.jpg)
The Real Estate UNLOCKED Podcast
REALEST Real Estate Podcast on the Planet!
The Real Estate UNLOCKED Podcast
How to Get Business Credit Fast: Expert Tips for New Entrepreneurs | Episode 16
This episode dives into the essential role of business credit in increasing purchasing power for real estate investors. It provides listeners with a step-by-step guide to establishing business credit, explains the importance of DUNS and BINS numbers, and highlights common pitfalls while encouraging proactive growth for new and seasoned entrepreneurs.
• Understanding the definition and importance of business credit
• Steps to establish business credit from scratch
• The significance of DUNS and BINS numbers
• Common mistakes new business owners make in credit building
• How to utilize tiered vendor credit systems
• Emphasizing the need for both business and personal credit strategies
• Final advice on staying humble and coachable on the journey to financial success
What up everyone and welcome back to the real estate on live podcast. I'm your host, Joseph Marohn, and today we're going to be showing you guys how to instantly increase your purchasing power to create more investment opportunities. A smart way to leverage funds for your property renovations. One of the best ways to enhance the credibility and reputation of your real estate business. Today, we're going to be doing a step-by-step walkthrough on how to build your business credit. Be doing a step-by-step walkthrough on how to build your business credit.
Joseph Marohn:Business credit is a financial tool that allows businesses to borrow money and access funding based on their own credit profile. Establishing strong business credit enables businesses to secure funds, tap into large lines of credit and gain favorable terms with suppliers and lenders. It also helps provide a crucial safety net for navigating financial challenges. Ultimately, business credit is a powerful tool that can help unlock the full potential of your real estate ventures. Now, if that sounds like something you're looking to implement into your personal businesses, then stay tuned, because we're going to provide you with all the necessary tools and information. You need to get started with it today. Now you know how we do it on the Real Estate Unlocked podcast. If we're going to do it, we got to do it right. We can't just bring on anyone to speak about business credit. We got to bring on Mr Business Credit.
Joseph Marohn:Today, our special guest on the podcast is Terrence Spencer. Terrence is not only a jack of all trades, but a multi-dimensional leader with over 20 years of experience. Since 2020, terrence has been laser focused on all things real estate, bringing in his passion, leadership and expertise into the Sub2 community starting in February of 2023. Terrence is also the co-leader of California's very own Orange County Joint Ventures. He has developed a passion for building business credit with access to unlimited funding and is now helping other business owners do the same. Terrence joins us today to help educate us all on how to start building our own business credit profiles so that we can propel our businesses to new heights and unleash a whole new world of opportunities. So, without further ado I've been talking long enough, everyone if you will, please allow me to formally introduce to you Terrence Spencer. Terrence, what up, brother? How are you doing today?
Terence Spencer:I'm doing great, my brother. Thank you for the intro. Wow, I mean very humbling. I appreciate you, man.
Joseph Marohn:Hey, that's how we kicking things off over here, man. We got to do you right, man. You know we appreciate everything you bring into the table today. So thank you, man. We got to do you right, man. We appreciate everything you bring into the table today. So thank you, man. I know we've been talking about doing this for some time here, Terrence. So glad we can finally get you on. But you know what? We're finally here, brother, so let's make it happen.
Terence Spencer:That's right.
Joseph Marohn:Let's do it right as we should, right as we should so well. First off, t welcome to the Real Estate Unlocked podcast, a place where we bring value to new and intermediate investors by bringing on guests who are extremely knowledgeable, as yourself, to cover real estate topics on a very basic entry level. Now, terrence, I know you're extremely busy running multiple businesses, bro, so we appreciate you for coming to hang out with us today to talk about such an important topic that we should all understand how to properly use so we can scale our businesses and tap into more opportunities. So thank you.
Terence Spencer:Absolutely my man Anytime, I appreciate you having me on man. Thank you Very humbled again.
Joseph Marohn:Thank you, absolutely, absolutely. So we're going to talk about business credit here today and there's going to be a lot of gems dropped on this episode, but before we get there, I always like to kick things off and put the spotlight on my guests. First, terrence. Walk us through your journey, bro. What sparks your interest to get into real estate? Like, what was it that drew you into this industry? Was it out of necessity? Did you have a family member in the business, or did you just feel like you always had a greater purpose in life?
Terence Spencer:You know, let's take it back. Actually we're going to go before the recession, so we're talking 2000. Yeah, man, we're talking 2005, 2006 and fresh out of college, 2003 graduated came out and you know it's funny because you did say a jack of all trades in the beginning. And so, coming out of college, you know my degree, just like probably a lot of people who don't really have a direction outside of maybe what they wanted to do out of college, I got my degree in communications and so with communications there is such a broad level of different things you can do and I've always loved sales, always been involved with marketing, always been involved with marketing, always been involved with building relationships and connecting with people, and so it's interesting.
Terence Spencer:But I remember when this surge of people going into the loan industry, the mortgage industry and that was huge because back then I was in the fitness industry I came out doing well in the fitness industry and I remember having guys come in getting memberships and they would just drop $900, $1,200, you know $1,500 on memberships, you know just right up front, like, and I would go hey, what do you do? And I remember I had a number of people say I'm in the mortgage industry, I'm like mortgage industry I need to get involved in the mortgage industry.
Terence Spencer:I'm like mortgage industry, I need to get involved in the mortgage industry. So I took a look at the mortgage industry and I said, oh wow, this is just again, this is just sales. It was already what I was doing, and doing as well, in the fitness industry, and I went okay, let me take a look at this. So I was doing it part-time and it's interesting that doing mortgages part-time, I was making more doing mortgages part-time than I was full-time in the business industry. So I'm like, okay, I'm missing the ball here, Let me get involved full-time now with the mortgage industry. So I did.
Joseph Marohn:He's like I'm on to something here, right.
Terence Spencer:Yeah, I'm on to something, man, and so I did. I jumped into the mortgage industry and, lo and behold, man, yeah, it was a match made in heaven. I ended up making a really high, six-figure income, you know, really, really quickly, you know, in that industry. And so, as the ball was rolling, I, of course, you know, accumulated, you know, my magic car, the house and all that good stuff right. And then what happened in 2008?
Joseph Marohn:Recession.
