the 3 C’s formula, it’s like you could figure out what your strength is, Cashflow, Credit, or Collateral. You can get money based on that strength even if you have weaknesses in the other areas.

As you build a more established business, your consumer credit is improved, and your business credit is established, you start to get all three Cs. That’s what opens up the best kinds of loans. SBA is an example. They want us to have Collateral. They want us to have good Credit. They want us to have Cashflow verifiable on tax returns. The closer we get to having all three Cs, the more capital we can get through more different types of loan products. The good thing is even as a startup, I’m able to use good Credit or Collateral alone to be able to get funding even from the beginning of my business. The three Cs formula is an easy roadmap for somebody to get money and grow.

I want to make sure that I understand this. In terms of the credit of the three Cs. Can you use very solid personal credit to get business credit but not have to sign a personal guarantee?

There are a couple of different ways to answer that. Let me give you an example. There’s a program called Credit Line Hybrid. That’s the most popular program we deal with for real estate investors. We also deal with Credit Line Hybrid for startups. With Credit Line Hybrid, I have good personal credit. I come in and I get credit and financing from my business. The nice thing is I’m able to get that financing at 0%. That reports to the business credit reporting agencies. It helps me build business credit, but I am providing a personal guarantee.

Here is an example. One of the first credit cards I ever got from my business using Credit Line Hybrid, I still use it. It’s my only business card that I carry in my wallet. This required good credit. It required a personal guarantee to get approved. Most of the time, if you’re relying on consumer credit to make the underwriting decision, you are providing a personal guarantee in almost all cases.

The other side of credit is business credit. When we talk about the three Cs, we talk about funding you can get based on personal credit, but there’s also tons of money you can get based on business credit as well. As a matter of fact, I like to tell a lot of entrepreneurs, “If you don’t have a C, then you make one. You make one by creating business credit because by building a credit profile and score, you now create an asset itself there with business credit that then helps you get money using the business credit building system.”

Building Business Credit

Let’s talk about the first and most crucial step in creating business credit. Is it going out and getting a store credit card or a 30, 60, or 90-day type account with a service provider for businesses? What is the best step to get started in building that business credit? 

The first step we never want to forget is to set up the business where it’s fundable. I’ll come back and constantly reiterate that. As entrepreneurs, our brains don’t work this way. We want to skip that thing. We want to get to the good stuff. The problem is this is the thing that messes us up. The fundability accounts for more than half of all denials.

Of all the denials for business lending, which is upwards of 90%, more than half of them are because of fundability. If somebody fixes that, I could sit here for hours and tell you stories of people that fixed that and look from denial on AmEx to no limit AmEx or denial on loan to a $500,000 loan. It’s all right there. That’s what gets lenders to chase us and we’ll stop chasing them. It’s what gets us pre-screened offers. It’s what gets us automated approvals. This is where everybody gets stuck.

Let’s say that we’ve already done that. We’ve already talked about it. We’ve already set up our business where we’re fundable. When it comes to building initial business credit, there is no right or wrong or better or worse way. It depends on what works for you. There are three ways to do it. The first, Credit Line Hybrid is an example. I’m able to come in and get 5 to 8 credit lines that report to the business credit reporting agencies using a guarantee from me or a guarantor and good personal credit to get approved. I’m starting business credit with $10,000, $15,000, or $20,000 limit credit lines or higher.

That is a great way to jumpstart business credit building but I might not have good personal credit. A lot of entrepreneurs don’t. We’re risk-takers. I might not want to provide a personal guarantee. I want to look at 1 of 2 other options. The other option is done in Bradstreet’s credit builder. D&B’s credit builder will allow us to take twelve accounts that we already have and add them to our business credit report.

For example, if you are working with HubSpot as your CRM or maybe you’re with Infusionsoft, you could take your payments there and add them to your Dun & Bradstreet credit report by paying D&B monthly for their credit builder. You could do this with twelve accounts. That can jumpstart at least your credit profile with D&B.

