My guest today is Mr. Michael England, president of River Capital Group, in Stafford, Virginia.
What we’re talking about in this episode is credit. Specifically business credit; why it’s so important and what you can do to build up your company’s ability to borrow.
The third of the Six M’s in my book Unlocking The M Cube is Money.
Access to capital is a critical success factor when starting, growing and running your business.
I am not a proponent of borrowing too much, having found myself overleveraged in the past.
But I do know that the right mix of vendor credit, equipment financing and lines of credit are very important if you want to avoid cash flow problems. That’s why I invited Mr. England to share some knowledge on Radio Free Enterprise.
Complete Unedited Transcription of Michael England Interview
[00:00:42] My guest today is Mr. Michael England, president of River Capital Group in Stafford Virginia. Michael England welcome to the program.
[00:00:52] Thanks. Great to be on.
[00:00:54] What we’re going to be talking about today is credit, specifically business credit; why it’s important and what you can do to build up your company’s ability to borrow. The third of the six Ms in my book Unlocking The M Cube is Money. Access to capital is critical.
[00:01:10] It’s a critical success factor when you’re starting your business, growing your business, running your business.
[00:01:16] You can’t afford to run into a cash flow crunch, it can literally kill your business even though you’ve got sales going on, accounts receivable everything else. It can actually cause you to close your doors. And I’m not a proponent of borrowing too much – I’ve overleveraged myself in the past. But I do know that the right mix of vendor credit, equipment financing, lines of credit with banks – it’s all very important if you want to avoid a cash flow crisis. That’s why I’ve invited Mr. England to share some knowledge with us today.
[00:01:48] Michael let’s start with this.
[00:01:50] Why should a business owner even care about business credit. What’s the big deal?
[00:01:55] Business credit is much akin to personal credit. With business credit one of the benefits of that is you’re separating your own business from your own personal credit. If you have poor personal credit but you can establish good credit with your business also helps to double your good borrowing power.
[00:02:22] So if you just using your own social security number to secure loans with business credit lines. Double triple the buying power that you get in business credit is gained much quicker than what you can do through do your own personal accounts. Those are just some of the main reasons why you want to have business credit.
[00:02:44] You know suddenly you just said there made me think of and you tell me if I’m wrong a potential additional benefit is you’re not loading up more debt on your personal credit report.
[00:02:55] Exactly. So on washpot of businesses do you want to separate your own portion or from your business tax accounts start there. I’ll be along with the business credit. You’re gone off of what your business kicked gambaro. What are the big companies that are out there. They don’t right. They don’t use Dawn personal grudges just securit. And then you’re not personally liable for it of the company yourself.
[00:03:20] Yeah and that’s a big big deal. What happens to me if I don’t have business credit.
[00:03:25] Well if you don’t have it are you going to be as you just mentioned. Come in against that cash flow crunch whether it’s to expand your your business records to buy a new building whether it’s to get new equipment. If you don’t have access to capital you’re sincerely stuck for that. Well I often say as the engine of the business is your sales and marketing but the capital is the gas for their engine food.
[00:03:54] Like their head it gets better I usually say it’s like the life blood. But people just can look at me with a hazy look in their eyes.
[00:04:01] They don’t really seem to know what that means. But the gas for the engine I like that. Yeah. The sales sales are the engine. Well if you don’t have that cash you’re not going to keep that engine running for barrelling like that. You’re in it. I’ll be happy. Bad lied from you from now. You got it. Okay so you clearly over apparently help businesses get business grow and build their business. What kinds of businesses do you work with.
[00:04:27] Well our growth our title businesses rather it’s a government contractor that’s starting out and trying to establish themselves. The government is they demand that you have a DUNS number and that you have done a bradstreet number and that you are able to have good credit to you. I think. I work with our mechanic shops mom and pop shops. I’ve done a dance studio. There’s a lot of real estate promotion real estate as all the pinball upon that business credit.
