Unlocking the Secrets of Business Credit and Funding with Jarrod Smith

Ever wonder why some businesses seem to have a magic touch when it comes to funding? Today, I sat down with Jarrod Smith from Lone Star Valor Funding to unlock the secrets of successful business credit and funding strategies. We dove headfirst into the complexities that separate personal and business credit, shedding light on the roles of credit bureaus Experian, Equifax, and especially Dun & Bradstreet.  Jared pinpointed the common stumbling blocks businesses face in their quest for loans, arming you with knowledge to tilt the scales in your favor.
We recognized that different businesses, from burgeoning startups to expanding enterprises, require tailored approaches to funding. Sharing our wealth of experience, we’re committed to guiding you through each phase, whether it's finding the right lender for your industry or strategizing to meet specific financial milestones.

As we wrapped up our conversation, I couldn't help but extend my heartfelt thanks to you, our listeners, for joining us on this journey. I'm excited to invite you to be a part of our Keep On Sharing community, where we support one another's ventures and celebrate each other's successes. Remember, you can always reach out to Jarrod for expert guidance in navigating the world of business funding. Keep your eyes peeled for future episodes where we keep it real and champion authenticity while guiding you to stay true to your vision and leverage the power of community in business.
To contact Jerrod Smith 

We look forward to seeing you succeed! - www.KeepOnSharing.com - Code - KOS

Transcript

Speaker 1: 0:14

Hey, I'm Coach Mickey and I'm so glad that you've joined us, and if this is your first time joining us, come on in and make yourself comfortable. For those of you that join us on a regular basis, we are so glad that you do, and thank you so much for all your support and reaching out to our community and people that are here on our podcast and also part of our Keep On Sharing community, and I'd like to thank Keep On Sharing for being our sponsor of each and every one of these episodes and gives us an opportunity to showcase all of our great community members, because they've got so much to offer, regardless of what you're looking for. There are so many. And again, today is going to be so much fun, because I've really been interested in this also, not only as a CEO and a business owner and things that I do, but just I've always had these questions in regards to okay, now I've got this business, what do I do, especially when I need funding?

Speaker 1: 1:02

So I'm really excited to have with me today Jared Smith. He's with Lone Star, valor Funding, and he's also an Army veteran. So I want to first of all thank you so much for your service. That is something I highly respect for anybody that serves our country, so first I want to thank you for that, and now I just want to jump right in and hear about what you have to offer and how you can help other businesses.

Speaker 2: 1:26

Absolutely. Thank you for that. I appreciate it, and so my goal is to help fund dreams for businesses. I think a lot of businesses need funding at one point of their business, and so that's my goal is to help get the right funding for them and find the right lender for them. We try to really tailor it around there, and the other thing that we try to do is we don't like to ghost you.

Speaker 2: 1:54

If you're not able to get funding, or you're having trouble getting funding, or you know what, you're interested in getting funding, but you don't know where to start. We try to help you with that side as well, with business credit, learning how to build it and everything. Because I know with me when I first got, or I know I've been denied a loan. I don't know about you, coach Mickey, but it's frustrating when they ghost you. You know because you never know why they, why they, why you got you didn't get approved. You know what, what can you do to fix it, and so that could be really frustrating as a business owner, as a person. You know because you don't know how to improve yourself, and so that's my goal is is that if you're not even able to get funding or you're having issues, let's try to figure out a way to fix it, and so that's what. That's what I'm here for.

Speaker 1: 2:44

Well, let me ask you this right from the beginning and yes, I know as a from the business, especially starting with many of the businesses, you get these things. They'll say oh yeah, we give grants and we give funding. You know whether, especially for me, what I've run into is I've tried to get funding as a female business owner and they have to. Oh yeah, we'll fund you. And I've seen people that have got a funding, that have put an idea on a napkin and here I've got this full on pitch deck information and everything you possibly could imagine, plus already a preceded a little bit more than a preceded business, and still get no as a reasoning. And and you just like okay, well, why? And it's not so much also the funding, it's also, you know, investors and other things. So what with the funding? What would you say is the most important thing that people should have right from the beginning, prior to going out and seeking funding, that can make it easier for them to get along?