Terence Spencer:Recession, you know, lose everything, just like everybody else. At that time, um, lost, you know, my house lost, my cars lost, everything, you know, um, and it was a really tough time, yeah, super difficult, and so I had at that time. So you know what? I'm going to go ahead and embark on a different journey of life, and so I did. I ended up getting involved in a slew of different things that I just felt like, wow, ok, I'm a niche here that I'm really good at. Niche is here I was really good at, and all the while, I was still involved in leadership, no matter what area of life I was involved in, you know. And so I just decided to keep going at that trade until I even got an education back in 2013. And I ended up becoming I ran through education, you know was an assistant, you an assistant in special needs, and also became a teacher as well for a few years, and then I actually made it to dean of students at a private school as well, and so I became a dean of students.
Terence Spencer:And then guess what happens? Again, covid hits. So I just can't get away from disasters, right? And so COVID hits and I say I've always had a passion, though. Uh, for real estate. Always inside of my heart, I've always loved real estate. I used to be that kid that would play monopoly hours on end. You know, and um, you know me and my boys. You know we'd have six hour monopoly games. You know seven hour monopoly game Coming out of Monopoly game.
Joseph Marohn:That's a good theory, man.
Terence Spencer:That's a good theory. It's from fights broke out playing Monopoly. You know what I mean. So it was great, man.
Terence Spencer:But when I learned that Monopoly is actually what Robert Kiyosaki said in his book, he said, when you play Monopoly, you're really just playing real estate in real life. But they help you to is a game, but it's really real life. And I thought that that was true, especially getting back into real estate in 2020, because COVID had hit and it was an opportunity, I think, for a lot of people who may have been maybe trapped into a career that maybe they wanted to expand out of but didn't really know how. But COVID really was sometimes an open door for a lot of people who had bigger dreams. And so that was really my avenue to really get back into the real estate game. And I did, and I started in wholesaling YouTube University, you know, and YouTube University and getting into wholesaling at that time in 2020. And I actually, man, just I blew it out of the park. You know it was. It was sales all over again that really fired that passion to me to get back into the real estate game. You know, made some really good lump sum checks in a very short amount of time and I mean my first two checks were bigger than my salary. You know that I had as a Dean. I mean it was. It was incredible.
Terence Spencer:And so, getting back into the fold of that, I realized I need to stay in real estate again. So I did that, even became a leader in that industry as well. I was with a company in Newport Beach where I helped establish their acquisitions and dispositions departments and really helped train their specialists there to help sell real estate and get houses acquired and houses disposed. And then, as you know, 2023 came into sub two and it's been game on since then, know, since then, and obviously have a great team of people around me. Big shout out to OCJV, orange County, jv, my people Love you guys. They're amazing, amazing bunch of people, plus our leadership there, great guys and gals, and so really appreciative of that. And business credit has now taken the spotlight because it really does lend towards growing your real estate business. And that's where we are here today and I found a gem and a golden nugget in business credit which will unlock it really takes that capacity to maximize your capital, maximize your funds, to a whole nother level, and it's untapped.
Terence Spencer:You can do this as many times as you want to, throughout the life of you building business credit.
Joseph Marohn:So love it, man. Well, first off, big shout out to OCJV man. Everybody in OCJV is awesome people. What I love about your story is that you faced all these adversities, all these challenges going on, just like everybody else that started in that time. I started in the game a little bit later. I didn't face those 2008 challenges and even the COVID challenges, but what I liked about that is you went through all these struggles, went through all these adversities and you didn't give up, man. You just kept pushing forward. You may have put it off temporarily, you know, during that time, but you came back to it because you felt you had a calling. And look at you, man. Look at you now, bro, like you are excelling at a great pace and I love watching you grow, bro. So you know that's awesome man. And look at you, man, now you playing Monopoly in real life, right, I appreciate it, man.
Terence Spencer:But I mean, Joe, I appreciate you, man, I appreciate the dibs on that, bro. Thank you, man. But more importantly, I want to bring it to you as a spotlight as well. As you already know, I believe in what you're doing, especially with building your podcast right now. Even when I first met you, I said this dude, he's got something special, you know and.
Terence Spencer:I think everybody has something to them. I think I heard this quote, but I'm not sure who it came from. But everybody has Michael Jordan talent somewhere in some area of their life, right, and so I think for you, you know even your Michael Jordan size talent. Man, even when I said I first met you, I'm like man. Your personality is amazing. Even the way you connect with people is amazing. I mean the comfort level you have being around people that you don't know says a lot about you as a person. You know what I mean, and so I want to give you a big thumbs up, a big dab, just for your character and who you are as a person. I've watched you grow so great job on what you're doing, bro.
Joseph Marohn:Hey, I love that man. That means the world to me. I appreciate you, t. Thank you a lot, man, but yeah, let's get back on. So I know you talked a little bit about diving into business credit, but where did you first learn about business credit, and what exactly was it that intrigued you about this tool that made you want to dive deeper? Sure?
Terence Spencer:Now, interesting, it's actually a gentleman who's actually in sub two, which is amazing, right. Big shout out, big shout out, and he's going to watch this at some point. So big shout out to my boy, mikey Carcamo. Mikey is also in sub two, but I actually ended up getting a big wholesale deal and with those, of course, as you know, when you get big wholesale deals, it's also a way for you to either put it into something else that you want to grow, or to even use it to pay off debt and really build up your credit.
Terence Spencer:And I built up my personal credit profile to a huge level. I mean, I had my personal credit was at about 780 something at that time when I started paying off you know just different things just because of the money I had earned through doing wholesaling, and so I had ended up applying, you know, for a, for what you would call a now, which is what I know as a hybrid type of format credit card, you know using Chase and you know using Citizens Business Bank, and I ended up talking to Mike and he said have you ever thought about, like, building business credit? I'm like I have no clue how to do that. What is that? Talk to me about it, right, and so, just like most people, right, I'm like what is I don't even understand business credit, what is that? And so I only understood personal credit and how to build up your personal credit. So I think it was breaking down different avenues, you know, of business credit, helping me to see the details of how it worked. I went, oh my gosh, this is big. This will change the game, not just for me but for other people if they discover how this really works as well.
