Video: How to Establish Business Credit (Transcript Included)

Garrett: Greetings and welcome to “Finance Your Own Business: Get on the Financing Fast-Track.” My name is Garrett Sutton I’m pleased to be joined today by my co-author of this book Gerri Detweiler. Gerri, thanks for being on this webinar.

Gerri: Glad to be here Garrett.

Garrett: This has been a great book to write. I found that there are not many books that encompass all the various ways to finance your business, so it’s been great working with Gerri to bring this kind of unique and important information for entrepreneurs together. So Gerri thanks for all your help on this, because you’re the business credit expert and that’s what we’re going to be talking about today. It’s been a great collaboration. So here’s a little bit about myself. I’m a corporate attorney. I’m a rich dad adviser. I’ve written all these great books down there, and our firm Corporate Direct helps entrepreneur’s and real estate investors form entities including corporations and LLCs to protect their business and to advance their business goals. I’m going to go to the next slide in let Gerri introduced herself.

Gerri: I am Gerri Detweiler and I’ve been involved in credit education for more than 20 years now. I’ve done a lot of writing, speaking and also news media interviews on credit. I also worked in Washington DC for a while and was involved in legislation. I’m particularly excited about this project because it really feel like we’re on the cusp of, it sounds very cliché, but a revolution in small business credit and financing. When I look at my career where personal credit was ten twelve years ago, where people really didn’t know their FICO score didn’t know what their FICO score was and didn’t know how to make it better.
Business credit is there and that’s one of the reasons why I wrote this. We are at the edge of a revolution with the crowd funding rules coming out which we’ll touch on a little bit later. It’s an exciting time to get your business started. So let’s dive right into it on this slide. We’re talking about the stages of business credit.

Garrett: Gerri is an expert in this so there are four stages, correct?

Gerri: Correct, and so what we find is that most businesses are at stage one. If you want advance the slide Garrett, that’s where that’s where it’s really about you. You use maybe a personal credit card for your business you might even use your own personal bank account to pay your business expenses you have a credit score. You have a credit report and credit rating but you really don’t have anything that directly related to your business. We do not want you to stay at this level.

Garrett: Right! And we don’t want you to operate personally as a sole proprietorship either. We want you to get to at least the stage to where you can start building business credit. So Gerry, let’s discuss that.

Gerri: So it’s Stage 2. That’s where you’re starting to separate your business and personal credit. So you definitely have a corporate structuring here. We’ll talk about that in a minute. You will have a business bank account, probably a dedicated small business credit card and you start to establish credit references with companies that report to the small business credit bureaus of the commercial credit bureaus. So that you’re building a credit rating on your
Business. Your business can have its own credit rating, and we’ll talk about why that’s a good idea in a moment.

Garrett: Then let’s get people to stage 3. The book “Finance Your Own Business” goes into how to get to stage 3, but briefly Gerry what’s the next stage to get to?

Gerri: Right, so it’s state three. You’ve established credit references in the name of your business, and you are moving away from credit, and financial matters that involve a personal guarantee and instead financing things strictly in the name of your business. This is great for asset protection. It’s great for protecting your personal credit. It’s great for tax reasons. There are just a lot of benefits to having a solid business credit rating for the business itself.

Garrett: Great points and by doing that we get to stage four: robust business credit.

Gerri: Right. And this is where the doors really open. Where you can get credit from vendors. Get, let’s say, items on better terms. So let’s say you want to buy something and sell it over the holidays. You can get it maybe with ninety- or even hundred-twenty-day terms. You turn around and sell it. Bring in the profits and then pay the bills. That’s a great cash flow model. It’s what Wal-Mart does and the big retailers do. It’s where you want to be. It also lets you get credit cards without a personal guarantee. It allows you to finance your business again strictly on the business’s finances and move away from putting your own credit online every time you need to borrow or grow.

Garrett: Right, and by putting your own credit on the line you are personally responsible for that obligation. We wanna get you away from the personal responsibility to the responsibility of the business for these credit items. So let’s talk about the seven steps to building business credit. The first one kind of comes in my bailiwick, Gerri. That is to create the proper business structure. Being a corporation or LLC you’re not going to use the sole proprietorship or a general partnership. You want that entity that is registered with the state, and then you wanna get an EIN which stands for employer ID number. That is a kind of like the social security number for your business. It’s issued by the IRS. You have to have your corporation or LLC chartered to get that number, but with that number you can start building your business credit. So let’s look at the second step here, and that is to open a business bank account. We don’t want you to do business through your personal bank account. We want you to open a separate business
bank account, and Gerri why is that important for business credit?