[00:05:00] Excellent. And I think probably a great way for us to understand how you help them is if you could just give us a couple of case studies of you know dad studio mechanic shop What have you. Let’s start with what the problem was they were experiencing how they happened to reach out to you and then how you were able to solve their problem. What what then life look like after.
[00:05:23] Well I’ll start off with that downstairs. So the destiny has been in business for a few years. There are renting out a space but they wanted to. Of the studio. So she had excellent personal credit. She didn’t have any assets. And so Castle was okay. She went through a number of banks are three banks. They all start to bounce. Because you don’t have all of our criteria. We’re like a you you talking about that just the other day I was talking to a banker and he says lushly they can only get a 50 laws come through them. They were on the phone three of my as credit is one of those major things so well I helped or do is help helped to give business credit by having stock in trade lines and end revolving credit lines and lines of credit. Once we’ve done that. That was 60 percent of all the financing does she need that in order to expand. And then since then we’ve been able to grow and her cashflow has increased dramatically because of this. So that’s one of the example.
[00:06:35] Correct me if I’m wrong it sounds like you said that’s what we did initially and then over time additional benefits accrued. It is exactly an overtime game.
[00:06:45] So. This is one of the hardest things. Most lenders they will not let you if you’re businesses less than two years. So we help them in the very beginning to establish their credit so they’re at their six month mark the year mark. They are 18 months into your marks. We are able to give them more more financing so I might be on cars late nights and hey I need financing. I need a million dollars. We looked at the other story that I could maybe Jim a hundred thousand two hundred thousand dollars. But if we help them build up the credit now then over time are you know they can come back to me and it’s been that much easier. You give him that financing.
[00:07:27] That makes a lot of sense. Great. I’m sorry to have been drugged you if you would please go on with a more case studies.
[00:07:35] Yes I saw a couple of other ones out there that we felt as our government contractors armed with them trying to enter the in the centre still of providing goods or services to the government. And what we are able to do it was what a paycheque or the honour or how horrible. This with the barista’s wife is ex wife talk about a lot of those monies omeprazole credit crash of as lines of credit were bought or taken down. So we then hopped on with his business over the period of six months we were able to block that up right nicely so that Rached you then could rely on his business credit and eyes on promotional which put him in a position to go after a couple prime contracts for the federal government. Something like that is was really beneficial. And you know it created you know millions of dollars that he was then able to make.
[00:08:30] Yeah. You know it’s an interesting thing. Again it occurs to me as you talking is that this business credit and then the ability to generate additional sales because of it means that if you are having problems with your personal credit your personal income it’s going to have a big beneficial impact on that.
[00:08:48] Rising tide is going to lift all boats. Yes definitely. Tokay and I’m at the mechanic shop.
[00:08:57] So with the mechanic shop there they were simply just on a cash crunch that they’d been they went into a few different banks themselves because they didn’t have the cash flow or the credit that the bank really did for their guidelines. They said become an. We can help you out. They then reached out to me. So I was able to get them some immediate funding up France and then over the course of the last nine months helping to increases credit so now he has a line of a line of credit there that he can to buy supplies. And then the other thing is repots to rebadge is his billing source or that he was then able to point more money from that so you take that together. You add in his business credit which she didn’t have any of the beginning. You know what was a in the initial stages. And then as we saw they corrected it. He’s been able to expand his business and offer more services through his mechanic shop.
[00:10:01] Interesting. So you said you helped him with his billing did this accelerate the collection of his accounts receivable.
[00:10:09] Yes I did. Since he had his the bunch of accounts receivable was there outstanding of more than 60 90 days. We hope to take the all that up immediately and then help them to reassess. So we move them cash flow positive in that instance.
[00:10:26] So do sometimes then your services go beyond helping people build their credit and connect them with with capital sources or Yast.
[00:10:37] So their business credit is something that I’ve seen a lot of businesses have little to no understanding about. And then to follow on with that I have a lot of financial services that I can help with in business as either traditional or non-traditional lending so that they can take that next step themselves.