Terence Spencer:And that was, I think, an eye-opener for me that I said I've got to attack this. And it's funny because I talked to Mike on the phone a couple of days ago and he said talked to Mike on the phone a couple of days ago and he said, darren, sometimes you can be a little compulsive. And I said I sometimes can. I said but when I see something that I know that I can get out the park, I will go after it and I will go after it with a vengeance. I mean I will go after it and drive it home, just like real estate.
Terence Spencer:And obviously, seeing this, I'm like, okay, this is something I can really build out and it can become a legacy for my family. It can open up doors that I've never seen before. It can allow my real estate business to take off to new heights. It can do so much that I'm not seeing right now, but I know, I feel it and I know that it can go to that level if I put my heart and my passion into it. And that's what I'm doing right now with Business Friendly.
Joseph Marohn:And that right, there is your superpower man. So absolutely, man, you're absolutely doing the thing, bro. So I think we can all agree that most people understand what personal credit is, but there's a lot of people that start out in their businesses or they get into real estate and yet don't realize they have access to something called business credit. So what happens? They start using their own capital, they're applying for personal loans, reaching out to private money lenders, maybe they borrow from a family member or 401k. But what if they understood how to start acquiring business credit and how to properly leverage it? That could be the missing skill in their entire business Terrence. I know I talked a little bit about it in the intro, but can you give us a brief overview of what business credit is and why you feel it's important for every real estate investor and business owner to establish Sure?
Terence Spencer:So business credit, it is totally separate than your personal credit. Building business credit, it should be at a place where you develop it and build it enough where it stands on its own without you having to personal guarantee anything such as a credit card, a line of credit or a loan, if you build up your business credit to a point where you have enough trade lines. Now, again, this is getting into some of the details. So some of the details, but again it's very simple. When you talk about business credit, what you're really talking about is being fundable, getting your business to a place where it's fundable. Fundability that's really the basics of what I teach people is how to be a fundable business.
Terence Spencer:And you say, well, how do you do that? Everything has to be cohesive. We talk about the basics of being cohesive your address, meaning you have a business address that you have not a mailing address such as a UPS store or USPS box office, but an actual physical address that you can get that you you know there's several of them Regents, you've got. Alliance, you have, you know, northwest. You can get an actual physical business address. Email address, that's a professional email address, not a Gmail or Hotmail or Yahoo. Right?
Joseph Marohn:A company address.
Terence Spencer:Yes, a company address, something that is professional, so that when a lender sees this, they're able to go okay, that's a real company and this is not a fictitious company. This is a real company and this is not a fictitious company. This is a real company. Okay, also, making sure that you have everything else lined up as well, such as a NIACS code. What is a?
Joseph Marohn:NIACS. I didn't know what the heck a.
Terence Spencer:NIACS code was your N-A-I-C-S code. It is the industry in which you're involved and it comes with an actual code. It's how they recognize what kind of business you have. It's what a lender uses to see what industry are they involved in. You can actually go to NAICScom and you can look at what are high risk codes and what are low risk codes and you want to be able to pick one that aligns with your industry. That is a low risk. That way it expands your fundability options and it doesn't limit your fundability options.
Terence Spencer:And on top of that, it's really just making sure that you're setting up your normal things that you would, even in real estate your business bank account, very simple and even when you set up your business bank account, they're going to ask you I'm not sure if many people know this, but your banker asked you what industry are you in or what's your NAICS code? My banker asked me that and I had no clue. When he said industry, I'm like, oh okay, industry, I'm in real estate, but really it matters. It matters when you open up your business bank account to make sure you actually have an established NAICS code and give that to your banker, because your banker, they are going to push that out to all of the lenders who are going to ask for any type of. They're going to push that out to all of the lenders who are going to ask for any type of. They're going to ask for your NIAX code. They're probably going to look at your business banker as well and go what did they put down? So these are all important factors, right?
Terence Spencer:So getting your business fundable in that area, which is having everything cohesive, and then you're able to apply for what I like to call trade vendors.
Terence Spencer:Trade vendors are vendors that you can use all the time and you actually are using a lot of their products all day long but you're able to get vendor credit through them and they will establish an actual 30, should I say a net 30 term, a net 15 term, a net 60 term?
Terence Spencer:You say what is that? It's an actual term that the vendors establish with you that allow you to pay back the debt within 30 days, or you can pay back that debt within 15 days or 60 days, whatever the term is. But the beauty about these net 30 terms, or above or less, is that they actually report to the business credit bureaus, so they help you to establish trade lines, and trade lines are the number one reason why you will be able to get extended credit and higher terms on your credit is the amount of trade lines that you have on your business credit report. And so you want to start from the beginning, work your way up, and I actually have a great system and software in place that helps you, step by step, walk through that entire process, including you got some help from me too, so, again, this is just a little gold nuggets to help you move forward.
Joseph Marohn:Man, you are already dropping game on them. Man, I don't even know if we should still continue. Man, we're giving them too much information right now. No, I'm kidding, no, but hey, terrence.
Joseph Marohn:So when I first started off in real estate, it only took a few months for me to realize the power of business credit and what it can do for my business Right. The problem is, no one in my inner circle really talked about it, so I didn't have the ability to reach out to someone to really show me how this stuff works. So I did what everybody else would probably do Started Googling, watching YouTube videos, listen to podcasts. Started Googling, watching YouTube videos, listening to podcasts, but the information was all over the place. Then I decided to pay for a prime corporate services business credit program.
Joseph Marohn:Now, it's important to know at this time I already had an LLC and a business bank account, so they had me start off by filing for a DUNS number. About a few weeks later I received the DUNS number. Then they gave me a list of tier one net 30 vendor accounts and told me to apply for three and, once I was approved, start utilizing them right away. That way I can establish a paydex score Now, before I start getting into the heart of my question. I want to make sure we don't lose anybody here. What is a DUNS number and why?
Terence Spencer:do? I need that Right. So Dunn's number. So Dunn and Bradstreet is a great credit bureau. They actually are the you would say, the face of business credit when it comes to the bureau side Dunn's and Bradstreet and they actually have what is called a paydex score, which is from zero to one hundred, and you want to be able to establish that paydex score. That DUNS number is directly connected to your paydex score. So when you get your DUNS number, that just simply means you now have trade lines reporting through Dun Bradstreet and you can start building that Dun Bradstreet paydex score up and you identify through that, through your DUNS number, and so you have any business, any business that is establishing business credit, you need to have your DUNS number. It is one of the basics of getting your business credit profile established is having that DUNS number in place.
