The 3 Kinds of Unsecured Business Lines of Credit — Part 3
By Tom Gazaway
This is the 3rd in a three part series. If you haven’t read the first article read it here. The 3 Kinds of Unsecured Business Lines of Credit (UBL’s) Part 1.
And the 2nd article can be read here.
3 – This last type of UBL…Well, I’ll be honest – it’s a bit of a stretch to call these UBL’s and I personally do not refer to them as UBL’s but technically they are so I guess they belong on the list. These are the Vendor Lines of Credit. What’s a Vendor Line of Credit? It’s a line that is given by a store, a company, or a business. For example, I have many of these Vendor Lines of Credit for Hawkeye Management. My Staples card is technically a UBL because I did not provide any collateral and it is a line of credit. I can buy at the store, online, or through the Staples catalog using our Staples card. It is great and I like having it but it can only be used one place – Staples. I cannot turn this into cash, I cannot finance receivables with it, and I can’t use it for anything other than buying products and services from Staples. So these business lines of credit are not Cash UBL’s. They have some value but their value pales in comparison to the other two types of UBL’s that can be used for anything under the sun.
The other thing to note here is that these Vendor tradelines or Vendor Lines of Credit are often part of a strategy that is designed to build business credit. Also, if this is done properly, these Vendor Lines of Credit are obtained WITHOUT a personal guarantee. I will also say this at this point. I do understand this strategy pretty well but when and if we get involved in a business credit building strategy where we want to help someone build up their D&B and other business credit reports we will bring in a third party provider to do this. We don’t consider ourselves to be experts at this strategy.
Now, with that being said, it’s also only fair to point out that most of the companies that are collecting fees for doing this are not really truly experts. If you know me at all you know that I do not consider you an expert if you know a little more than the average guy knows. So be careful and use caution with this strategy if you hire someone to assist you with the process.
The other knock I have against the “business credit” providers is that they often sell it or promote it with a carrot that doesn’t really exist. What do I mean by that? Well, if you build your business credit up to where you want it then it’s still VERY UNLIKELY that you can obtain CASH lines of credit WITHOUT a PG or personal guarantee. Did I say this is VERY unlikely? In other words, if you think that a good business credit report will get you any traditional credit lines or business credit cards without a PG then think again! I’ll tell you like this. At Hawkeye Management we have an 80 Paydex score, a 2r2 rating with D&B, 25-30 tradelines reporting, and we also have a 99 Intelliscore (out of 100) with Experian Business. With all of that we can’t find anyone who will get us unsecured business credit without a personal guarantee. I’ve had numerous people tell me that they could do it and, as one of my good friends would say, “it ain’t happened yet dude.” So just know what you’re getting and don’t fool yourself into thinking you’ll get something on the other side that really isn’t there.
I hope you enjoyed this 3-Part series about UBL’s. If you have any questions or comments then let us know. Our mission at Hawkeye Management is to assist entrepreneurs and Small Business owners with achieving their goals and dreams. We do this by assisting business owners who want to start, build, or grow their companies. If you need some capital to grow your business then we are passionate about helping you do it the RIGHT way. Go to our “Contact Us” page on our website or give us a call and we’ll assist you and give you some HONEST feedback. Have a great day!
Tom Gazaway, CCEW, FICO Pro, CMPS, XCO
Hawkeye Management LLC
888.783.1503 Ph