The third way and the most popular way to do this is what is called using starter vendors. Starter vendors are unique because they do two things. They’ll, one, give you credit when you have none. We’re always in this conundrum of, “How do I get credit if I need a credit history to get credit?” The conundrum would be solved by starter vendors. They’ll give us credit when we have none but they report the credit to the business credit reporting agency, which is important.

Over 90% of people who issue us credit do not report to a business credit reporting agency. I talked to a lot of people with multimillion-dollar businesses that are denied because they don’t have business credit. They’re astonished because all of these people have extended them credit but report it to a business CRA or Credit Reporting Agency.  We want to use starter vendors that report to a business credit reporting agency that will give us approvals when we don’t have it.

One example here is ULINE. ULINE has been one of my favorites since I wrote the best-selling book on business credit many years ago. I love ULINE. I love Grainger. Grainger will give you a $2,500 credit line. If I opened my business now, they would give me a $2,500 credit line to put that thing about the business license, which goes back to the importance of fundability. Another one, for example, is CEO Creative. They’re selling swag like this. They sell office supplies amongst many other things.

There are a lot of these starter vendors out there that sell things that we normally would buy for our business but the difference is they’ll give us net 15 or net 30-day terms. They’ll give us 15 days, 30 days, or Amazon net 55 to pay them back. These starter vendors will extend us credit. We go and send up an account online with it. We go buy the stuff we want to buy. We use our credit to buy it. We let them ship the credit to us or ship the items to us that we purchased. When we pay the bill, they take that payment and report it to a business credit reporting agency. All three of these methods will work. The key is that we need accounts to report it to a business credit reporting agency done in Bradstreet, Equifax, and/or Experian to jumpstart the business credit building. Any of those three methods will help us do it.

If you’re looking to set up that business credit, those trade lines would be really beneficial. Use CEO Creative, Grainger, or ULINE to go ahead and get a net 15 or net 30 account and pay it off. Here’s one of the key things that I know from going through the process of establishing business credit. Whether or not you need anything from the company, spend a couple hundred dollars a month and let it get reported. I have more mailing, stuffing, and package equipment that I need in the loft in my garage, but I did it because I wanted to set up the business credit. It was very helpful.

I have a stack of first aid kits from Grainger. I have more batteries than even my teenagers could even blow through. It’s interesting because when you talk about these places and people are like, “I don’t need outdoor workwear,” neither do I. I bought a funny sign that I parked in front of my best friend’s car that he loves that I got from there. I’m able to come in and get batteries and first aid kits.

The key here is that when you’re building initial business credit and you find the right vendors, you legitimately can find what you need to buy. For example, office supplies, networking solutions, computer solutions, marketing services, and website creation ads. You can find it. In some cases, you’re buying things you normally wouldn’t buy.

You said, “I don’t need a bunch of shipping supplies. I don’t ship a bunch of stuff.” It’s worth it to me to give you $50 or $100 because they give me that trade line. That’s that actual trade-off. Try to find vendors that sell stuff that you need to buy. You might have to make a small sacrifice but it’s worth it for that trade line because in the next month, you’re then able to start coming in and getting credit with almost all of the major retailers and start opening up the month into it.

Best Business Loans

Let’s talk about some of the sources that offer some of the best business loans, credit cards, or credit lines that are in the market.

There are a lot of them. The way I like to describe this is like this. If we talk about the easiest and fastest farms to get capital, we talk about business credit cards, one. Loans are typically second. Credit lines are some of the hardest to get in, which is third. What I like to tell entrepreneurs is that most entrepreneurs are trying to go out and get a loan or a credit line to pay for everything. They say, “I need to launch a business and it’s going to cost me $50,000,” and then they’re trying to get a start-up loan or credit line for $50,000. It’s completely the wrong way to do it. What you want to do is you want to map out what you’re trying to get the money for.

If I’m launching my business here, then I need computers. I need a phone. I need my MacBook. I need cameras, my printer, paper, and my stand-up desk. I need an office set. 100% of this, I could use a business credit line. I can get my computers here through Dell or HP. My camera, I can get through Best Buy. I could get my phone through a credit line with Apple. You get the idea. I can get my furniture from Ikea. 100% of these could be bought based on business credit. I always want to go down that path because it’s easy to get. I’m able to get $10,000, $20,000, $30,000, or $50,000 credit lines, for example, at all of these places.

