In this interview, Michael England, president of River Capital Group, explains why it’s so important to build your business credit and how you can do it very quickly using simple, commonsense techniques.
More Information: (540) 318-5700
What follows is a computer-generated transcription of our entire conversation. Please excuse any typos!
Michael England 00:00
The engine of the business is your sales and marketing, but the capital is the gas for that engine.
Dude Walker 00:14
And now it’s time once again for those show that gives glorious voice to 25 million business owners across the fruited plain, Radio Free Enterprise with Frank Felker.
Frank Felker 00:30
Hello. Thank you, Dude Walker. Yes, indeed I am Frank Felker. Welcome back to Radio Free Enterprise. My guest today is Mr. Michael England, president of River Capital Group in Stafford, Virginia, Michael England. Welcome to the program.
Michael England 00:46
Thanks, it’s great to be on.
Frank Felker 00:48
What we’re going to be talking about today is credit, specifically business credit, why it’s so important and what you can do to build up your company’s ability to borrow them. The third of the six Ms in my book, Unlocking The M Cube is Money. Access to capital is critical. It’s a critical success factor when you’re starting your business growing your business, running your business, 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, it can honestly cause you to close your doors. And I’m not a proponent of borrowing too much I’ve over leveraged 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 cashflow problems. That’s why I’ve invited Mr. Englund to share some knowledge with us today. Michael let’s start with this. Why should a business owner even care about business credit what’s the big deal?
Michael England 01:49
for business credit is much akin to personal credit, or they kind of use the same matrix system to say, hey, whether you have good credit or bad credit, with business credit, one of the benefits of that as you’re separating your own business from your own personal credit. So that way, if you have poor credit that you can establish good credit with your business, it also helps to double your borrowing power. So if you’re just solely using your own social security number to secure loans, well, with business credit, we can oftentimes double or triple the borrowing power that you get. And business credit is gained much quicker than what you can do to your own personal credit. So those are just some of the main reasons why you want to have business credit,
Frank Felker 02:38
you know, something you just said they’re made me think of, and you tell me if I’m wrong, and potential additional benefit is you’re not loading up more debt on your personal credit report.
Michael England 02:50
Exactly. So a large part of businesses is you want to separate your own personal from your business. The tax accounts talk to that all day long. But with the business credit, you’re going off of what your business can power, a lot of the big companies that are out there, they don’t write they don’t use don’t personal credit to just secure it, and then you’re not personally liable for it if the company goes south.
Frank Felker 03:14
Yeah. And that’s a big, big deal. What happens to me if I don’t have it?
Michael England 03:18
Well, if you don’t have it, you’re going to be, as you just mentioned, coming against that cash flow crunch, whether it’s to expand your, your business, we those to buy a new building, whether it’s to get new equipment, if you don’t have access to capital, you’re essentially stuck for that. What I often say is the engine of the business is your sales and marketing. But the capital is the gas for that engine. Hmm.
Frank Felker 03:48
I like that. You know, I think that’s better. I usually say it’s like the lifeblood, but people just kind of look at me with a hazy look on their eyes. They don’t really seem to know what that means. But the gas for the engine, I like that. Yeah, the sales are the engine. But if you don’t have that cash, you you’re not going to keep that engine running for very long. I like that. Thanks for sharing that. I’ll be happy to steal that line from you from now.
Michael England 04:10
You got it.
Frank Felker 04:11
Okay, so you clearly are apparently help businesses get business credit, build their business credit. What kinds of businesses do you work with?
Michael England 04:21
Well, I work with all types of businesses really, it’s a government contractor that starting out and trying to establish themselves the federal government is they demand that you have a DUNS number and that you have a Dun and Bradstreet number, and that you’re able to have good credit to to obtain good credit. I work with mechanic shops, Mom and Pop shots. I’ve done a dance to do those. A lot of real estate, commercial real estate is all dependent upon that business credit.