[00:10:57] But I mean things like helping somebody do a better job collecting and getting their bookkeeping straightened out. It didn’t occur to me that this is something where you could help people as well.
[00:11:07] Oh yes. That’s this is something that I do with a lot of our medical facilities. A shopper but generic and this is why I help people with doing educational services and counselling services. There’s Wrekin do a lot with their ask God an to some of logistics. Oil and gas are government contracting once again. There’s all different ways that I can hop on the billing side on a receivable size to clear all up and make it get that money so that they can then grow the business.
[00:11:46] Interesting. Now you mentioned just a minute ago that you help connect people with traditional and non-traditional capital sources. Yes. It may seem obvious but if you would let’s start with defining what a traditional capital source. What are you referring to as a traditional sort of gabal the traditional ones.
[00:12:06] Well most people think about graun down to the a bank bill or a bang they were have a number of products designed for businesses or a conventional business mom or an SBA. They were they mere areso provides lines of credits that they can also help with their businesses but that’s pretty much the large extent. The majority the banks would be able to Arthel. So I can hotham sort of up with that. I have relationships with numerous banks with or by presence of a steel building so I can help them do better SBL on down burst or krikor an hour and times less what they would at the woc a Brach.
[00:12:47] Okay. Now Dan as you say is what people think of when they think of traditional lending and it’s more limited both in terms of the number of products available in in terms of how many people qualify for it. Yes. So I wonder what kinds of things are we looking at in terms of non-traditional capital sources that you can connect business owners.
[00:13:10] So they’re not traditional. There’s a lot Roth are real estate investing commercial real estate that we had the non-traditional lending that that’s that’s available from from the private lenders. We also have other sources that that us to be like out such as account receivable financing or just all before purchase or financing.
[00:13:28] Are those are going to be tied into it. We have outsourced equipment leasing equipment financing. Are all those different ones that we can help provide people that money to food to get going.
[00:13:43] And it sounds as though the building up your business credit would well damn if I’m right. Would it help you.
[00:13:52] Both of these arenas no other words make you more likely to qualify for either traditional or non-traditional almost more stuff and only according to the statistics that the SBA has put out are 80 percent of people who pine for longest point out of business wants get torn down. You know as I made mention or all the your you know in the this of you that’s one of the bankers I talked to last week who were saying that every 50 lawns that come into their brand he can only do three of them. The large reason why is people are don’t have the business credit not land or compliance which scores are back into Been have you at your business credit some being without compliance. There’s about 20 different things that a business needs to have in line in order to qualify for that fund.
[00:14:48] Great. Well let’s go right into there. What do what types of things Kim just about any business owner do that you know with the caveat that some of these things will take time in order to impact your credit rating so all the better reason it did. Exactly. You know what. What are you say there’s a 20 things that help your compliance. Tell me about a few. And what can we do quickly and easily that will help us more.
[00:15:16] First of all we make sure that your entity is seller quickly with your local or county and state records. You mean you’re business. Dean. Yes sorry. Make sure that you’re an LLC an LP a seeker. Make sure that it’s set up correctly and that’s the same with every single type of information that you put out there. There is always the same information so now with myself a rubber cap of a group. See I can’t make sure that capital and River Capital or leave something out to stop a listing of thing up or down my business entity is the same name across across obvious love.
[00:15:53] It sounds like from Scuse me did you told me two different things. One is there it should be created correctly and establish correctly in your local area. But then the second thing is that you always refer to it by the same name every where you talk about exactly okoth.
[00:16:11] The second thing is to make sure that you have your number. Next thing was make sure that you have a bank account. A lot of the land loss war consider you in business until you have your own business bank account. Interesting. Another thing is make sure you have all the credit licences in order to be walked in in whatever sphere or that your business is operating on. Another one is there. I’m starting to see a lot as coming up is making sure that your business has has an actual physical address array from your on home. N n in the Heronry rest that that’s there. Lenders were saying that if it’s a home business there it’s much more likely to default than we though if it has a physical location.