The other nice thing is that when I get my computer from Dell, my camera from Best Buy, and my phone from Apple, I’ve got 5, 6, 7, or 8 credit lines and they’re all reporting to the business credit reporting agency. That’s a very important point to business credibility. Business credibility in large part is driven based on how many accounts you have on that profile.

I want to split my spending up as much as I can across these different credit lines. That’s because then, what happens is the next credit line issue where the next lender sees that I’ve got all this credit and I’m using it all, buying stuff, and paying it down, that is the dream of what they’re looking for. They want an established, credible business that’s giving money, using it, and then paying it off and using a lot of it. If you do that, that opens the door to loans and credit lines.

I’ll stop there for a second in case you have thoughts, but then we’ll get into loans and credit lines. I always say that business credit will pay 90% of what you need to buy for a business. Spread it out using business credit first. You’re then dealing with a smaller amount of money you need loans or credit lines for. Depending on what you need the money for determines the best lenders and types of lending for the loans and the credit lines.

This makes a lot of sense to me. It sounds like once you spread it out, you have that diversification that’s going to be key for you to get extended more credit. Once you set up a ULINE account, do you have to use it forever and ever or can you use it for three months and get the reporting? Is there any special sauce or technique in there when you have the trade accounts first?

There are two things to keep in mind. If you look at your business credit reports, one of the interesting things you’re going to notice is that they do not have your credit limit on there. They have the recent amount of credit you’ve used. Business credit reporting agencies are telling us that getting the credit and using it is more important than what even the limit is.

I tell clients, “$50 bucks or less is fine if you want.” I like how you came in and said, “Spend $100. Spend a couple hundred bucks.” The more you’re spending on that credit, the more credit issuers will approve you for future credit. It doesn’t matter if you have a $10,000 limit if you’re only spending $100 a month. If they see you’re given a $2,000 limit and you’re spending $1,000 or $2,000, then from their perspective, you need a higher limit. 

If I gave you a credit card with a higher limit, you’re probably more inclined to use that one. The reason that this is the card in my wallet for business is it’s my highest limit. We tend to default to our highest-limit credit card. The next credit insurers are going to see you’re using it. They’re going to want to give you more money. Using that credit is part of the equation. It’s very important that you’re using it as much as you possibly can. That is one of the main factors you want to look at.

The business credit reporting agencies will stop scoring it if it hasn’t been used for twelve months. I tell our clients, “Use it every six months at least. If you want it to calculate it into your score, the actual from the reporting agency’s cutoff is twelve months. If you haven’t used it in twelve months, it’s not dropped from your report but it’s not calculated into your score.”

What I’m hearing from you is that the key to business credit is that they don’t report the limits that you have on your cards, get it, use it, and pay it off.

The third part is the most important. When we look at business credit scores, the main scores of the business credit reporting agencies are driven based on only how you pay your bills. The only fact that they look at is how you pay your bills. Don’t get me wrong. If I pull my D&B report, I can get five scores. All five of those scores take different things into account.

We could talk for an hour about how business credit scores work. The primary score from D&B, for example, PAYDEX, is 100% based on how you pay your bills. It is a number that reflects how you pay your bills on average during that time period. You need to make sure that you pay your bills on time or early. Remember, in the consumer credit world, I have 30 days before I’m late. That does not work that way in the business world. If I’m one day late, then I am one-day DBT or Day Beyond Turns. I want to make sure I’m paying the bill on time or early if I do that one thing that gives me a good score. That is what drives the interest rates that we end up paying on loans, credit lines, and business credit cards.

Taxes

Let me shift over to talking about taxes and the business. Is it important to show profitability in your business when you’re going for the larger lines of credit?