Gerri: Well, for one thing of course it’s a lot easier come tax time. So you could actually separate business, and what’s personal purchases. So that’s definitely a benefit. Less headaches there, but also because you need to establish financial background or track record for your business.
Remember with good business credit and business financing, when you go to apply they’re gonna look at more than just a credit score. You may have to provide financial information for your business. For example, I don’t know about you, but I’d rather not turn over to a banker all my personal bank accounts and have them looking at every single personal purchase I made if I need to get some financing. So this is a very important step.

Garrett: Absolutely, and it’s important to realize there are two tracks of credit. There’s personal credit, which everybody should know about: your FICO score, how you handle your credit cards, how you pay your utility bills… that all goes on their personal credit track. But we have a second track of credit that we’re developing here, which is your business credit. By doing the business credit track you are not personally obligated for all of the obligations that you’re entering into. When you start a business, you need to think right off the bat, how do I build my business credit? So let’s go on to Step number three and that’s a to get credit with vendors and lenders that report. What does that mean Gerri?

Gerri: Let me just add a caveat to what you just said Garrett: that is so long as you don’t sign a personal guarantee the business credit doesn’t translate your person credit, but a lot of business owners when they start out do sign a personal guaranteed. So we’re trying to show our readers and viewers how to get away from that.

Garrett: Very good point. We don’t want you signing personal guarantees, if you don’t have to. At the start you may have to. It may be a requirement, but you can build your business credit so that someday you can avoid those darn personal guarantees.

Gerri: Right, so in step 3 the next step is to get credit with vendors and lenders that report. Now this is confusing because with your personal credit, it’s pretty much guaranteed if you open a credit card, or you get a student loan, or an auto loan, they’re going to report to Equifax, Experian and TransUnion. That’s pretty much a given with those types of accounts. With business credit it’s a little more tricky. You have several major business commercial credit bureaus. You have the Experian Small Business Division. The Experian has a separate division devoted small business.
You also have Dun and Bradstreet, which produces the DMB report, and they have something called the PAETEC score. Then you have a Equifax, which produces small business credit information, and you have an agency called the small business financial exchange, which says it’s not a credit bureau but it does basically collect credit data from members and allow members to use that to make credit decisions, so it’s like a credit bureau, but you can’t go directly to SBFE to get any information or to get a report etcetera. So with this you’re looking for companies that report, so sometimes it may be a credit card but not all your small business credit cards report to all the commercial credit bureaus. So sometimes its vendors that you’ll end up doing business with. So you have a printing relationship for example where the printer will report your payment history to D&B for example, or you’re leasing equipment and the equipment leasing company will report. If you’re having trouble finding these companies at the end of this presentation we’re gonna show you a free and easy resource where you can track down companies that will report to the commercial credit agencies. Without credit references you can’t build a credit report or credit score.

Garrett: And Gerri did a great job writing about this in your section of the book on this topic, so in the book “Finance Your Own Business” we go into this in much greater detail so know that there’s more great information for you. Let’s go to step number four: Get a DUNS number. What’s a DUNS number Gerri?

Gerri: So this is sort of like your EIN is for your social security number for your small business. A DUNS number is your identifier in the Dun and Bradstreet system. A DUNS numbers really is important. If you want to do government contracting, you’re gonna have to have one, and if you want to do business with a large retailers like Walmart or Target, you’re probably gonna need it. They’re probably going to check your DUNS number and check your D&B report and look at your Paydex score. So this is a free process. We explain the book how to do it the easiest way possible because it can get a little clunky and you could go to the DMV website now and see if you’re already in their system. They may already have you in the system, but if they don’t you’ll need to apply for this number so you have that to get that DMB file started.

Garrett: Great! An important number for all new businesses. So let’s go on to step number five: increase business credit and manage it properly. What are your thoughts Gerri?