Frank Felker 04:54
Excellent. And I think probably a great way for us to understand how you have them is, if you could just give us a couple of case studies of, you know, dance studio mechanic shop, what have you, let’s start with what the problem was they were experiencing, how they happen to reach out to you, and then how you were able to solve their problem and what then life looked like afterwards,
Michael England 05:17
although start off with that dance studio, so the dancer has been in business for a few years, they were renting out a space, but they wanted to have their own studio. So she had excellent personal credit, she didn’t have any assets. And sure, cash flow was okay, she went to a number of banks, three banks, they all turned her down saying, because you don’t have all of our criteria, we’re not going to lend to you talking about that, just the other day, I was talking to a banker, and he says, literally, they can only out of 50 loans that accompany them, they were only fun three of them, was his credit is one of those major things. So what I helped I do is I helped her to get business credit by having certain trade lines and, and revolving credits, and lines and lines of credit. Once we’ve done that, that was 60% of all the financing that she needs that in order to expand. And then since then we’ve been able to grow, and her cash flow has increased dramatically because of all this. So that’s one of the example.
Frank Felker 06:29
Correct me if I’m wrong, it sounds like you said, that’s what we did initially. And then over time, additional benefits accrued is exactly an overtime game.
Michael England 06:39
So this is one of the hardest things is most lenders, they will not lend to you if your business is less than two years. So we help them in the very beginning to establish their credit so that at the six-month mark, the year mark the 18 months, and two-year marks, we are able to get the more and more financing. So I you know, I get phone calls, late at nights and hey, I need financing, I need a million dollars, we look at the way that they’re situated. I could maybe give them 100,000 $200,000. But if we help them build up the credit now, then over time, you know, they can come back to me and it’d be that much easier to get them that financing.
Frank Felker 07:21
That makes a lot of sense. Great. I’m sorry to have interrupted you, if you would please go on with the some more case studies.
Michael England 07:28
Yes. So a couple other ones that that we felt is our government contractors, with them trying to get into the into, into the skill of providing goods or services to the government. What we have paid with those one in particular, the owner had horrible credit, he just went through a divorce his wife, his ex-wife took him for a lot of his money, his own personal credit crashed, all of his lines of credits were brought or taken down. So we then helped him with his business credit, and over the period of six months, were able to build that up quite nicely. So that way he was then could rely on his business credit and not his own personal one, which put him in a position to go after a couple of prime contracts for the for the federal government. Something like that is was really beneficial. And, you know, he created to, you know, millions of dollars that he was then able to make.
Frank Felker 08:24
Yeah, and you know, it’s an interesting thing, again, that occurs to me, as you’re 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 or your personal income, it’s going to have a big beneficial impact on that rising tide is going to lift all boats.
Michael England 08:44
Yes, definitely.
Frank Felker 08:46
Okay, and how about the mechanic shop.
Michael England 08:49
So with the mechanic shop there, they were simply just on a cash flow crunch that they didn’t, they went into a few different banks themselves. Because they didn’t have the cash flow or the credit that that the bank needed for their guidelines. They said thanks for coming in, we can help you out. They then reached out to me, so I was able to get them some immediate funding up front and then over the course of the last nine months, helping to increase his credit. So now he has a line of a line of credits that he can pull on to buy supplies. And then the other thing is we’ve helped him to revamped his billing so that he was then able to pull in more money from that. So you take that together, you add it in his own business credit, which he didn’t have any at the beginning. He didn’t know what it was in the initial stages. And then as we slowly corrected it, he has been able to expand it his business and offer more services through his mechanic shop. Interesting.
Frank Felker 09:56
So you said you helped him with his billing. Did this happen? accelerate the collection of his accounts receivable.
Michael England 10:03
Yes, it did. Since he had a bunch of accounts receivables that were outstanding of more than 6090 days, we helped to clear that up immediately. And then help them to reassess it. So we made him cashflow positive in that instance.
Frank Felker 10:20
So do sometimes then your services go beyond helping people build their credit and connect them with capital sources? And oh, yes.
Michael England 10:31
So that business credit is something that I’ve seen a lot of businesses have little to no understanding of balance. And then to follow on with that I have a lot of financial services that can help with getting businesses either traditional or nontraditional lending, so that they can take that next step themselves. Mm hmm.