When it comes to loans and credit lines, 100%. When it comes to business, credit is no doc. We don’t care. Business credit does not look at tax returns, bank statements, or any income documentation. That is why we love business credit so much. It’s easy to get. When it comes to getting the best kinds of loans and the best kinds of credit lines, profitability ties into it. If you show me a business that has $1,000 in loss and show me another business that has $1,000 in profit, I’m going to show you the difference between a hard money loan and a loan that has way better terms, including lower interest rates, longer terms, more money, and lower payments.

Profitability is a big deal in a business, and here’s why. We all hide the money. It’s all we do. The tax code was created for businesses. You can talk to any tax experts. The thing is that you get so big that you can’t hide it anymore. Everybody knows that you get to a point where you have to pay taxes. You can’t legally and ethically hide the money. I mean hide by legally doing it, like buying a year’s worth of my software at the end of the year but not paying taxes type of thing. When I say hide, I’m talking about legally and ethically.

You get to a point in the business where it grows and you can’t do that. You have to pay taxes because you’re profitable. There’s no other way around it if you’re running a really good business. That’s why lenders look at it that way. The most established businesses are showing profits. Your SBA lenders, for example, and the major banks are the businesses that those banks want.

Let’s say that you are a business and you’re at the point where the tax code isn’t working much for you anymore and you are profitable, and you’ve got to take that profit. Are there ways to offset that, like investing in real estate?

There are a lot of those. I’m not the guy for that. There are all kinds of tax strategists that I deploy and I’m sure you deploy that help with that tax strategy of where the money is. For example, we pre-pay everything. At the end of the year, we’re buying software for the year at major discounts. That’s where we typically start. We go to get discounts on everything we buy by giving them the money in advance to be able to get discounts there.

There are a lot of other ways, including real estate and other things we can get with airplanes. My private jet, for example. It’s surprising you could depreciate all of that within the first year that you buy it right away. There are different types of ways to be able to do it. I’m imploring your audience to go get a private jet.

You are a man who’s singing the tune that I love to hear because I am waiting for that day that I can. The problem is I’ve done it a few times. Once you’ve flown private a few times, it messes up your life because then you have to sit in an airport terminal and you’re like, “Ugh.” I digress. There are various ways that you, as a business owner, can offset that income through the acquisition of equipment like planes and real estate.

I love what you said about pre-buying your equipment. I’ve seen companies that spend a lot of money on travel, meals, and entertainment. Prepay for a block of hotel rooms for an entire year at a 50% discount because the hotels can book it. They need to spend the money anyway. They get a discount for it. They’ve even done that with restaurants that they have relationships with where they’ll pre-spin $100,000 in a year and save 40% or 50% because the restaurant can book that income day one. There are a lot of creative ways that as business owners, once you get to that point, you can do things like that to offset some of your income.

You can even funnel a lot of that through business credit cards where you’re getting points for all that. You’re combining these strategies where you’re getting the tax benefit and even wisely using credit in a way where they are able to come out and be able to get all these points. Imagine paying $10,000 on your Marriott Bonvoy card, what that does for your points, and how much your personal vacation is covered for free if you want it to be within the tax limitations. I’m not the tax expert speaking to that, but you start combining these benefits of all the points, rewards, and the tax strategy as well. 

Real-Life Examples

Let’s talk about some real-time examples of how you’ve worked with businesses where they’ve used the creation of this business credit or access to funds to create more profitability in your business. That’s what our audience is most concerned about. 

I’ll give you an example. One of our clients, Christine, has surpassed $1 million in business credit. She has a really interesting story. She tried to do it on her own and hired a few companies but didn’t succeed. She found me on social media, became a client, and then started to build business credit. She has a transportation company. She started to build business credit and very quickly started to get high-limit lines at Best Buy, all the fuel stations, and all the places. They also had a construction business. They were getting construction credit and fuel credit amongst computers and everything else that they needed.

When we first got started with her, she was a one-truck operation as a lot of truckers were. What she brought to me was something I hadn’t even thought about, quite honestly, with the benefit of business credit. What happened in her trucking industry is when she started to establish this business credit and then she’d go to bid on jobs, what she didn’t know was they were looking at business credit when they were tied into the decision they were making. All of a sudden, she started to get all of these contracts approved and got substantially higher contracts than she ever had before.