Gerri: So here we’re looking at building these references and then being very very careful about how we handle the references. Paying on time is crucial. With a business credit report it’s different than it is with personal credit. It’s much more granular and detailed to build than it is with personal credit. And you know, making sure that you have a breath of different types of accounts. You don’t have to have debt to have a good credit history. That’s true of course no credit and business credit, but you do have to have accounts that report, and you have to have activity, and you have to make sure that you pay on time. With that, you can build an excellent business credit rating.

Garrett: Great! And once you do that, it’s important to monitor your business credit as well as your personal credit. You know, people make mistakes. Some of these accounts may enter the wrong information, so we want to monitor what your business track and your personal track of credit show to the public and to other vendors. What are your thoughts Gerri?

Gerri: Yeah, absolutely. This is so crucial and I wanted to say that even if you pay your bills on time you still need to do this because in my experience over 20 years I’ve heard from so many people who were shocked. They went to refinance their mortgages. They found something wrong on their credit file. Just this past year, Credit.com did a survey and found that about 10% of people who check their credit report found a collection account they didn’t know about, and about 10% found negative information that they didn’t know about. So you need to know if this happens, so that if there is a mistake, you can fix it. Now a little caveat with small business credit, most small business owners have never checked their business credit report, so they do not know if it’s accurate or not but there appear to be a larger number of inaccuracies on business credit. I think one reason is because they’re not checking. Ultimately you are the best judge of whether that information is correct or not. So if you’re not checking it, they don’t know it’s incorrect. It remained incorrect, and, in the meantime, someone else could be getting that credit report, could be
making a decision, they don’t need your permission to check it, so they could be making a decision about doing business with you without you even knowing that they looked at wrong information. This is not something you want to happen to you.

Garrett: Well and we’ve taken all the steps up to step 6. We’ve spent the time and energy to build our business credit. It makes sense that we should be monitoring it to make sure all of our hard work is paying off. So we get to step 7, and here’s where it all pays off: grow your business and expand available credit. Gerri?

Gerri: Exactly, so here again is where you are in a position where you have strong business credit. Opportunities are open for you. If that big order comes, then you are not gonna be panicked and rushed into a very expensive high cost financing solution because there’s nothing available to you. This is a big problem right now, and in fact it’s got the attention of Congress and legislators: where a lot of small business owners, because they aren’t on top of their credit or their finances, they are ending up with loans that are costing them sixty-, seventy-, eighty-percent a year! They don’t even realize with business credit, they do not have to tell you the APR. So people get stuck in these expensive loans. They think it looks reasonable, but when you figure it out on an annual basis it’s a very expensive way to borrow. We do not want that to happen to you.

Garrett: Right we want you to get the business credit that is available to many businesses and affordable rates. We talk about the various types of financing opportunities you can use in
the book, but we want you to build to this point and then use it prudently. So let’s go on to one of the ways we’re gonna get started we. We pretty much have to start with a proper business entity a corporation or LLC. This allows us to keep our business separate from our personal assets. This is really good asset protection. Know that you can have a couple entities. You don’t need to put everything into one corporation or LLC. We can have an LLC that owns real estate and a corporation that runs a business, and keep them separate from each other for greater asset protection. Then when we select the entity that we’re going to operate our business through, that’s the one I like to use to build business credit. If you’re a real estate investor and you own an LLC that holds a duplex for example, you may sell that duplex someday and not need that
real estate LLC. That’s not a great candidate to build business credit through. Instead you would form a separate management company. Build business credit through the management company. You will always have that management company, and be able to use the business credit associated with it. Now with a corporation or LLC, you’ll enjoy tax benefits. You’ll certainly have lower audit rates. If you operate as a sole proprietorship or a general partnership, you have a five times greater rate of being audited than you do if you use a corporation or an LLC. Look at it from the IRS standpoint, if you’re not operating as a corporation or LLC maybe you’re not serious about your business, as a normal person would want to protect their assets. So if you’re using a sole proprietorship or general partnership, the IRS thinks maybe something funny is going on here, and they have great success going after people who do not operate through corporation or LLC. So by creating the right business structure, you really can make more money. You have greater asset protection, and it’s the right entity to build business credit. Gerri, any further thoughts on this?