[00:16:57] So having a physical location is another way which is true even if you have like a physical address on a coworking facility. See
[00:17:07] and that’s what a lot of businesses are going towards is having the core walking or vaucher Armistice Day that an actual physical business address or when a lend or type send your address there say yes this is an actual physical business. Is Interesting. So and that’s just one ways that you can save a lot of money is to have a virtual office or a crosswalk space arvis.
[00:17:32] And you know so many of these things it’s easy to say you should have had you should have already done that.
[00:17:39] As you know or bank account any number and so many those things you know one thing for example it’s funny when you said the importance of a bank account. A lot of people they just haven’t separated their business from their personal lives even in their own consciousness. So the idea of taking the parsings end of their own bank account and writing checks out of it and using their own credit card it is a no brainer. But clearly it’s hurting them in a variety of ways not the least of which is their business.
[00:18:11] The business credit. And then they’re not put in their own bank account as a why ability a guest of the year sued their bank account is now open for them to grapple.
[00:18:21] Ouch. Ouch. Yeah. Yes. So having a physical space like I use a coworking facility and you know you you can spend several hundred hours a month. How much of life depending on where the facility is and what benefits you get from it.
[00:18:40] But it’s just such a difference in terms of professionalism and flexibility.
[00:18:47] It never really occurred to me however that it was helping me from a business credit to him.
[00:18:52] Yes. Another thing is making sure that you’re not used in your own personal cell phone number as as as your business and barnaba have an actual business model. That’s another crucial element that make sure that that that number is registered with a 4 1 1 directory along with that is making sure you have your website make sure it’s an active site.
[00:19:14] I’ve heard of some landlords that say alright word we can find your presence are mine. We don’t know if your exist or don’t exist. The same thing with emails are what people are used in a g.m. Hartnell car for the for the business hours.
[00:19:29] You go have a business email that you can be directed to.
[00:19:35] That’s easy. You know I never would have fired something like My email address or how fresh My website is good impact my business credit rating.
[00:19:46] Yeah. So right now there’s about 50 percent of our businesses they sold or not have a Web site and people not go to the old pages anymore they go to Google to try to find the business if you’re not there you’re not found you you’re you’re losing business.
[00:20:03] So if you add in virtual space you really don’t exist you don’t exist well a world we’re living in well it’s good to know that it’s important to know we can argue whether that is right or wrong but it is the correct situation. If you’re interested in building a business credit you I know that you know you talk about these 20 things that you can do. You guys the river capital group of actually created an online tool that makes it easy for people to do these things and get it done quickly. Tell us about that.
[00:20:34] Yes. So as I said there are starting to see a trend over and over again. There is as I was trying to help our business with the business we were the funding that our credit business credit was lacking. So we’ve designed a website that’s reverse siji dot net. And there are river acg up there at you can go and there is a whole wrath of information about business credit. There’s what you need to do to become fundable What do you need to do to become bankable. What do you need to do to become become qualified author those things off the reader from become qualified fundable and bankable. Additionally as you register your business whether they are give you a dashboard to show you exactly what your business credit health is and what you need to interview in to improve this. Zarry rela if you come to me which is which are by or if you go back to your bank then at that point you be blunderbore and bankable so that there were be the financing you need for your company. And this is a free service to show you exactly where our stands were your business credit stands and what you need to do to improve.
[00:21:47] Its amazing and with you your agreement to add an umbrella have to be at some point in the future I can see where I would like to walk through that website with you using sort of a video podcast with a screen share so you could show me how to do that. We really don’t have time to get into too much detail here on this episode but how difficult is it. I mean is it just as easy as checking if you check box is what. What kind of information should we be reading. Should we be prepared to to enter into this form.