When we talked, she was on track. She was finishing the closing of a 50-truck operation. She went from a 1-truck operation to a 50-truck operation and then, like a lot of our clients, blew up a second business at the same time on the construction side. That’s an example. Another one of our clients did the same thing with a tow truck. They ended up getting the money they needed using business credit to drive the way to go from 1 tow truck to 2, 3, and 4 trucks to get a whole fleet of trucks on the road. Those are two examples.

Another one of our clients used business credit and financing. He was a doctor. He came to us to close down his business. When he had $417,000 over a tax lane and the IRS was knocking on the door, the bank turned him down with a 580 credit score. With business credit financing, we were able to get them $1.5 million in funding. He paid off the IRS tax lane. He ran for public office as an independent. He opened another office. He’s a phenomenal doctor. He opened a second office and doubled the size of his practice. Those are three examples off the top.

That’s incredible. I want to elaborate on that some more. You have a really great quote. It’s, “With business credit, a business can fund itself.” Tell me what you mean by that.

What I mean by that is that we’re used to, as entrepreneurs, having to come in and sign. We’re used to having to provide a personal guarantee. We’re used to our personal situation, our personal taxes, our personal credit, and all these things being tied into the decisions that are being made to fund the business. The reality is when you’re building business credit, you’re truly giving your business the ability to fund itself. With that credit profile and score that you’re using, you are able to come and get a $10,000 to $50,000 limit or even higher credit cards that you’re able to use for 90%-plus of whatever you need to buy for the business.

We have credit clients who are using and getting credit lines of $100,000 or $300,000. Christine, for example, has a $300,000 credit line from a local vendor in her town based on business credit quality that covers all of the supplies that they need on a regular basis to be able to run and scale their construction business. Business credit gives your business the ability to fund itself because you go from not having a credit profile to then getting credit. You’re then creating a credit profile which gives you more credit. The more you build the credit profile by getting more credit, the higher the limits and the more credit you get.

We have a client that got $350,000 in Ford. He walked into Ford to get a car for his business. They gave him a $350,000 credit line. He ended up walking out and going, “What do I do with this?” He launched a Turo business or a rental car business as his second business. He never even thought about it before. He’s a partner of ours, which means he offers business credit financing through us using us as the back end. He got the finance manager as a client. Surprisingly, a lot of finance managers become our partners’ clients because they’ve never seen these things even happen before. This is a guy who launched an entire rental car business 100% funded based on business credit. I love these kinds of stories when they come in.

It sounds to me that business credit can be crucial for people’s businesses. The fact that you can walk into Ford and get credit, I never knew that something like that existed. My mind is blown. If you take a paver company, a window washing company, or a landscaping company, their ability to scale is ultimately more equipment and more trucks. A one-truck operation that’s a landscaping company could establish business credit. They can go out and get lines of credit to buy an additional truck, hire more workers, and pick up more business. That is massive for any and every business owner out there. The fact that you can use business credit to accelerate your business is huge.

It’s all about the strategic use of capital. We’ll talk about a tow truck business. They want to blow out the tow truck business. They go out and then they’re building business credit. They’re using it for marketing services right out of the gate. They’re able to go out and run Facebook ads in their local community, for example, to attract customers. One of our clients, Thelma, went out and got her initial starter vendors to use yard signs and fliers to promote local tax seminars. People would come and they would sign up and give her the money that she needed for her tax services to be able to save money on taxes or eliminate tax debt.  She then used it to compel.

We talk about the tow truck business, for example. They’re using it for marketing. They need to go out and get that truck. They go out and get specialized auto financing for the truck, or they’re even able to come in and use equipment financing for it. They’re able to use the Visa or MasterCard they got with business credit to cover the down payments. That’s no money out of pocket.

They continue to build business credit. All of a sudden, they’re getting hundreds of thousands of dollars of credit in auto financing that they’re able to then go and extend their fleet. We look at everything they’re buying. They have a fleet. They got a dispatch. They need computers. They need laptops for every single one of their drivers. They need the electronics. They need an office set. They have to get furniture. Those are 100% paid for by business credit at that part. They need to pay payroll. Business credit can’t pay payroll but that’s okay. Everything else, the business credit covers. They add the cash for the things business credit won’t cover. You can see the ease it is to be able to expand and grow a business like that.