Terence Spencer:Also a BINS number. You know say, what is a BINS? I had no clue what a BINS number was. I'm like I have a BINS number right on my car. What's a BINS number? A Ben's number is the actual Experian credit profile. So when you have an Experian credit profile you have what is called a Ben's number. That's B as in boy, so B-I-N-S. Okay. So Ben's number having that and you want to report those trade lines to that Experian commercial side as well, which is also your business bureau credit report.
Joseph Marohn:Awesome Now. Okay, cool Now. So going back to like how I started establishing my business credit with the help of PCS, I don't necessarily know if that was the best way to go about it. Some say the startup counts aren't even necessary, but I will say it worked for me and it did help establish my paydex store. With that being said, what are the first steps that you would recommend we should take to start building our business credit? Are there any specific steps, any order? If somebody wanted to start today, what would they start doing?
Terence Spencer:First, you want to make sure that you even have an entity. You'd be surprised that there are even a number of people doing real estate that don't have an established entity. What I mean by that is an LLC, a C-Corp or an S-Corp. And, of course, the best way to start off if you're just getting into business is to get yourself an LLC. And once you get that LLC through the IRS, you want to make sure you get your EIN. You want to apply for an EIN and get that EIN, because that now is your employment identification number, which now takes you out of the personal side. You are now an operating business.
Terence Spencer:People think it's pretty difficult and they go well, I don't have a business. How do I establish a business? Well, it's pretty simple. It's actually not very difficult at all. In fact, you can get it established within less than 30 minutes, sometimes online, and just go right through the process and put your information in and then apply for an EIN and have that EIN attached to that entity, to that LLC. Okay, so that's the first steps get an entity, get a business started.
Joseph Marohn:Right Cause, you're not cause. You're not building credit on your personal name, you're building it on your business, which requires an entity Correct.
Terence Spencer:That is correct. And I want to add this too, because what I learned from my mentor is actually to do everything in reverse. So you say, wow, what do you mean by reverse? So, even as I know that I'm getting ready to get an entity started, what you have to realize is that, as you're getting this entity and this LSE, c Corp, s Corp that is actually with the California secretary of state or whatever state you choose you should have your business address established, because that's what you are going to have to provide when you build that entity, or should I say when you put together that entity. So, for me, when I started business credit, I had to go back and put a new address in. I had to go back and put a and redo my NIACS code. I had to go back and do a lot of different things, because I should have done that at first. Got it.
Terence Spencer:You know that, that that that IRS and also the secretary of state with the entity. So I had to go back and put a business address in, so know what your business address is going to be and again, you can receive help with that. You know, and of course I'm also here, available and we're going to provide some information, of course, after this where you can get in contact with me, where we can help you do that in reverse, before you set that entity up, to make sure you're positioned right with the right foundation.
Joseph Marohn:Yep, and I want to note that you know, don't overthink the business address, because you know you don't have to actually have, like a building or infrastructure you can ask. So me personally, I use iPostal, which is basically just a virtual mailbox, and I use that, and as long as you have some type of address you can put down other than your personal address, then you should be good to go. So don't overthink that part. Okay, so now that we have a better understanding of how to start building our business credit realistically, how quickly can you build a good credit score?
Terence Spencer:That's a very good question, awesome.
Terence Spencer:So the industry standard.
Terence Spencer:If you're not diligent with building business credit, it could take you nine to 12 months, which is still actually much better than if you were to try to do your business credit I mean, sorry, your personal credit on that side, for somebody who's diligent and they really go after building their business credit, it really only takes you between three to six months to build your business credit, which is really nothing, because some of these processes could take a week or two just to change and you're good to go.
Terence Spencer:And now you've moved one step closer to building your business credit. So it doesn't take very much time to build business credit and you can actually start getting funding right now. Depending on what we'd like to call it, kind of a hybrid state, if you may have some pretty good personal credit even sometimes average personal credit along with building your business credit, there are funding opportunities even right now that people qualify for that they don't even understand that they can qualify for. Just by having your entity and just by having yourself positioned in the right fundability factor, you can get yourself credit right now.
Joseph Marohn:Okay, and then how much credit can a new business owner expect to accumulate in the first year if they line everything up properly?
Terence Spencer:In the first year. Oh boy, A year is a long period. If you're diligent and you really establish business credit the way you're supposed to and the way that you're taught and, again, the system and software that we use helps you to go through that process. And so, if you're going to be on that and you're going to do it efficiently, you shouldn't have anything less than $100,000, anything less you should not. If you have anything less than $100,000, there's something that you did wrong when it comes to the flow of the process, Because, again, business credit doesn't take very long to build at all. It's a very short process and so the minimum I would say would be that about 100K. If you don't have anything more than that, there's something again we need to check to see what did you delay or what went wrong here, Because you should have much, even much more than that after that first year In duration. I'd say that first year yeah.
Joseph Marohn:Okay. So, terrence, you and I, we come from the same community, sub two right, where we have learned how to acquire investment properties utilizing the power of creative finance, which typically means, most of the time, we're buying properties with no bank loans, no credit checks, no bank statements or any of that stuff.
Joseph Marohn:Right, yes sir, why would I need business credit man, what type of real estate transactions or what are some of the things I can buy in my real estate business to take full advantage of these new credit lines that I'm working so hard for?
Terence Spencer:Man, I can't even. I can't even say you asked a better question because you couldn't ask a better question. Bro, I love that question. Everybody's thinking it, man, everybody's thinking I know they are.
Joseph Marohn:I love that question Everybody's thinking it, man, everybody's thinking it I know they are.
Terence Spencer:They have to be thinking it because it was actually something that, even in my own mind, when I started looking at business credit, I said to myself wait a second, you mean to tell me that there is lines of credit available to me, there are credit cards available to me on the business credit side that have 0% financing for 12 months, 18 months, some of them even higher than that at high limits I'm not talking 5,000. I'm talking high limits 20,000, 30,000, 50,000 and up. So I said to myself, wow, it was a huge deal. Said to myself, wow, it was a huge deal.