Frank Felker 10:51
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 can help people as well. Oh, yes.
Michael England 11:01
This, this is something that I do with a lot of medical facilities, Doctor shops, but veterinarians, this is where I help people with doing educational services and counseling services, this, we can do a lot with that. And also going into some of your logistics, oil and gas government contracting. Once again, there’s all different ways that I can help them on the billing side on account receivable size to clear it up and make them get that money so that they can then grow their business. Interesting.
Frank Felker 11:41
You mentioned just a minute ago that you help connect people with traditional and nontraditional capital sources. Yes, it may seem obvious, but if you would, let’s start with defining what a traditional capital source what do you refer to as a traditional source of capital.
Michael England 11:57
So the traditional ones is what most people think about going down to the local bank, the local bank, they will have a number of products designed for businesses either a conventional business loan or an SBA loan, they will, they may also provide some lines of credits, that they can also help with the businesses. But that’s pretty much the large extent what was the majority the banks would be able to offer. So I can help them set it up with that I have relationships with numerous banks, with Vice Presidents of SBA lending, so I can help them get that SBA loan done faster, quicker, and oftentimes less than what they would at the local branch.
Frank Felker 12:41
Okay. Now that as you say, it 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, and in terms of how many people qualify for it.
Michael England 12:55
Yes. So what
Frank Felker 12:57
what kinds of things are we looking at in terms of nontraditional capital sources that
Michael England 13:02
you can connect business owners are so so nontraditional, there’s a lot with real estate investing commercial real estate that we have the nontraditional lending, that that’s, that’s available from the private lenders, we also have all the sources that we can rely on such as account receivable, financing, purchase, order, purchase, order, financing, all those are going to be piled into it. We have some equipment, leasing equipment, financing, all those different ones is that we can help provide people that money to get going. And it sounds as
Frank Felker 13:38
though the building up your business credit, would well tell me if I’m right, would it help you in both of these arenas, in other words, make you more likely to qualify for either traditional or nontraditional,
Michael England 13:54
almost most definitely, according to this statistics that the SBA is put out 80% of people who apply for loan get turned down business loans get toned down. You know, as I made mentioned earlier, you know, in this interview, that’s one of the bankers I just talked to last week, he was saying that every 50 loans that come into the branch, he can only do three of them. The large reason why is people are don’t have the business credit, and they’re not lender compliant with scores back into being having your business credit, some being lender compliance was about 20 different things that that a business needs to have in line in order just to qualify for that funding.
Frank Felker 14:42
Great. Well, let’s go right into that what types of things can 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 to do them today? Exactly. You know, what are the reasons say there’s 20 things that help your compliance. Tell me about a few of them. What can we do quickly and easily that will help us?
Michael England 15:09
Well, first of all, you make sure that your entity is set up correctly with your local county and state records,
Frank Felker 15:16
you mean your business entity?
Michael England 15:18
Yes. So make sure that you’re an LLC or LLP, a secret, make sure that it’s set up correctly. And it’s the same with every single type of information that you put out there that it’s always the same information. So, you know, with what myself I’m real VA Capital Group LLC, I can’t make sure that I can’t put down river capital or leave something out to. So every single thing I put down, my business entity is the same name, across all of them. So okay, so
Frank Felker 15:46
it sounds like from excuse me that you’re talking about two different things. One is that it should be created correctly and established correctly in your local area. But then the second thing is that you always refer to it by the same name, everywhere you talk about it. Exactly.
Michael England 16:03
Okay. The second thing is make sure that you have your EIN number. The next thing is make sure that you have a bank account, a lot of the lenders won’t consider you in business, and you have your own business bank account. Interesting. Another thing is make sure that you have all the correct licenses in order to be working in whatever sphere that your business is operating in. Another one is that I’m starting to see a lot that’s coming up is making sure that your business has an actual physical address, a ray from your own home, those inherent risks that that that lenders are seeing that if it’s a home business, that is much more likely to default, then reload if it has a physical location. So having a physical location is another way,
Frank Felker 16:54
this is true, even if you have like a physical address and a co working facility.