Speaker 2: 3:39

I mean, that's a great question. There's there's a lot of things. I think the most important thing is is going out there and and establishing your business credit. Even if you're not, you don't know how to how to grow it, or that. I think there's a misconception that you know what. I've got my EIN number. You know it's like my social security number, my business credit's already already going, and that's not the case. You have to go with and register and it's not the same format that our personal credit is. The three bureaus is Experian, equifax and then Dunn Dunn and Bradstreet. So Trans Union is, or Trans Union is not, a part of business credit and you have to register with all three of them and they're free. But a lot of businesses don't know that, do that and they don't, so they're not setting themselves up for success when, when it comes down the line.

Speaker 1: 4:33

That's interesting because I did not know that TransUnion did not even take that into consideration. And a lot of times as a sole proprietor, and which many businesses are, especially if they're just starting out and they haven't filed an LLC or a C Corp. So as an individual or sole proprietor you may have a really good credit score with Experian or Equifax, or, let's say, your credit is really good with TransUnion, but it's kind of a little bit lower on the other two. That's not even going to. That's going to. You need that other one, would you say Dunham Bradstreet.

Speaker 2: 5:05

Yeah, dunham, bradstreet.

Speaker 1: 5:06

So you'd have to file with them and be able to have that. Now does Dunham Bradstreet offer the same type of credit rating as Experian Equifax, or are you going to find a whole different element with that, because now it's a company?

Speaker 2: 5:19

So it's actually a whole different element. I apologize about the work and hopefully you don't hear that, but it's a whole different element because instead of doing, I believe, to be honest, I'm not really sure what the lowest end is, and hopefully I never find that out as far as personal credit is, but it's around like $3.30, I think, up to the $8.50, where business credit is $0 to $100. So it doesn't use the same score and that's for both Experian, equifax and Dunham Bradstreet. So when they're looking at business credit scores, it's $0 to $100, not the traditional personal $8 to $300.

Speaker 1: 6:02

So how do you accomplish that? Okay, so let's say I've got a credit of $750, $700 to $800. My credits are really well on as an individual, but now I started this company. Do they take your personal credit into consideration or are they looking at the business based on your income and your profit, your P&Ls, your profit and loss statements?

Speaker 2: 6:25

So this is where financing gets really, really confusing because there's so much intricacy to it.

Speaker 2: 6:32

So they do absolutely look at your personal credit, especially when you're starting out, because a lot of times your business is in that revenue phase or you're not making that much revenue, and so usually in that startup phase I always say go and establish your business credit first and then get a business credit card and then try to fund it.

Speaker 2: 6:52

Now, most of the time when you apply for your business credit card, you're using your personal credit on the same time, but with that it doesn't affect your personal credit.

Speaker 2: 7:03

So with business credit cards or anything business related, even if you use your personal, they only do soft pools on your personal, so you don't have to worry about the hard inquiries, which allows you to do a little bit more shopping to try to find the best rate. And then the other thing it does is it doesn't report on your personal credit unless you do something negative. So that means that you can max your credit card out and it's not going to report on your personal credit card or on your personal report. And that's important because in your personal credit, that magic number on your credit cards is 30%, right, so we don't want to go above that 30%. And if you're using your personal credit cards to finance that business, well, guess what? 90% of the business owners are doing that, starting up and they're maxing out their credit cards and then what happens is that their personal credit takes a hit because then they're past that 30% and so now their credit score goes lower because of that.

Speaker 1: 8:05

That makes a lot of sense Now with business, when you do a business type of credit and, like you said so you don't get that hard pull on your individual. So when you fill this out, like a lot of times, people use their social security number as a sole proprietor prior to paying for an LLC, because the LLC especially when you start out with just a little bit of funding for your business an LLC may come later or a C-Corp may come later. So if you're using your own social security number for your business, how do you separate the two, as your business and you as an individual, if you're using the same number, or is it advantageous to go and get an LLC first and then be able to do it as you're doing your business? Start right off the bat?

Speaker 2: 8:51

So what I think is most important is getting an EIN number and using your EIN number. And an EIN number is free, it doesn't cost anybody anything, and so, as a sole proprietor, it won't give them any issues either. So all they have to do is go in there and they'll use their Social Security number to register that EIN. But that's the key is getting your EIN, because the EIN will act as your business Social Security number.

Speaker 1: 9:21

Okay, that makes sense. Okay, so let's say, now you've got your EIN, you're doing really good. You filed with all three credit unions that you need to do for as a business. What's the next step to help to get to the funding, to where you can? I mean, I know you kind of take everybody and help them all the way through this process, but what's the next step after that?