Terence Spencer:I remember even first coming even in the sub two and looking at getting a private money lender and saying, man, okay, private money lender, 10, 12%, sometimes even higher, depending upon the terms in a transaction. And I said, well, wow, this changes the game. You actually really don't need a private money lender If you're able to untap and unlock the potential of business credit and you can get yourself all of the capital you need at zero percent interest, literally zero percent interest. So I said to myself, would I rather pay zero percent interest or 12 percent interest? I think that's a no brainer and I think it should be a no brainer for everybody else as well too. Right as you're looking at that going okay, so you can actually do that and not have to put yourself in a position to pay back those types of monthly funds when you could just not pay anything for that. 0%, absolutely.
Joseph Marohn:Yeah, it's so funny you say that and we're going to piss some private money lenders off right now. But you know what? No, you were going to. Terrence said it, not me. So it's funny, man, because when I first got into Sub2, we're in the community, right and I was asking people and I was like, hey, what's this about business credit? Who's doing what with business credit? And then people were kind of joking around and they're like credit, we don't need no credit man. We buy properties with no credit checks, no bank loans or none of that.
Joseph Marohn:And I come from I come from, you know like I built up my personal credit and I seen the power that I can leverage that, you know, into my day to day. You know things that I do outside of business. So when I started thinking about it, I'm like they've got to have like zero percent interest cards, just like personal credit cards, just like personal credit. And if I can get it, you know, 12 months, 18 months, 24 months, man, like are these people just not seeing the same vision that I'm seeing? Because I'm like dude, I can use this for entry fees on properties, I can use it for furnishing costs for properties. Dude, like you know, like you really are only limited by what you can think of what you can use business credit for, you know. So it's funny we say that you know and then it's like I understand. You know the power of private money lenders and you're not always going to be able to leverage business credit, but you know, if I could get something 0% versus 12% it's a no brainer, right? So brainer.
Terence Spencer:Absolutely, absolutely, and one of the reasons why we also say it's untapped right is, yes, building business credit doesn't have to just be with the entity that you established in the business that you have right now. You can actually produce more entities. You can have more LLCs, you can have more S-Corps, more C-Corps. You can continue to build out. You can continue to build out however large you can see and vision. You can build your business credit. It doesn't have to be just attached to whatever Again, llc or entity you have right now. Build more and then you build more business credit. It's unlimited, it's untapped. You just keep going, which is why we say it's the number one way to get yourself funded.
Terence Spencer:Now, can I actually physically take this money out and use it, or do I have to use it on a specific transaction from Chase Bank? You can actually pull that money out and still keep it at 0% and put it into a piece of real estate. You can do however you want to do with that money and, again, it's going to depend on different lenders. Some lenders will not allow you to do that because they will charge you a very high cash advance if you were to do something like that. There are a lot, though, that allow you just to take that money as just real cash and use it as you want, and so, again, there'll be no penalty for that. It will still honor the same interest rate of that 0% for that 12 or 18 months Awesome.
Joseph Marohn:Okay. So when we're talking about personal credit, 680 to about 740 is a good score, would you agree? Absolutely, absolutely Okay. So anything above that is pretty much an excellent score. Correct what would be considered a good business credit score? And are there any apps similar to something like Credit Karma that you can use for free to track and improve our scores?
Terence Spencer:So interestingly when you actually so let me let me break this down for you. If you were to go directly to Experian and that's commercial Experian and also Equifax as well commercial Equifax and D&B they have separate programs that you can purchase and buy into to monitor your credit score. So as far as in monitoring them for free that's kind of the caveat when it comes to business credit is you actually have to pay these actual bureaus in order to track your credit score. Now here's the other thing, though with the software that I have and the program that I have, you actually pay one fee per month and they are able to accurately in time track your Experian Equifax and Dun.
Terence Spencer:Bradstreet score and report all in one throughout the entire, month in and month out, of having that program, so you're able to track it all the time, versus there's no other process you can do that with. You'd actually have to go directly to the bureaus in order to track it, and so, yeah, they will not allow you for free to track it, unfortunately, like a credit karma does on the consumer side.
Joseph Marohn:A lot of reasons for that too.
Terence Spencer:I want to mention this A lot. Of. The reason for that is when you get denied credit on the consumer side A lot of reasons for that too. I want to mention this. A lot of the reason for that is when you get denied credit on the consumer side, they have to give you a reason why they denied you. When you get denied credit on the business credit side, they don't have to provide an explanation to you.
Terence Spencer:So, again, that tells you a lot right there, right, that kind of gives you a little bit of the thinking of building business credit, because if you figure it out, then guess what? You're going to get a ton of business credit if you figure out what the problem is.
Joseph Marohn:And you're right about that, because I believe there's a website called NAV right and NAV you could track your credit score, but it's a paid service. I believe you need to pay like $49.99 a month to actually track this every month. That's right and it's not in real time.
Terence Spencer:So NAV is behind a bit, I can tell, because my program that I have is Bureau Insights that's the name of it. Bureau Insights works directly with my organization and so you can only get Bureau Insights if you are affiliated with my organization. You can't just go buy them on your own. You can't type it in and say I'm going to get Bureau Insights. You can't do that. But you can do it through the software, the program that I have, and it tracks it every single month and it shows you exactly where you are in building your business credit. And so the other firms yeah, you're right, You'd have to go pay those separately in order to track it. But again now, yeah, it's a little bit off when it comes to the timing in which you can get things in.
Joseph Marohn:OK, so, and now? Do you need to have a good personal credit score or to build a business credit, or can someone with a poor personal credit score still succeed in this area?
Terence Spencer:Absolutely. You do not need great personal credit at all. You don't need good personal credit. You don't need all right personal credit. You can have very poor personal credit and build out great business credit. That's the beauty of building be great on its own. You can have again bad personal credit and you can actually use your business credit to build your personal credit. That's sometimes what people miss too. As you're getting these lines of credit and you're getting these loans and these credit cards a lot of times you can use them just to pay off your personal debt, which will build your personal credit score up with your business credit, and also you can use those two as well to get even more funding and bigger funding.
Joseph Marohn:Right, and so I mean I've heard of, like some you know, companies actually requiring a personal guarantee, a PG. Do you happen to know what that process looks like? Like, am I signing, you know? Am I signing documents, paperwork? Am I giving blood? Am I giving my social security? I mean, what are we giving your birth certificates? Like, what does that personal guarantee process look like?