Michael England 17:00
See, and that’s what a lot of businesses are going towards is having the CO working or virtual offices, they that’s an actual physical business address. So when a lender types in your address, they say, yes, this is an actual physical business location. Interesting. So and that’s just one ways that you can save a lot of money is to have a virtual office or a co workspace office.
Frank Felker 17:24
Hmm. And you know, so many of these things, it’s easy to say you should have that you should have already done that, as far as you know, bank account and EIN number, and so many of those things. You know, one thing, for example, it’s funny when you said the importance of a bank account, I know a lot of people, they just haven’t separated their business, from their personal life, even in their own consciousness. So the idea of taking deposits into their own bank account and writing checks out of it and using their own credit card, or whatever. But clearly, it’s hurting them in a variety of ways, not the least of which is their business credit,
Michael England 18:04
the business credit, and then though, putting their own bank account as a liability against it. So if they get sued, that bank account is now open for them to go after. Ouch, ouch. Yeah, yes.
Frank Felker 18:18
And you know, having a physical space, like I use a co working facility, and you know, you can spend several $100 a month, however much you’d like, depending on where the facility is and what benefits you get from it. But it’s just such a difference in terms of professionalism and flexibility. It never really occurred to me, however, that it was helping me from a business credit standpoint.
Michael England 18:46
Yes. Another thing is making sure that you’re not using your own personal cell phone number as, as your business phone up I have in the actual business number. That’s another crucial element and make sure that that that phone number is registered with a 411 directory. Along with that is making sure that you have your website, make sure it’s an active website. I’ve heard of some lenders that say, all right, well, we can’t find your presence online. We don’t know if you exist or don’t exist. The same thing with emails, a lot of people are using Gmail or hotmail.com. To for the for the business outside, you got to have a business email that you can be directed to.
Frank Felker 19:29
That’s amazing. You know, I never would have thought that something like my email address, or how fresh My website is, could impact my business credit rating.
Michael England 19:40
Yep. So right now there was about 50% of all businesses, they still do not have a website and people don’t go to the Yellow Pages, the more they go to Google to try to find the business. If you’re not there. You’re not found you’re losing business.
Frank Felker 19:56
So if you’re not in virtual space, you really do don’t exist, you don’t
Michael England 20:01
exist.
Frank Felker 20:02
What a world we’re living in? Well, it’s good to know though it’s important to know, we could argue whether that is right or wrong, but it is the correct situation. If you’re interested in building your business credit. Now I know you know, you’re talking about these 20 things that you can do. You guys at river Capital Group have actually created an online tool that makes it easy for people to do these things and get it done quickly. Tell us about that.
Michael England 20:28
Yes. So as I said, I are starting to see a trend over and over again, that as far as trying to help a business with a business with the funding, that the credit business credit was lacking. So we’ve designed a website that’s reverse CG dotnet. And they are reverse CG dotnet. You can go in there and it goes a whole wealth of information about what business credit is, what do you need to do to become fundable? What do you need to do to become bankable? What do you need to do to come become qualified, all three of those things are three different metals become qualified fundable and bankable. Additionally, as you register your business with it, they will give you a dashboard to show you exactly what your business credit health is, and what you need to do into it to improve this. So that we really, if you come to me, which was our bike, or if you go back to your bank, then that that point, you’ll be fundable and bankable, so that that way you can get the financing you need for your company. And this is a free service to show you exactly. ROA stands, where your business credit stands and what you need to do to improve it.
Frank Felker 21:40
That’s amazing. And with you, your agreement to it, and it’ll have to be at some point in the future, I can see where I would like to walk through that website with you doing sort of a video podcast, with a screen share. So you could show me how to do that. We obviously 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 a few checkboxes what, what kind of information should we be? Should we be prepared to enter into this form?