Gerri: Well, I would just say that it’s very difficult to build business credit as a sole proprietor. One of the things that you’ve said before that I really appreciated is, “when it comes to setting up the right structure, it’s not about how much money you’re making. It’s about how much you could stand to lose.” You know, this is also about asset protection. If you’re operating as a sole proprietor, and something goes wrong, and you get sued, they can reach to your personal assets: your home, your income and other things. You do a great job explaining this in your book, “Start Your Own Corporation,” but that line has always stuck with me.

Garrett: Well, thank you Gerri. You know it’s interesting, if you start as a sole
proprietor, and you get sued it’s too late to set up a corporation. You’ve already been sued. As the sole proprietor, all of your personal assets are exposed. So right at the start, I always recommend people set up an entity. It’s not that expensive we do it in a very, very, affordable price here at Corporate Direct and get yourself protected for the future. All right let’s go to the next slide here. There is no one-size-fits-all corporation type. You may use an LLC for real estate. you may use an S corporation, which allows you to minimize payroll taxes for a business. There are certainly times when you would use a limited partnership for certain holdings. So
I wouldn’t say that you’re gonna always set up a C Corp or an S Corp or LLC. We need to analyze what you’re doing, and put you into the right entity type. Let’s go to the next slide, here: incorporating. We need to choose the right name for the corporation. You don’t want to incorporate under the name Coca-Cola Inc. There’s a big company in Atlanta that would have a problem with that. So you want to get a unique name that you can grow. We also want to choose the right state. We like Nevada and Wyoming for setting up. Some states have very weak asset protection laws, including California, Georgia and New York. So we want to choose the right state to set you up in, and then we want to play by the rules. You know we want to follow the corporate formalities. The state says you have to pay them a fee every year. You have to hold an annual meeting at least once a year, and we can prepare minutes to reflect the fact that you actually had the meeting. We want to follow these corporate formalities because if we don’t, someone can perice the veil of asset protection by saying that you didn’t follow the corporate formalities. You didn’t have a resident agent. You didn’t pay annual fee or do the annual minutes. By failing to follow the corporate formalities, they can pierce through the corporation and hold you personally responsible. So we want to play by the rules and do it right. We assist people with that. Gerri any thoughts on this slide?

Gerri: No, I would just say that getting good advice is really important. I remember talking to an accountant who said, “Oh, we always do LLCs.” And I thought “Well… (laughter) when you hear that kind of advice be careful.”

Garrett: “Exactly, so here are some of the choices. We have C corporations, and S
Corporations. It’s important to know they’re both corporations. You set them up with the state. The state doesn’t care if you’re a C Corp or and S Corp because the “C” & “S” refer to two
Tax code chapters. The C corporation has its own tax: we make distributions to the
Shareholders and there’s another tax on that income so you have a double tax with a C
Corp. There are reasons to use see C Corp, especially if you’re gonna go public. I
like for most of my clients the S corporation, which offers flow-through taxation like the LLC or the LP (Limited Partnership). We can use the S corporation to minimize payroll taxes. For businesses this can be a significant advantage. The LLC and LP are great for asset protection. They feature the charging order protection. We like to use them for real estate holdings. We also have professional associations or professional corporations. And these are entities used by lawyers doctors, engineers to operate their professional practices through. We also, Gerri, have a new entity. I’m sure you’ve heard of the corporation, which stands for “benefit” corporation and this is an interesting new entity that allows people with a charitable purpose to set up a corporation that doesn’t have to maximize shareholder value. In other words, it doesn’t owe a duty to get every last dollar for the shareholders. They can create a company that has a duty not only to the shareholders, but to the workers, or the environment. In this is kind of an interesting new entity that we’re starting to see. But as you can see on this slide, there’s not one-size-fits-all. We have a number of choices that we can pick. So you need to work with an advisor that can get you into the right entity so that you can not only have asset protection, but you can build business credit. Now at the next slide talks about build credit references and what are your thoughts on that Gerri?