Terence Spencer:So if you're going to do a personal guarantee it's interesting you mentioned this because I was at a meetup about I think it was about two months ago. I was at a meetup and you know it's interesting. But a lot of business owners think, hey, I've established business credit because I actually got a business credit card. And then one of the questions I ask is I said is there, wait, did you have a personal guarantee, that credit card? Yeah, yeah, yeah, I had a personal guarantee, but it's still a business credit card. So I got business credit and but it just hurts me. Only if I do bad, if I don't make a payment right, I go.
Terence Spencer:No, that's not true business credit. You know, it's a, it's a hybrid form that I'd spoken to you about earlier is that if you have good personal credit, you can actually apply for business credit, which is great for those. But those business credit cards are also attached as a personal guarantee. They're PG, they're personally guaranteed, meaning that if you are late on that payment it's going to hurt your personal credit. Got it Now, if you have a business credit card and it's only your business credit card, it doesn't affect your personal credit if you happen to be late on that credit card because it's a true business credit card that has nothing to do with your personal credit. Got it? Makes sense. I understand, though you do have days beyond term. So DDT, let's say, if I'm late on a business credit card, you don't ever want to be late on any credit card, but personal or business. But if you are late on a business credit card, business credit cards don't go on the consumer side of that. When you're looking at the business credit card side, they go by what is called days beyond terms. So if you're one day late off of a business credit card, it's one DBT day beyond terms. Now the consumer side is 30, 60, or 90 days. You have 30 days to be late and then they'll count it towards your credit report. So DBT on the business side is one day so you can have that report at the end.
Terence Spencer:So you got to be careful still, even if you're doing the business and with that, one day hurts you substantially and if it does, how do you overcome that? Is there a way to you know? Maybe I do like three months. It could take forever to get that off of your consumer side.
Terence Spencer:When you're doing it on the DBT side, you actually have a 90-day window where you can start building that up and it will start to creep off of your report and have more weight on your on-time payments, which is what your lenders are looking for. They're going to look at the day beyond term and go okay, this guy was two days beyond terms on this particular account, but on these other accounts he did really well, so they actually will disregard the 2DBT because of what you're doing in these other areas of your credit. On the consumer side, man, you can have one 30-day late and that will mess you up with everything Right, right, moving forward, not necessarily with business credit. They always look at the bigger picture, the bigger picture of things. Versus this one time you were late for 30 days.
Joseph Marohn:OK, so let's say we do everything right. We do the net 30s, we're paying them on time, we establish a good base history. What's our next action step? Do we start applying for store cards? Do we start cold calling Bank of America to get the CEO on the line? Like, what are we doing here?
Terence Spencer:I love it. It's kind of. What I explained to you earlier is that we have ours broken up into three tiers, so tier one, tier two and tier three. So as you start to build the foundation of fundability and you become a fundable company, then you're going to get your tier one credit. That's your vendor credit, as we talked about earlier. You know vendor credits are Uline. You know you have Granger, you have CEO, creative, creative Analytics. These are just different vendors that offer you net 30 terms.
Terence Spencer:Whereas you stay on time with these, it builds your trade lines up, where you have trade lines to report in your business bureaus, as you're able to get as you even said, even with PCS, they have that on track too as you get at least three trade lines reporting. That will allow you to move to now your tier two credit, which is what we just talked about right now your store credit, your Home Depot, your Lowe's, your Walmart, your Amazon. You're looking at your Nordstrom even. You're looking at these store credits now that you can apply for. That are really high limits as well.
Terence Spencer:Okay, and on top of that, now you're moving in less time when you get to at least those six accounts. You're moving less time to tier three. So tier three is your bigger size. That's now your MasterCard, your Visa's, your American Express's. That's fleet credit. That's auto loan credit as well. You know that you can actually get an auto loan credit with the amount of trade lines we have at least 12 trade lines reporting you can actually get a GMC trade line, a Chev trade line, a Ford trade line. They give trade lines up to $200,000 to $300,000 to go get fleet credit.
Terence Spencer:That's crazy, that's crazy.
Terence Spencer:And again, you don't have to own a fleet company to do that. You can go to GMC and say, hey, you can send in your report, get all of your ducks in a row and you have at least 12 trade lines reporting at a specific timeframe. Again, this is all tracked and our software does track this for you. But if you have those trade lines established, you can now apply for that fleet credit where you can get those type of uh, those type of uh fundings to go get a vehicle of your choice with that particular brand, for chevy, gmc, all of them I'll tell you something funny.
Joseph Marohn:Man uh started getting some tools shipped to my house. My wife's like what hey, what are building? What do you plan on doing? You don't get it, baby, it's next level stuff right here. Like I'm building something here. Man, she's like yeah, what are you building? I said I'm building credit. She's like huh.
Terence Spencer:What are you talking about? Right, what are you talking about? Yeah, that's really what you have to start with. A lot of times when you are just beginning to build business credit, these starter vendors are the best vendors to go with, because it helps you with those trade lines.
Joseph Marohn:Right, right Terrence. What's your favorite business? Credit card man. What's your personal favorite? Chase, Chase, Chase. Why?
Terence Spencer:Because Chase is very lenient. When I say lenient, when I say their terms, their terms are very lenient terms. I have 18 months with them of 0% interest. They started off right away out of the gate. They gave me 8,000 and then they lifted it up almost right at about 20, another 10 within two months and so, again, they want to give you that credit off the bat. They want to see that at least you make a couple of payments and they lift you up off the bat.
Terence Spencer:Citizens Business Bank is another one. So, citizens, they will give you credit right away and as soon as you make one to two payments, they'll increase yours another 10 to 15,000. And so have theirs just starting off. I mean and again, these are just they just want to see that you can pay it a couple of times and they want to see you pay over the minimum payment. Once you do that, they're able to just start throwing more money at you, more and more and more money at you. As more as you can be responsible with, they'll give to you, which is the great.
Joseph Marohn:That's awesome, okay, so what are some of the common mistakes you often see like new entrepreneurs making, like when they're trying to build their business credit, and how, how can they avoid them?
