Common Mistakes Owners Make With Business Credit and Funding
The owner of a home building company was logged into a business credit app when it told him his credit was good enough to apply to 20 vendors at one time. So he did. “Well, they, like, all denied me,” he told us on a call, and all 20 applications were now showing on his report. He had…
Why Profitable Trades Businesses Run Short on Cash
A deck builder we talked with had grown from about $187,000 in revenue his first year to $850,000 by midsummer of his third. He took 50% upfront and 50% at the end, with nothing in the middle, on projects around $60,000. Payroll, including a sub crew, ran about $10,000 a week. The jobs…
How a Business Line of Credit Works
Say a plumbing company has a $100,000 line of credit with its bank. In July it finishes a $60,000 commercial job on net 45 terms, but payroll and the supply house bill are due now. The owner draws $40,000, covers both, and pays the line back when the customer’s check clears in September.…
How Daily Payment Loans and Merchant Cash Advances Work
A young home service company doing about $35,000 to $40,000 a month got a funding offer through its job management software. There was no interest rate, just a flat fee, and it would be paid back out of 17% of the company’s daily sales. The owner had a finance degree and still couldn’t…
Why the Order You Borrow In Matters
A contractor needs $40,000 to cover payroll and materials while a large job waits 45 days to pay. There’s no bank line in place, so he takes an advance that funds the next day, with a payment pulled from the business account every business day. The job pays, but the daily payment keeps…
Credit Report Errors and UCC Liens: What They Are and How to Clean Them Up
A plumbing and heating owner running a company of about $6 million pulled up his business reports for the first time and found a lien from a bank he’d banked with for years. The filing had been open since 2016. Reading it off the screen, he listed what it covered: “all negotiable…
Why Did the Bank Say No?
An auto repair shop owner had just finished his first year over $1 million in revenue when he applied for a long-term loan and got declined. Asked later what the reason was, he said, “because we had four, four MCAs.” The lender didn’t want to come in behind four merchant cash advances…
What Does a Personal Guarantee Actually Mean?
A plumbing and heating owner with about 25 to 30 employees ordered three new trucks. His existing bank loan was already in the business name with his personal guarantee on it, and when he went to the manufacturer’s financing arm for the new trucks, they asked him to personally guarantee…
How Do I Get My Business Off My Personal Credit?
A cabinet finishing and painting shop doing around $200,000 a year had about $35,000 of business spending sitting on personal credit cards. The business made every payment. When the owner’s wife, who handles the books, applied for a car loan in her own name, the bank put her…
How Business Credit Gets Built
A lot of owners believe their business credit has been building for years. They’ve paid on trucks, carried a business card and paid suppliers on net 30 terms without missing a month. Then they pull a report and find a thin file, or no file at all. The vehicle loans reported to their personal…