Gerri: Right, again once you have the structure in place, you’re looking for credit references that report. It may be multiple references because, as I mentioned earlier, some of them report to different agencies. So one may report, for example, to D&B, but the other one may reports to Experian, or the data goes to SBFE. I will add a note about small business credit cards. I do think they’re a good idea for separating business and personal credit. They can offer some very,
very rich rewards, but a lot of times you do have to personally guarantee a small business credit card. Understand that when you apply, they’re gonna look at your personal credit score is initially until you have an established business, usually somewhere around two million dollars or more in revenues and a track record of at least a couple years in business with a strong business credit
rating.

Garrett: But don’t be offended by the request to have it tied to your personal credit. That’s normal. At the start we want to get away from that, but just know that it’s a normal thing for credit cards and banks to request. Now let’s talk about the business credit agencies. You talked about this before Gerri, and you wrote a very well about it in the book, but let’s go through these four that you’ve listed here again.

Gerri: These are the big four that are going to be very important in your building your business credit. D&B, which produces something called the PAETEC score. Equifax has their small business division and they produce small business credit scores and reports. They use data primarily from the small business financial exchange, SBFE, which you see below and again SBFE is this data exchange. It was set up by all the big lenders to share business credit data like equipment leasing, small business loans and lines of credit, some business credit cards report to this. It’s a member agency and members are only allowed to share. It’s sort or give and get. If they share information, they can get information. SBFE doesn’t make any decisions. They don’t sell the reports per say. They don’t sell the credit rating. They’re just there as a data repository. Experian is interesting because they produce something called the Experian Intelliscore and the Experian Intelliscore Plus. And Because they have both the business and personal side they can produce a score that incorporates information from the small business owners personal credit as well as the business owners business credit. So that’s why, again, it’s really important that your cognizant of both. It’s not one or the other. It really is both. If we have bad personal credit, you know you can start to build your business credit, and work on your personal credit, I think I’ve seen people made incredible progress in their personal credit scores in as little as twelve to eighteen months if they’re really dedicated to doing that.

Garrett: After 2008 a lot of people had challenged credit and we’re seeing that credit bounce back fairly quickly. More quickly than we thought at the start. So it can be done. Just stick with it and it can be done. These are the business credit scores Gerri mentioned. You may want to jot them down. Gerri anything else to say about the slide.

Gerri: Yeah, let me touch on the last one. This is the FICO LiquidCredit SBSS Score.
This is a very important score. You probably have not heard about it. Most people haven’t. Most FICO scores, if you’re familiar with your FICO score, you know they run on a scale 300 to 850, with 850 being with the very best score. With a FICO LiquidCredit SBSS Score the top score is 300, so if you had a 300 you’d be sitting really pretty. At a 200, you shouldn’t be upset because it’s not the end of the world. This score is crucial if your gonna apply for an SBA loans. So if you’re going to appy for an SBA loan under the 78 program, a very popular program, $350,000 or less and – by the way these loans are on fire right now. The SBA is setting records for SBA lending over the past year. They will do a pre-screen and they will check the score – the FICA LiquidCredit SBSS Score – and if you do not have an 140, you probably will not
make it past the pre-screening. Most banks are looking for a 160, so this is a really important score. At the end of the program we’re going to tell you how to get more information where you can actually check your FICO LiquidCredit SBSS Score in advance if you’re thinking of getting an SBA loan. This is a really, really important score if you’re thinking SBA.

Garrett: Great information! And so on the next slide here you mentioned that business credit reports are different Gerri earlier in the show. But let’s go through these bullet points here.

Gerri: Yeah, so there’s no federal law law that covers small business credit reports or credit scores. So with your personal credit, you know, someone has to have a principal purpose or they have to get your permission to check your personal credit report. If they do check it, and they turn you down based on that, they have to tell you that. And they have to tell you who they checked and you get a free report. You get a free report once a year from all three bureaus. There’s a lot of federal laws that cover personal credit. This does not apply to business credit. With business credit, income does matter, so the best credit score is often do you go to companies with established track record financially. Now that’s not with all bureaus and all scorers, but it is something that can be a factor. Your income does not affect your personal credit score credit at all because the bureaus don’t have that information. They don’t have a reliable source for it. Not everyone reports, as I mentioned before, so you have to make sure that you’re looking for accounts that report. These are not just going to be credit cards and loans. They could also be trade credit. Again, you get something from a vendor on net thirty-day terms that could end up in your credit report and that could be a positive reference if you paid within 30 days. On payments, I will add that they are very different with business credit. So with your business credit score, they actually look at something called DBT or days beyond term. So let’s say you have a relationship with that printer and your invoices are net 60. The full amount is due in 60 days. If you paid on day 65 you were five days beyond term. If they reported it, it would be reported as five
DBT – that would be a little bit late. With your personal credit, you usually have 30 days before it gets reported the credit bureau. You know if it’s due January 1st and you pay before February 1st it usually doesn’t get reported to the credit bureaus as late because it’s a thirty-day bucket. With business credit, you’ve got these very granular payment histories. In addition, with the
PAETEC score you actually get the highest score if you pay early. So if, its net 30 and you pay on day 25 you actually get some — I’m using air quotes here — extra credit, so to speak, for paying early. So it is really important with your business credit to make sure that you are set up so that you know your financials, you’re paying on time and whenever possible you’re paying early.