Terence Spencer:Sure, just not being cohesive. As I said before, you know, really having their fundability foundation laid out, they'll have an address from, they'll have a home address and they'll you won't. It's hard to get lending when you have a home address that you're using. Okay, lenders are looking at that and, again, a lot of these are through FinTech. I'm not sure if you know through FinTech, finance technology but FinTech is just a. It's an electronic system that these lenders use to see if you are a fraudulent company or if you're legit, and they have that criteria of fundability laid out, just as I'm explaining. They're going to look at the address, they're going to look at the email address, they're going to look at the phone number, they're going to look at the NYX code, they're going to look at the DUNS number, the BINS number. They're going to check all of these factors to make sure that everything is lined up in the right way. And if something is off, they get denied right away. And that's what a lot of young entrepreneurs don't understand. Is that, why did I get denied? And they don't have a reason why they got denied. But when I take a look at the structure of their business, I go okay, I can see exactly why you got denied. There's nothing that is cohesive around the board and nothing is streamlined where a lender can say this is not a fraudulent company. They have to be convinced that this company is not fraud.
Terence Spencer:Over 60% of denials come because companies think that your company is fraudulent. That's what most people don't understand. And then we say well, what do you mean fraudulent? That's because it's not cohesive. Things are not lined up the right way for it to be fundable. So they look at it as they're crawlers. Remember the FinTech? They said it as this is a fraudulent company. And you're saying to yourself this is not fraud, this is my company. They don't know that. What they see is that things don't line up right and so you got to have a 411 listing to put your, put your company on Google, put it on 411. I have all that set up. I have all that streamlined. So if you see my business, everything that a lender needs to see to make sure that my company is fundable it meets all the criteria.
Joseph Marohn:So when I go apply, I know that there's no way for me to get denied because I know that everything is in sync around the board get denied, because I know that everything is in sync around the board, smart man, and that's a good way to go about it Make sure you have the websites, the business emails, the address. Everything just has to line up so if they do go to do a search on you, they can go and find your company at ease. They don't have to go dig in and think that you're like a fraudulent company. So good points on that. Now, terrence, you are the CEO of a company called Expandemonium. I see you got that fresh fitted on right there, bro, which is an awesome name, by the way. Talk to us a little bit about that. What exactly does your company offer in regards to helping people build their business credit?
Terence Spencer:Sure. So again, let's get with the name. You know the name, I thought expand the money.
Terence Spencer:I'm like, yeah, because I thought about the name pandemonium. I'm like, when I think about the name pandemonium, you know I'm an old football head man, you know I'm old school, you know I'm like and I think pandemonium, being on the football field and I'm just everybody's running everywhere, we're just crazy out there, right, and I'm just everybody's running everywhere, we're just crazy out there, right, and there's a lot of growth that takes place. And I remember our coach used to say we used to always be at practice and we'd have these hard workouts.
Terence Spencer:We would go it's pandemonium in here. You know, we just say that, right, and we go there. He goes again it's pandemonium in here. And so when I thought about that, for some reason in my mind I thought, man, it's all about scaling, scaling a business, expanding a business. And then when I said the word expand, the word and demonium came to my mind and I thought expand ammonium. You know, it just hit me expand ammonium. I said I want to help business owners really expand their business and just have an. Just make it. Expand ammonium. They're just going, they're scaling at all levels of building this business. And so for me, expand ammonium. It's the slogan at the bottom don't die. When I say this here, it says don't die, but expand. I like that.
Terence Spencer:Don't die, but expand. Many businesses, as you already know, they die. More businesses die than succeed, unfortunately, and the number one reason why businesses die is because of a lack of capital. So that's my job. Our job in Expanded Money is to help business owners build business credit so they can produce funding that's going to help them sustain and scale their business, and that's what I tell anybody, as far as even an elevator pitch. That's what I do, and so help them build that business credit.
Joseph Marohn:Okay, so let's say they sign up for your services. Now do they still have to do all these first steps that we talked about in the beginning of this podcast? Or is it something that they jump in with you with no experience, no credit, and you guys basically walk them through this process? And what does that look like?
Terence Spencer:Sure, both. It's both. It depended upon where you are in your journey, because everybody has an individual journey and there are people who I even had presentations earlier today this morning, where I had a guy who actually had no personal credit. I mean, literally, he's like I haven't even established any personal credit, but I have a business that is pretty nice and he actually has a little bit of revenue, which is great.
Terence Spencer:I actually talked to a gentleman earlier too. They earn about $45,000 per month in his business and it's a transportation business. He said but I use so much personal credit to build this business. I now understand I got to build some business credit as well. So he's actually my new client that just started earlier today, which is great. Well, so he's actually my new client that just started earlier today, which is great, and so I just again told him about really the importance of building business credit and really establishing that.
Terence Spencer:So those are two different journeys that these gentlemen are on and they are going to take a different approach.
Terence Spencer:So if we need to establish something on the base side of things, I'm there for that in the program and the software will help guide you through that, and there's a very large advisory team that I have in place that will help you with the seven step system, because it is a seven step system to help you get that four to six months of solid business credit and solid business funding that you can get, and so that helps you to keep walking through that.
Terence Spencer:Plus, you have access through me, so I've put myself out there for those who want to take that journey and really start building that business credit. I'm going to be there for you where you can call me. I'm going to have a link that you can use that you'll be able to access me two hours every single week to be able to help you and guide you through that process of the business credit building process. On top of that, I think anybody knows the industry standard. If you've looked into any business credit the industry standard for really a program to start building business credit a lot of the gurus out there that I say they're building business credit. They have programs that are $3,500 all the way up to $6,000 to start building business credit For me and for this podcast.
Terence Spencer:I want to put a special offer out there for everybody. So if you go on my website, expandemoniumvip, you'll see that my standard price is $24.97. That's a one-time fee $24.97. And again, that's lower than the industry standard, which is amazing because of the value that you have and the bonuses that you have that come with that. So that already is a great discount according to industry standards.
Terence Spencer:But for this podcast, I also want to put another one out there and I'm going to have this run until the end of August. So anybody who sees this and anybody who's interested in getting help with building their business credit, I'm going to take $1,000 off of my base already lower price, and it's $14.97 only for those who are watching this podcast. On top of that, you'll have the two hours of help from me each week and on top of that I'm going to add on one more. You guys see that I'm here right now at the beautiful Huntington Harbor. Right here, this is our Freedom Bowl Club location. So what I'm also going to do as well is I'm going to add in for those who are watching this podcast. I'm going to add in a two-hour boat ride as well for those who want to jump on board and get involved in this podcast.