We’re talking about a form of capital that anybody can get. If you have an entity in the US, you could start it and get it. We’re talking about the type of capital that was used to fund Walmart from the ground up. If you ever read Sam Walton’s book, he’ll tell you the story. He would sit there and go in the back room. The poll was done in Bradstreet’s credit profile. That’s how he got the money to be able to supply the actual stuff he sold in stores.

I don’t mean to go off on a tangent, but 80% of what Walmart sells, they use business credit to buy. Think about that. Think about how strategic that is. 8 out of 10 items on their shelves, they’re using business credit to buy, and then they use your money to pay off the credit. They save their cash and use it for stores. It’s why they have 10,000 stores. If you read Sam’s book, this is how he started. The entire company was founded and still is driven by business credit. It has more value in Walmart than all their shareholder value combined in the company. It goes to show how big it can get when you’re doing it right.

It has been my experience, so let me speak for myself. Credit has always had a bit of a negative connotation because of the connection to personal credit and growing up not having that financial acumen, screwing up your credit, having to fix it, and then using it and it gets screwed up again, having to fix it, and going through these cycles that we go through. To your point, entrepreneurs are renegades. They’re mavericks. They go out and take chances. A lot of times, their credit blows up because of that. In spite of this, they still build really strong businesses. It sounds like, to me, business credit really is that tool that can take you to the next level.

I’m going to give a shameless plug for my company. One of our partners, LoanBud, that we work with for our businesses that go out and get the SBA loans, what we’re able to do on the payment processing side of the business and the savings that we can create from either reducing or eliminating credit card fees has allowed some of our business owners to pay for their SBA loan monthly payments. The same thing could go for those credit payments.

That’s a shameless plug there, I know, but there are so many different financial techniques. You said the strategic use of capital. Those strategic use of capital elements can propel your business to the next level. It’s not just about creating more profitability or more revenue. It’s taking what you have as a business owner and being strategic with your use of capital through credit lines, SBA loans, or payment processing to accelerate to the next level. 

I filmed a video on the same topic where I said, “With consumer credit, business credit and business credit scores are extremely more valuable than personal credit.” If we look at personal credit, we’re obtaining debt for an improved quality of life, whether it be credit cards, car loans, or mortgages. That is a great thing to have. I like living in a really nice place. Business credit is tied to your wealth. It’s what’s tied to your net worth.

 I don’t know about you, but for me personally, my biggest aspect of net worth is my company, as a lot of us as entrepreneurs are. Business credit is what’s building, compounding, and helping me grow the asset nets accounting for the majority of my wealth and my net worth.  This is how all the big companies see it. There’s a reason that every one of the largest publicly and privately-owned companies is where they are. They understand this concept.

If I look at Apple on any given day, one of the most valuable companies in the world, they have $130 billion in cash and $100 billion in debt. Why would a company with $130 billion have $100 billion in debt? Dave Ramsey would say, “Apple, I know what to do.” The problem is Apple wouldn’t be the most valuable company if they did that. What they’re doing is conserving cash for expansion, R&D, new product development, and retail stores.

They all operate the same way. They use OPM masterfully, Other People’s Money, and then they can conserve cash for things they can’t necessarily use OPM for. That’s how they expand at an exponential rate. The easier we understand that as small business owners, the more we could do the same thing and follow the exact same concepts that they use to get to where they are. 

Rapid Fire Round

You have given us an incredible amount of information. We do something fun at the end of each one of our episodes. We’re going to do a Rapid-fire session. Are you ready?

I’m ready. I was born ready.

Sega Genesis or Stickball?

Sega Genesis.

If it’s a zombie apocalypse and you’ve got to run out of the house and protect your family, what weapon are you taking with you? 

What kills the zombie? Would a shotgun work? I’ll take a shotgun if it works. That’s tough a question.