Speaker 2: 9:42

Now you're trying to steal all my secrets. No, I'm just kidding, but no. So the next thing is getting like again that business credit card and those net 30s is what we call those, and basically those are like revolving credit lines basically with companies like Office Depot and that, where you as a business are going to shop there, use their supplies, get products from there, but you have to pay it all off within 30 days, and so that's why they call it a net 30. There's also net 60s and net 90s, but net 60s and 90s are a little bit harder. They're a little bit more straight on revenue and what you're doing, so as a startup, it's a little easier to get net 30s and they're a little bit more lenient on you.

Speaker 1: 10:30

So now I know you offer funding, you said, at any point in time of a business, so I want to share a little bit about that and who you can help and how you can help them get the funding that they need for where they're at.

Speaker 2: 10:44

I mean absolutely. So we have a wide list of lenders, and so I can really help anybody in the industry, and the reason why I say that is because not all lenders are equal and that meaning that not all lenders are going to take the same industry. So I have certain lenders that don't like, say, healthcare industry. I have other that will only do trucking industry, and so that's why it's critical for me to really understand the business and kind of what their goal is for funding, because are they looking for a line of credit? Are they looking for a term loan? Are they invoice factoring? What kind of loan are they looking for? What would best suit them?

Speaker 2: 11:28

And then for me, it's all about getting you funded. So if I don't have that right lender, I'm going to go out there and search for that lender. One of the things that was proud of to me the other day was trying to get clients financed for coaches in that, and so I was able to connect with two lenders that offer coaches the option to offer financing for their products, and so I didn't have that at the time and I went out and researched it, was able to find it and connect with them and figure out which was the best way and create a partnership, and so that's what I do. I try to find that resource that's really going to fit into their business.

Speaker 1: 12:10

And I really respect the fact that you do that, because I do know from a lot of people that I work with and even for myself. I'm a service-based industry, whether it's some of the things I've done in the past, or even as a coach, and I've even had companies where it's been all service when working with kids and going out and getting a loan or lending or even just help through my business because I don't have something tangible always seem to be the biggest challenge I had. So there's lending. So what I'm hearing you say is you can find lending, whether it's a service or you have a tangible product or for anywhere, from starting out to somebody who's already been in business for quite a while, you can find all those different levels of funding that they may need depending on where they are in their business at the time.

Speaker 2: 12:59

Absolutely. Now I will say startups are a little bit harder in what they, what I can get access to, because a lot of these lenders, they do want to see some type of revenue. And then I do also have, like certain lenders, that if you're making, say, $10,000 a month, then they don't even care what your credit score is, and so even if those people that have kind of that bad credit score or that we're kind of able to circumvent that, depending on what their business is doing, so yeah, absolutely can help anybody from A to B. And so I just always like to stress, with startups it's a little bit harder and most of the time we kind of have to start with like credit cards or that, to make sure that we can get them built. So there may not always get that, I don't know. $200,000 or the million dollars that they're looking for is right up the bat.

Speaker 1: 13:50

Yeah, but I love the fact that your company does that. What you do is you take and look at the whole situation where they're, at what they need, and then you kind of piece it together, you know, individualize it to what they're needing and then help them fill in the blanks wherever there might be a void to be able to keep them from getting that funding. So that's really pretty amazing that your company does that. You'll start from, you know, square one and take them all the way through and then give them the steps to be able to get there. What do you think is one of the biggest challenges that you can take care of or help with with companies? You know that. Just go my gosh. I'm starting out. I don't know what to do. You know what seems to be the most common denominator that people come to you with.

Speaker 2: 14:35

I mean just really honestly the lack of business credit and the knowledge of business credit. And the other thing with that is you know where the information is, because a lot of the information is out there but it's over here and it's over here, and so you can kind of find this info here and you could kind of find it over here, and so it's hard if you're trying to really do it yourself. And I think that's the biggest issues.

Speaker 1: 15:08

What do you think some of the biggest mistakes people make in regards to trying to get in funding that you know? Maybe they could look at it now and go oh, I don't want to do that because it's going to hurt me in the long run.

Speaker 2: 15:18

Well, I'm glad you asked that one. I love this question, so I think it's interweaving your personal finances with your business finances. There's a lot of small businesses, including like sole proprietorship or small LLCs, that just feel the need that they can intertwine that and it makes things so messy and so hard for many different reasons. But for funding it's hard because it's hard to distinguish what is what.