Michael England 22:17
Well, first of all, it’s going to be going over those 3020 compliance items that we did, we did talk about the majority of them. In this thing, kind of give you a checkbox. Yes, you have this this is compliant, that you know, this item is compliant. You have a Red Mill, a website and email you have you have you’ve been registered with all the business credit bureaus. And then it kind of goes on to say like, okay, based upon this, this is what you need to do. So those are going to be the things that they’re going to be looking for your business entity ID, it being registered, and helps you to make sure that it will check to see if it’s a physical business location. Another thing is, do you have a business plan? A lot of the lender is going to be asking for that business plan if you don’t have a business plan. I just came across a business this other way. That was the main one of the main reasons why he was denied a loan from a bank was, well, one he had poor personal credit and no business credit. And two, he didn’t have a business plan, the bank didn’t want to touch them.
Frank Felker 23:21
Hmm, amazing. Did so do you think that that’s just like a on off switch for them? Whether the business plan exist or is it they feel as though if you haven’t written a business plan, you’re not serious,
Michael England 23:33
you’re not serious, because of all that helps to show the bank exactly what you’re trying to do. And this is another thing that my reps I can help do is, if you don’t have any of those things, it can directly help you to get each one of those items corrected right there on the spot.
Frank Felker 23:52
Give me an example. What sort of things can it help you correct? And how does it do that?
Michael England 23:57
Well, let’s say in an email, if you don’t have a business email, we can help you set up with a business email right there. The other nice thing about it is we then go for a trade line so a reportable vendor trade line to all the business bureau so that way, you’re starting to accrue acute business credit such as your business location, right? If you’re paying rent right now that rent is not getting you any helping you build business credit. But we have a system in though that say hey, put in your business info, you know your business, rent information, and then we can help that translate that into a trade line. That reports back to all the business credit bureaus. Hmm. So you you’re establishing your business, if you don’t have a phone system, we can help you set up set that up. If you don’t have a CRM system, or a phone system, we can help you set that up right there on that spot to make sure the same thing with business plan and making sure that your entity is correct.
Frank Felker 25:04
That’s great. So you can kind of hold our hand through these 20 steps, and help facilitate the building of that business credit,
Michael England 25:13
exactly. In this sort of take to get registered, all it takes is just a couple of minutes to do to get if you needed all these things, maybe take you an hour to get compliant with these 20 items.
25:29
And how much does this cost?
Michael England 25:30
Well, just to see what your business credit health is, that that’s all free to use to help you to get established, it’s minimal amounts, you know, $20, to set up an email, you know, or $50, for a website, credit creation. And then that’s the way that you can make sure that it’s all compliance. So very minimal. We have several packages out there. For new businesses, there’ll be 299 a month, going up to 599, if you’re a full business enterprise.
Frank Felker 26:08
And did you say there’s some level of this also, that’s at no charge?
Michael England 26:12
Yes, that’s stuff that’s at no charge, just make sure that all your things, you see exactly what your credit health is, and what you need to do to improve that. That’s all free.
Frank Felker 26:22
Okay, so just so filling out answering the questions and filling out the form, there’s no charge for that. Nope. Great. And that’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 river CG dotnet and just start, you know, filling out the form.
Michael England 26:46
Yes, this is open to all businesses are those who want to get into businesses and instead of traveling to to 20 different places to get your business started. It’s a one stop shop. And you can get all situated right there from the beginning, whether they run a business or been around for 10 decades.
Frank Felker 27:05
I bet there’s a lot of I can think of family businesses that I’ve known and others that they might have been around for 10 decades, and they still don’t have a business bank account. I could see where that can help just about anybody. And are there, you know, like little educational resources in there? Is there anything I can learn while I’m in there? Oh,
Michael England 27:27
that’s one of the nice things about it. Going back to a study to the SBA did about three years ago 90% of business owners have little to no idea of what business credit is, and how operates. So 90% of all businesses. So with that, those are whole slew of educational materials, on those eBooks that are under those videos that are on there, and there’s a portion that will pop up, that will kind of tell you what to do on each page and the importance of it. So there’s a whole wealth of information that we can clean from that.