Garrett: That is great information, Gerri. It is important to understand the difference and we go further into these differences in our new book, “Finance Your Own Business.” Now, let’s talk a little bit about other types of financing, which would be equity and debt. Equity is selling stock in your company. Most people are familiar with the concept of shares of a corporation. Shares are really equity ownership percentage of the company and when we engage in equity fundraising we have to be careful. There are a number of restrictions that the SEC the Securities and Exchange Commission in the US – and every country has its own Securities and Exchange Commission. But we have to be aware of these restrictions and rules because if you don’t do it right, you can run into problems. We go through that in the book. Also debt is another way to finance your business. You can borrow money from the SBA, as Gerri mentioned. You can borrow money from the bank. You can borrow money from friends and family, but that the debt means you’re going to pay them back. The equity means you’re going to provide them with the share of the profits. We go through that in the book. Let’s talk about some of these issues with capital sources. Whether its debt or equity, you should consider control. With equity you’re giving up control. If you sell 51% of the company, you may lose control of the company because the people you sold the stock to now have voting control with 51 percent of the company. With debt, you don’t have that issue. Although, you do have an obligation to a bank or other lender. We should also consider risk. How risky is this endeavor for you? Transferability is important to people who buy equity want to be able to transfer their shares. They want to buy it at one price and sell at a much greater price and be able to cash out. So transferability will be an issue. It’s not that big of an issue with debt.
Access, again, we have to follow the rules. You can’t just go out and sell stock in your company without following the rules. And team – you really need to have a good team around you. You want people who are of the same mindset. Who are gonna give the same energy and dedication to the venture and so you have to be very cautious when you bring aboard team members, that they share your vision and will work just as hard as you do. Gerri, what would you say about capital sources?

Gerri: I think that the overall impression, you know sometimes entrepreneurs will feel
like “if I can just get an investor that would be ideal” because they think of it as free money, right? Because they think, “I don’t necessarily have to pay back,” but it could be the most expensive money get. If you have an investor is part of that team who is bugging you constantly, and you can’t get your work done that’s not good. So equity can sound very attractive, but sometimes debt is actually better. And that’s one of the things we talked about in the book – trying to determine not just what where do I go for financing, but what type of financing makes sense based on my goals.

Garrett: Well and that is the next slide. They’re all sorts of alternative funding sources for you to get funded. You can certainly go to mom and dad. Private investors. Peer-to-peer lending. Businesses lend to other businesses. Angel funding – these are people who have made money in their life and want to invest in startups usually at a fairly early stage. Venture capitalists are also involved. We’re all aware of the VC’s who make huge scores on companies like Uber and Facebook. We talk about venture capitalists and angel funding in the book. We talk about all of these actually in the book. Factoring is a unique way to go, whereby you are going to produce goods and you have a big company that you know will pay in ninety days, but you need the
money ahead of that. So you can factor your purchase order and get money so that you can pay your employees and for the goods. So we talk about factoring. You can sell a note. You may be buying a business, and you could have the business owner take a note, and you pay them over time while you get into the business and succeed in the business. We also have barter, selling contracts, partnering up. We talk about life insurance loans and retirement funds. We need to be very cautious when using retirement monies because there are some restrictions there, which we go through in the book. Home equity loans – these were popular prior to the boom. I guess they’re starting to come back, but when people had a lot of equity in their house they took out loans. Some of those were productive so some of them weren’t. So you need to be cautious there. But these are all the various types of funding that are available to you. It’s not just the bank, or the SBA. You have all these other options to consider and we cover them in the book. Anything to add to this Gerri?