I go with the flamethrower because I feel like if you light stuff on fire, there’s a lot you can do with that. Also, it has a nice trajectory.

That’s smart. I don’t think I’d leave the house though. I’m on the 25th floor. Zombies can’t climb, so I feel safe. I got one door to protect as long as I got enough firepower on that door. This is the problem. You can’t ask people with ADHD these questions because my brain is far down the road.

You’re getting me off task because I want to have a conversation about this because I really don’t appreciate zombies. If you watched a zombie movie many years ago, they moved slowly and were like, “I’m a zombie.” Now, they sprint down the street after you. How did that happen? I don’t understand that.

I agree. We don’t have a fighting chance. I remember the one where you make noise and they come after you. That was startling. Those guys move super quickly. It’s instantaneous.

What is one of your favorite business quotes?

It is from Warren Buffet. “It’s good to learn through your mistakes, and it’s better to learn from the mistakes of others.”

I love that. If you were to have dinner this evening with someone you admire, dead or alive, who would it be and why?

My dad. I live pretty far away. I haven’t lived in the same state as my folks since I graduated high school. I still see them once in a while, but if I ever had a choice, I would sit down and have dinner with my dad.

That’s beautiful. Make that happen. You have no excuse. I’m telling you to make that happen. What is something that you see transpiring in your industry that you vehemently disagree with?

When I first got into this industry, I thought it would be good for everybody to help other people understand how it works. It saddens me that people give so much misinformation for the direct trade-off of money. People will say things that are adamantly untrue. They’re like, “Since you have an LLC, you’re entitled to $250,000 by law. Buy my course to figure out how.” That drives me crazy. It’s so unethical. 

It’s predatory. If you are a business owner who’s doing $10 million in annual revenue and Jarrod walks through the door and hands you a $300,000 check, how would you advise that business owner to invest that $300,000 to double their profits?

That depends on whatever they’re doing to give them the highest ROI. Whatever they’re doing that would give them the best ROI is where we’ll put that money into scaling, whatever that may be.

We’ve talked about this in other segments. I know I’m messing up our Rapid-fire, but I love what you said. When you need to sell, you need to make things happen, and you push sometimes that little thing that you do, that push is what you should be focusing on in your business in general. Lean into that thing that is moving your business forward and invest that extra capital in that that comes up. This is the last question and one of the most important questions. Tell me one thing in your life or business that you had to overcome that has helped you build the success that you have.

The first company I ever owned was a mortgage company in the mortgage industry when it failed. To me, it was one of the best experiences ever in my life. It was a horrible time. I could tell you things that bring me to tears, but it is the best learning experience that I’ve ever had. Those lessons I carried with me and have humbled me enough to become a whole different kind of entrepreneur that I am.

That’s beautiful. Please tell the audience where they can reach you and connect if they would like to do so.

We are available at CreditSuite.com. We’ve got a great step-by-step business credit-building guide that gives even more insight and we are able to dive in at CreditSuite.com/EIN.

Thank you for joining us.

Thanks for having me.

Important Links

• Credit Suite
• CreditSuite.com/EIN
• Perfect Credit
• Business Credit Decoded
• Sunbiz.org
• IRS.gov
• NAICSCode.com

About Ty Crandall

Ty Crandall is an internationally known speaker, author, and business credit expert. With over 20 years of financial experience, Ty is recognized as an authority in business credit building, business credit scoring, and business financing.

Ty is the author of two of the bestselling books on consumer and business credit: Perfect Credit and Business Credit Decoded and has written hundreds of published articles relating to business credit. Ty is also often heard being interviewed on countless radio and TV programs and news shows across the country and has been featured in Forbes, Entrepreneur, and Inc.

Ty currently serves as the CEO at Credit Suite. With Credit Suite, Ty consults with and advises companies on business credit building and scoring. He has overseen the business credit building for thousands of clients and has helped create and grow the most credible business coaching operation in the United States.

Ty has also created and coaches the largest business credit provider network in the world. Learn more and contact Ty Crandall through his main website: www.TyCrandall.com