Speaker 1: 15:49

So you would say the first things people should do is make sure that they keep their accounts completely separate. Money that's used for business should only be used for business. Keep your personal stuff out of it. Now let me ask you this what about somebody who works out of their home? Because I know, based on taxes and stuff, you're using your home as a base and there's a certain element of that. So how do you and maybe this is a tax question, maybe this isn't even part of what you offer, but I mean, what would you say is the best way to segregate the two finances to make it easy for lending?

Speaker 2: 16:24

Yeah. So I mean you have to go in there and pre-plan what you're going to do and have a plan. So I do a lot of from home. So I say, okay, for example, my electric bill a month is $200. Well, I take up X amount of space, so I'm going to take that number and minus it out of the electric right and so that's going to be what I'll use from the business and you can pay yourself from that business or pay it from the business. You know what I mean. The issue is more when it comes to, like, using your personal credit cards to pay for your business or using your personal bank account to pay for business. That's the issue more than anything.

Speaker 1: 17:16

So I know you said I'm going to back up a little bit because we said EIN number, and I know from just my own experience. You take your EIN number, you go into the bank, you show them your business license that you filed, you show me your EIN number. You can open up a completely separate account with that and then that's the only card and bank account that you would use. Even if your name's on it, it doesn't matter. You just have to make sure those two stay separate, because when you're pulling all that information for your business at least it's all itemized under one account. So it's pretty simple to go in and do that. So now with the funding and I know you said you work with a lot of different lenders. So if someone's to come to you and they say, okay, here you go, jared, I got this business, I just started it Kind of give an insight of what you do and how you can help other people get their funding.

Speaker 2: 18:07

Yeah, really quickly just want to back up with the banks and starting a bank and say really pay attention to what their fees are for business banks, because I mean some of what they do and what they charge. If you don't put enough money in there, it's sometimes ridiculous. To be honest, I don't understand how they can charge what they charge. So just keep that in mind, please is look up that bank fee and see what they charge, because some of these banks are horrible to businesses.

Speaker 1: 18:47

I'm so glad you brought that up, because you're right. I just changed banks because I'm like why am I paying this? This doesn't even make any sense when I can get free. So many other places say yes, please do your homework, Absolutely.

Speaker 2: 19:00

Absolutely. And the same thing Again. It's horrible the way they do that. So to back up, so to help somebody with lending, it's again finding out what kind of business they do. What are they going to use that money for? What's kind of the plan Trying to talk them through? Are you going to use it for hiring? Are you going to use it to put it in the sales department? Are you going to use it for marketing? Because then that kind of goes do you need a line of credit?

Speaker 2: 19:37

I had an individual who was like I am having to pay my employees out of my own pocket because the contracts are not hitting them. The bank can tell later, so I'm having to fork over the money to my employees first, and so that's stressing me out. What can we do? And so it was like oh, you know, what we can do is a line of credit, because if he's going to pay it right off and then he's going to use it again, he's going to constantly use it. So that makes sense for a line of credit. I wouldn't recommend a term loan for it. It doesn't make sense. And so where somebody says I need $10,000 because I want to start this marketing initiative, okay, well, that guy sounds like he might need a term loan, and so that's where it's just really understanding what they do and then again figuring out the industry, because some of these lenders I don't know why they are very picky on what they can and can't do. Okay, yeah.

Speaker 1: 20:46

I think, for some of the things that I've always wondered, because you've gotten you starting out as new business. Obviously you have income coming in. So when these lenders look at you, aren't they looking at your projected income? Or they're looking at your income that you've already have or what you have in your bank account? Because sometimes they'll look at you and they're like, well, you don't have enough to back this, so how do what are they taking into consideration when they're looking at your paperwork as a lender?

Speaker 2: 21:16

Well, that's a great question. Business credit and or business lending is really unique because it kind of encompasses the whole picture. Revenue is obviously important, but do you have a business plan talking about what you're projecting or what's the plan for this business? Are you operating it with the correct email? Are you using your URL email instead of it Gmail? It sounds kind of stupid, but banks look at them and say, okay, is he really that serious? I think, because getting an email is only 10 bucks a month or 10 bucks a year, and you don't even want to fork over that for an email. And so they start wondering, okay, is this guy legit? And so they look at everything, and so that's why it's not just about revenue, it's not just about your credit, it's a lot of different things, and so that's why it's important and that's kind of the other thing. That's the focus is building business credit and making yourself bankable.