[00:22:23] Well first of all is going to be gone over all those first 20 compliant items that we did with the start up of the majority of them are innocent and kind of give you a checkbox. Yes you have this this is compliant that you know there’s I complaint. Now you have a Rob mell a Web site an email you have you have you been registered with the business credit bureaus and then it kind of goes. Say my cocoa based on this. This is what you need to do. So those will be the things that they’re going to be looking for your your business entity had it been registered. That helps you to make sure that your check to see if it’s a physical business location. No the thing is do you have a business plan. A lot of the landlords will be asking for a business plan if you don’t have a business plan. I just came across a business the other day that was the main one of the main reasons why he was denied. Along from a bank was one he had poor call credit and no business credit and two. You don’t have a business by the bank didn’t want to touch it.
[00:23:28] Amazing. Did it so he figured as just like go on off switch for them whether the business plan exists or is it they feel as though if you have a written a business plan you’re not serious you’re not serious because of all that it helps assure the bank exactly what you’re trying to do.
[00:23:45] And this was another thing that my web I can help do is if you don’t have any of those things it can directly help you too. It’s one of those I’d aunts corrected right there on the spot.
[00:23:58] Give me example what sort of things can it help you correct. And how does it do that.
[00:24:04] Well let’s say in an e-mail if you have a business nobody can help you set up with the business in a wreck right there. The other nice thing about it is read then go for a trade like so a reportable burned or trade line you are the business bureau let’s say you’re starting you’re true to your business credit now. Such as. You’re at your business location right. If you’re paying rent right now that rent is nice. You need help and you build business credit. But we have a system in there that say hey put this in your business from your business you rent information and then we can help that translate that into a trade line that reports back to the business credit bureaus. So. So you were establishing your business if you don’t have a foreign system. You can help yourself sucks up that up. But if you don’t have a C or in system or a foreign system wreaking help suck that up right there on us spotted. Make sure the same thing with the business plan and making sure that your entity is good.
[00:25:10] That’s great. So you can kind of hold our hand through these 20 steps and help facilitate the building of that business drennen. Exactly.
[00:25:21] This take are to to get registered artista a couple minutes to do to target if you need all these things and maybe take you in an hour or two to get compliance with these 20 items and how much does this cost. Just to see what your business credit healthcares on that that’s our free choice to be to get established it’s middlemore more mouths I you know twenty dollars after it is sobby employer you know arm or 50 dollars for four for rubs Tikrit creation and then that’s the way that you can make sure those are components. So he will have some packages out there for new businesses that will be 299 amaan. Goin out to buy buy new line of your fob business enterprise.
[00:26:14] Did you say there’s some level of this.
[00:26:16] Also that said no charge yes suffers no charges. Make sure there are your things. You see exactly what your credit health is and what you need to do to improve that that’s ofri OK.
[00:26:29] So just fill in the questions and filling out the form. There is no charge for that. Not great. And I’ll show you where you are and then you can decide for yourself whether you want to take any further action or make any further investment. Exactly. And is this available to anyone. Anyone can go to ribber siji Diana and just start filling out the form.
[00:26:52] Yes this is open to to all businesses or those who want to go into business and instead of travelling to to 20 different places to get your business started. It’s a one stop shop and you can go on such really right there in the beginning with day one in business or been around for 10 decades.
[00:27:11] But this whole I could think of family businesses that I have known in others that they might have been around for 10 decades and they still don’t have a business background yet. I could see where that can help just about anybody in either you know like little educational resources in there is anything I can learn while men are.
[00:27:33] That’s one of the nice things about a grant back to study to the SBA did about three years ago 90 percent of business owners have little to no idea of what business credit is and how operates. So 90 per cent of our businesses.
[00:27:52] So with that goes a whole slew of educational materials on those or those books that are on those buildings that are on there. And there’s a portion there were people that were kind of tell you what to do on each page and the importance of it. So there’s a whole wealth of information that are working from that.
[00:28:15] That’s great. I applaud you for doing that. That’s the generous educator and sincere advocate for the success of their ideas in place.