Gerri: Yeah I would just say that overall there’s over forty-four different types of financing for a small business plus alternative funding sources like we’re talking about. And so there’s a lot of different options out there. I think a lot of times people think “bank,” “bank loan,” “SBA loan for their small business.” We want to help you to think broader and bigger so that if that’s not an option for you or it’s not a good option for you, you can look at other options depending on what stage your at in your business all the way from start-up to a well established and growing business.

Garrett: Great! And one of the new ways to raise money is through crowdfunding. And this is where you will have an offering in your company. You’re selling equity and you are going to offer this to the crowd. People have raised money for movies, and music projects through crowdfunding. Well, you can do it now with equity crowdfunding. The SEC and Congress have loosened the rules for raising money from the public. It used to be you only could raise money from people you had a pre-existing relationship with, and that limited capital formation and job creation. They decided, “look we’ve got it open it up. We’ve gotta let people be able to raise money from a large group of people.” It took a while for the SEC to put together the rules, but now you can go out on the internet through an internet portal and raise money from people you don’t know. Now by doing this, you still have to follow the rules for preparing a private placement memorandum. In in the book, we go through the fairly technical rules for doing a proper PPM -private placement memorandum. And we go through that, but it can be done now. People are raising money through these crowdfunding portals. I only see that increasing. Gerri, what are your thoughts on this?

Gerri: Yeah, well you know we certainly already have the rewards-based crowdfunding, where you can get a reward. The equity crowdfunding is opening up in the second quarter of 2016. So depending on when you’re watching this, it might be just around the corner. I think it’s very exciting, but there’s also a really great article that you wrote Garrett on your website at Corporate Direct that explains these new rules and how they open up crowdfunding to a small businesses. Like you said earlier, I think it’s just a really exciting time to be in this space, to be growing a business, and to be reaching a lot of potential customers, and investors in a very short amount of time.

Garrett: Great! Well, Gerri you mentioned resources throughout this webinar and here’s the slide on resources so take it away.

Gerri: Yes, so if you go to CorporateDirect.com, you’ll see a tab that says “business credit.” You can click on that business credit tab, and there’s a couple things you’ll find. First of all, we have a free report there that you can download immediately. We also have a number of resources there. So if you scroll down that page little ways, I mentioned earlier there’s a free place to check and monitor your small business credit rating. We have a link to that there, and that resource will also get you your FICO LiquidCredit SBSS Score. You could go down the page to that, and then you can also order the book. Depending on when you’re watching this, but the pre-order special its 31% off the book. This is the printed version of the book. Get it at CorporateDirector.com/FYOB.
We want you to order now because that’s 30% off the cover price on the book. Even if you miss out on the first 100, if you sign up for our email list you get notified of future events and future discounts that we have available. But personally, you know, I’ve written so many different books and so have you Garrett, and I’m so excited about this book because I really feel like it’s going to make a difference in in small businesses’ financial lives. I want to see small businesses succeed, get funded, grow and create jobs. That’s what small businesses do, and I love the fact that I can, hopefully, assist them in that even in a small way.

Garrett: Well, you’re right Gerri. The country certainly needs job creation right now. And I too am glad that we were able to collaborate on this book. When you start out writing a book you, you look at what’s out there. And you kind of compare the other books that have been written on the topic and frankly I haven’t seen a book that encompasses all the various forms of financing that we do here in “Finance Your Own Business.” So, I’m happy to brag about that, but I think we’ve done a pretty good job of assembling all these different strategies. We want you to use these strategies to succeed in business to grow your business and to create more jobs for the country. So it’s just been a pleasure working with you Gerri. I think we’ve turned out a really useful guide for people. You can get this this free guide, as you see on the slide, by going to CorporateDirect.com/business-credit. So feel free to take advantage of the free guide and the resources. Thank you very much today for listening. Thank you Gerri as well.

Gerri: Yes, and I can’t wait to hear all the success stories that come out of this.

Garrett: Absolutely let us know your success stories. Good luck with everything.

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