Speaker 1: 22:31

Well, it sounds like you take everything and you take the details. So you start from, like I said, from square one and you look at it, because who would have thought about that? I mean, that is just so simple. But if that's something that the banks are looking at or your lenders are looking at, I mean that really does make sense. It's like, how simple is that? It doesn't mean you might not think of that because they may say, well, I'll just use my Gmail right now because nobody's going to see my email. But now you look at a lender who's gone. Well, wait a minute, why is it not at whatever your business name is, compared to your personal Gmail account? So these little details seem like they're extremely important when it comes to lending.

Speaker 2: 23:08

Absolutely. And yeah, it's a unique thing and not every business is created equal. That's why it's not really a cookie-cutter thing and that's why it's when people ask, well, who can you help? It's like, well, I can help everybody because I need to really understand that business. And then I got to find that right lender and sometimes it benefits me and sometimes it doesn't, but at the end of the day, my goal is to make the business dreams come true, whatever they're looking for. That's my goal and I may have to make that sacrifice, but that's okay. I'd much rather see them succeed than fail.

Speaker 1: 23:47

I appreciate that, because I'm sure every other business owner appreciates that too, and you have an incredible company and for what you do and I see your passion and you're genuine about going out and helping people. We've got a few more minutes, so I'd like to offer what would you like to offer and say to our listeners of community and please, everybody you know the links will be down into the YouTube channel, but it'll also be a bit into the podcast Please, please, please, reach out to Jared, because I know he can help you. I wish I had found him when I had started my companies, because he would have made my life a lot easier with all of these questions to start and how and where and what to do and to find you that funding. But I'm gonna let you wrap it up here, jared, what is something that you would like to tell everybody? And please give your website and your information on. People can reach you.

Speaker 2: 24:39

Absolutely so. I'm gonna start with a freebie. We talked about Dunn Bradstreet. All you have to do is go to their website, which is wwwdnbcom, and then you can just walk through their their page and get your Dunn's number, which is what it's called, and so that's kind of my freebie. It's free to do it. Anybody can do their number, but don't waste any time. Go get it done. It does take a few days I think it's been a while since I've messed with them, obviously but it takes a couple days for them to get back to you with your Dunn's number. But again, completely free, go get it done. Don't waste any more time getting that done. And then, as far as to get ahold of me, you can reach me at my email at admin at lonestarvowlercom or lonestarvowlerfundingcom, sorry. And then my website is wwwlonestarvowlerfundingcom, and please don't feel free to, or don't hesitate to, reach out with any questions you have. I'm very happy to answer questions that you have. If you need help going through Dunn and Bradstree more of that, I'll be able to go through that.

Speaker 1: 25:55

Well, I want to thank you so much and I know that this is something that everybody can use, I'm just going to reiterate. So you want to go to wwwloanstarvalorfundingcom, if you guys are listening, and then also if you want to reach out to Jared, it's admin at lonestarvalorfundingcom, so and again, those links will be down into the podcast and the YouTube. Thank you so much, jared, for being with us. I am really excited. I know I've got quite a few people I want to send to you. I'd like to talk to you at some point off air, you know, with some of the things that's going on with us and what's happening, but I want to thank you so much for being here today, being part of the Keep On Sharing community.

Speaker 2: 26:40

Absolutely my pleasure. I'm sorry, I'm a little bit under the weather, so I apologize for not being as enthusiastic as I normally am.

Speaker 1: 26:48

No, you were great and I knew you were. And honestly, I'm going to tell everybody I have respect for people because they know that getting on my podcast and doing this, sometimes our time is so limited and structured and Jared was so kind to go. You know, hey, mac, I'm a little off today. I'm like that's okay, we're just going to give you your information anyway and let's get out. And you know what I love it because that tells me you're passionate and you keep striving through, no matter what's going on and how your day is going, and that tells me how sincere and honest and genuine you are about helping other people, you know, and it's very unselfish on your part. So thank you again for being with us and I will look forward to seeing you again. And thank you again. Please reach out to Jared, please, please, please, because I know we can help you with your business.

Speaker 2: 27:34

Absolutely, thank you.

Speaker 1: 27:36

All right, you guys. Thank you again. I will look forward to seeing you in our next podcast. Again, I'm Coach Mickey. You guys know, the most courageous thing you can do is be yourself. If you're not part of our Keep On Sharing community, please go on. It's free, you can make a free profile. You can list your business, your services and your events for free. And you know, hey, get your case here on our podcast so we can help support you. All right, until then, see ya.