Frank Felker 28:09
That’s great. I applaud you for doing that. That’s the generous educator and sincere advocate for the success of their audience at play. And I just think that that’s the best possible way to help people and initiate and nurture business relationships. And I’m so glad I asked you that 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, how you can do something about it. That’s where the real value lies.
Michael England 28:43
And that’s the thing is business owners. They’re really specialized in what they do the end, I’ve met so many really top-notch people that’s trying to excel the business. Do they know everything about financing, nor do they know anything about business credit? No. And this is how come those experts out there in order to such as myself, and your new to help them to overcome and become better?
Frank Felker 29:11
Now if somebody wanted to speak to you personally and directly? Is that something they could do? Could they call you and ask you? Can you help them with the with the financing problem they’re running into?
Michael England 29:22
Yes. So there, you can contact me directly. Our phone number is 540-318-5700. I just can sit down with a business and just consult with them and what they’re trying to do. You know, there’s no pressure and then we can develop a game plan and what best suits them. There are some businesses that I’ve given all this information and they’ve gone to find the funding elsewhere, which is great. Or you can come back with me and hopefully I can provide that top notch service and The funding for you for the for them to take the next step in business.
Frank Felker 30:04
That’s great. And you said it was 540318? And what was the rest?
Michael England 30:11
5700 5700 700 318 50 $700.
Frank Felker 30:13
So put that phone number in the show notes page for this episode. Now, when they do call you then what happens? I mean, is this, you know, information gathering what, what can they expect, as far as how long the call will take and what’s going to happen.
Michael England 30:35
Some of the times we can be on the phone for just a minute or two, just get you get a brief understanding, I found other people call me up and it’s taken they want discuss the full situation, some financing that I can get to them, and as little as 24 to 48 hours. Those other financing I can get and seven to two to 10 business days. And then there’s some other ones that take anywhere from one month to two to six months to get financing. Those are usually the more complicated deals, mergers are real estate transaction, commercial real estate transactions that take longer time.
Frank Felker 31:15
But yeah, somebody who just had a question, or was just wondering, trying to find out whether you could help them or not?
Michael England 31:23
Yes. And that’s, that’s another thing that I often take phone calls, thinking, Hey, this is the situation I’m in. This is what I’m trying to accomplish. You know, I just did this the other day for a manufacturer, that that presents a broad types of items, they will have four or five things going on at the same time. You know, they just reached out say, Hey, can you help me? And sure enough, we found a couple of different ways that we could help them Excel. You know, that’s
Frank Felker 31:54
a funny thing. Also, I’d be willing to bet 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 say, you know, yeah, you couldn’t get equipment financing. But if you did this, instead, you’d get your equipment plus, you’d have some extra cash leftover plus, you’d have a lower interest rate plus, and, you know, I exactly believe your expertise is invaluable to your clients.
Michael England 32:22
Yes. And this is the thing people can only ask for what they know what to ask for sure. So there has been multiple times in my life for they didn’t know that there were extra types of financing out there in order to help them to overcome those things. So that’s one of the things this is going back to that studio up in that, that when they came to me, they asked me for a very specific product they didn’t qualify for, they didn’t qualify for that. So we have to look at all the alternative means in order to help them get that financing.
Frank Felker 33:02
That’s great stuff. Well, Michael England, thank you so much for joining me today.
Michael England 33:07
It’s been a pleasure. Thank you, Frank.
Frank Felker 33:09
Thanks again to Michael England. And thank you for listening.
Now, here’s what we need to do next, you need to head on over to the iTunes Store and subscribe to the Radio Free Enterprise podcast. While you’re there, why not leave us a glowing review and a five star rating, just saying then head back over to Radio Free Enterprise dot com and register with the site so you can stay on top of all the exciting doings here at RFP HQ. If you promise to do that for me. I promised to remain your fearless host Frank Felker.
Dude Walker 33:40
Until next time, I’ll see you on the radio. Forgiving your entrepreneurial sins with a gentle wave of his microphone, here’s Frank Felker.