Terence Spencer:Yeah, so I'll be able to offer that to you as well, and we can ride around the harbor and give everybody, including their family, a trip around the harbor for two hours as well, whoever wants to come on board. So extendemonium on that VIP, and you can take a look at everything in there, including downloading a free ebook and looking at all the details of what it takes to go step-by-step, to build your business credit. On top of that, you'll have access to me and you'll have a lower price on that too. So I got you.
Joseph Marohn:That's love brother Cause you know.
Joseph Marohn:Terrence didn't even offer me that boat. I still love you, bro, you know. But it's all good though, you know, but no, that's a. I appreciate you, man. So you guys, there you go, man. Twenty four, ninety seven is already pretty much almost identical to what I was paying PCS, but now you're getting a thousand dollars off of that. So if you guys are watching this right now, make sure you guys take advantage of that. And if I heard you right, it doesn't matter where you are in your journey, right? So you could be just starting out or you could already have business credit established, and then it's a different conversation, right, correct, correct, okay.
Terence Spencer:Correct People have to understand. That is that there's accessible things that you have as an established business owner with business credit, things that I can unlock and help you to see that maybe you're not aware of. And also, if you're just starting and you're green, you don't really have any knowledge of business credit. Now you can start learning how to do it from the ground up, without having to get rid of bad habits right or be retrained. You can start things fresh and on the right path.
Joseph Marohn:So that's the coolest hey, I appreciate you, man. So, terrence, what final, what final piece of advice would you give to someone just starting to explore the world of business credit?
Terence Spencer:um, I would say make sure to be humble and be coachable. Be humble and be coachable. Um, it's very. It sounds maybe too simple, but it's really not too simple. I can tell you why. Even when I began on my journey with business credit, a little bit of my arrogance and ego came into play, overlooked that, just to find out that I needed to go step by step right. I needed to be somebody who was coachable, who follows the process to a T. If you follow the process, I can guarantee you, if you follow this process to a T, you will unlock so much funding for yourself in such a short amount of time that it will literally spin your head. But you have to be coachable and you've got to be humble to do that. So if you're willing to do that, man, you're going to go a long way. You're going to go a super long way.
Joseph Marohn:Yeah, I love that. Now I know we covered a lot of info here today on business credit Terrence. Basically just gave us all the blueprint on how to get started, so I hope you guys were taking notes, by the way, but anything you can think of that we might have missed or didn't cover here today.
Terence Spencer:T. Let's see what else. Other than that, I would say, if you're not a 49er fan, then there's some things you got to probably think about too, because I do see that hat.
Joseph Marohn:But it's okay, I forgive you. Hey, don't be taking the offer off the table now. Man, don't take the offer.
Terence Spencer:Don't, don't hurt, won't hurt the followers man because of the great thing right here.
Joseph Marohn:You know I'm joking with you. You know that was a good one, though I just had to throw it out there you know real quick.
Terence Spencer:but, on a serious note, I think we did cover a pretty good gambit of it. Um, however, there is a lot, as you already know, jo. There's a lot that goes with business credit. It's not hard to understand, it's simple, but again, it's just getting the information, and we know that those who have the information are the ones who are able to make informed decisions. So, hopefully, as you got the information today those who are out there listening you can make some informed decisions on how to positively move forward with this opportunity, versus sit back and just think should I and I think that's probably a problem that most people can run into is that procrastination? And should I? No, you should, especially if you're trying to expand and grow a business. You need it's not a want, you actually need business credit. It's what is the lifeblood of your business. Just like we talk about in real estate, leads are the lifeblood of your business. Without leads, you have no business. Without business credit, you really have no business, because you need capital to build a business.
Joseph Marohn:Awesome. Well, Terrence you, the man bro. You brought a bag with you today and just made it rain on all of us. So appreciate you, man. You're super knowledgeable to you on a real talk. You're very well spoken and, from what I can see, you're always giving game out to others and leading with value. So thank you.
Terence Spencer:Brother. I appreciate you, man. Thank you For all of you guys. Man, keep listening to my boy, joe Joe again, you're a special guy, dude. You bring so much value to the table. You have such a level of comfort, man, when it comes to doing these podcasts. So I got nothing but love for you, bro, and I can't wait to see you grow and do some great, amazing things in the future. My man.
Joseph Marohn:I appreciate you, man. I really do T. Where can people get ahold of you?
Terence Spencer:Well, you can actually go by. Actually, let me go ahead and give you the for those of you who need to contact me. This is on this podcast here. So here's my direct access. Okay, you can go to my email address TS. So this is Terrence Spencer. Ts at expandemoniumvip so there's the name there expandemoniumvip. Okay, that's my email address and you can reach me directly on my direct business line at 949-516-1529. I'll say it again 949-516-1529. That is my direct business access on my direct business line. So make sure, if you have any questions, you have any inquiries, feel free to reach out to me. As Joe knows, I am definitely not one who is abrasive in any way or confrontational in any way. I embrace and love every single person who comes with questions To me. There's no dumb question. You have to ask all of them and when you ask every single question, hopefully you get the answers and I can give you those answers. If not for me, I can provide the person who has the answers for you. Let's go.
Joseph Marohn:Now, if you guys are finding value from this podcast, don't forget to show your boy some love. If you like what we're bringing you, don't forget to subscribe. It helps us continue providing value to others by reaching a broader audience. We're out here to serve, learn together and help as many people as possible. Make sure to also smash that like button and drop a comment down below. If you already started working on your business credit, I want to know what your favorite business credit card is. Appreciate all the continued support and, guys, stay tuned because we're pumping these episodes out every two weeks. I got some awesome topics and guests coming up next. That will change the entire way you do business. You definitely don't want to miss out. Best, believe I'm going to keep bringing you that fire. Don't die, expand. Thank you, terrence.
Terence Spencer:Let's go Got you. My bro, take care. Welcome to our Channel. Today we show you how to make a Super Cool, super Cool, super Cool, super Cool, super Cool, super Cool, super Cool, super Cool, super Cool, super Cool.