[00:28:25] You know I just think that that’s the best possible way to help people in initiating nurture business relationships. I’m so glad I asked you the question because that’s you know just like what you’re doing right now Michael helping people understand number one why it’s so critical to build your business credit and then number two they can do something about it. That’s where the real value lies.
[00:28:50] And that’s the thing is business owners. And there are really specialized. And what they do. The End. I’ve met so many really topnotch people that are trying to solve a business. Do they know everything about finance and nor do they know about anything about business credit roll. This is how those experts out there in order to such as myself and you’re in you to help them to overcome and you come better.
[00:29:18] Now if somebody wanted to speak to you personally in rackley Is that something they could do today call you and ask you Can you help them with a with a financing problem they’re running into.
[00:29:29] Yes. Sorrell there are. You can contact me directly. Ah ah walk for nebra as by for 0 3 1 8 5 7 0 0 0.
[00:29:41] I just can sit down with the business and discuss consult with them and what they’re trying to do. There is no pressure and then we can develop a game plan and what best suits them. Are there some businesses that are given all this information and they’ve gone on to find the funding elsewhere which is great. Or you can come back with me and not hover. I can buy that up that saurus and the funding for it is for them to take the next up business.
[00:30:10] Let’s grade em. You said it was 5 4 0 3 1 8. And what was the rest. 5 7 0 0 or fifty seven hundred flights hundred three one eight fifty seven hundred I’ll also put that phone number in the show nodes page for this episode.
[00:30:29] Now when they do call you then what happens. I mean is as you know information gathering. What what what can we expect. As far as how long the call will take and what’s going to happen.
[00:30:41] Some at some times can be other form for just a minute or two just to give a brief understanding of the other people coming up. Let’s take in there are they were discussed the other the Fawcett narration some announcing that I can get to them as long as 24 to 48 hours. Why are those other financing I can get. And so to choose to 10 business days and then there are some other ones that taking the wheel from one month Fuji to six months.
[00:31:12] Did you get financing was or is it the more complicated deals are or real estate transaction.
[00:31:19] Are most realistic as I could that them why would I be and it simply you just had a question or was just wondering trying to find out whether you could help them right.
[00:31:29] Yes. Yes. Know another thing that I often take phone calls thinking the. This is the situation I’m in. This is what I’m trying to do to you. Kampusch You know I just did this the other day for a manufacturer. Their presents award types idols. They were all arm had four or five things drawn on the same time you know they just reached out to hacon hopping and shown up back up or they’ve raised that region of them excel.
[00:32:00] Yeah that’s a funny thing. Also have you will and embed because of your specialized knowledge people may come to you and say hey I need I’m just going to say you know equipment financing. And then once you dig down a little bit you’ll see you know yeah you go get equipment financing.
[00:32:16] But if you did this instead you’d you get your equipment quashed you’d have some extra cash left over Plus you devil or registry person you know. Exactly. Leave your expertise is invaluable right.
[00:32:28] Yes. And this is our thing. People can only ask for what they know what to ask for. Sure. So there’s been more stable times my life. They don’t know that there is extra types of financing out there in order to help them to overcome those things. And so that’s one of the things up. This has gone back to that dabster your opinion that that where when they came to me they asked me for a very specific product.
[00:32:57] Nah they didn’t qualify for a they didn’t qualify for that. So we had to look at it. Although I wanted of means in order to get that financing.
[00:33:08] That’s great stuff. Well Michael England thank you so much for joining me today. It’s been a pleasure. Thank you Frank. Thanks again Michael England.
[00:33:17] And thank you for listening. Now here’s what we need to do next. You need to head on over to the iPhone store and subscribe to the regular free enterprise podcast. Why are you there. Why on leave was a glowing review and a five star rating. See. Then head back over to really your freezer apprized calm and registered with the site so you can sitting on top of all the exciting doings here at our beach. If you promise to be bad for me I promise to remain your fear was hosed free fell. Until next time I’ll see you. In the rain. Given your entrepreneurial scenes with our gentle way homemade robbie’s microphone. He is growing older.