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This business coaching lesson discusses the most common credit mistakes.

Results-Focused Training, Tools, and Workshops from Expert Business Coaches.

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Lesson Nugget: Applying for multiple lines of credit in a short period of time will not only affect your credit score, but can also show your desperation to a lender.
  • Definition Magician: Soft Pull - A soft pull shows a brief snapshot and summary of your credit history rather than a full report.
  • The 7 Most Common Credit Mistakes: 5) Submitting multiple applications
  • The 7 Most Common Credit Mistakes: 6) Co-borrowing
  • Lesson Nugget: Co-borrowing can cause difficulties when attempting to acquire more capital; but if one business partner is alone responsible for the liabilities of the business, then it may be easier for another partner to acquire additional capital.

capital teaching better than khanacademy, start a business

-Hey, this Daniel McKenna here, Executive Producer of thrive15.com, and today, we are here with David Nilssen, and we're talking about the most common forms of small business financing when you start a business. If you don't know who David Nilssen is, David Nilssen is the co-founder and CEO of Guidant Financial. Guidant Financial has helped to connect small business owners to over $4 billion of capital that has been used to create over 60,000 jobs throughout the United States.

Specifically, you'll be learning about the plethora of different ways that you can finance your business after you start a business and what you can do today to start searching for funding. Now remember, here at Thrive 15, we believe that knowledge without application is meaningless. So if you don't take today's lesson and apply it to your life and/or business, then today's lesson could be more meaningless than buying a star. I mean, really, what are you going to do with it? You cannot take that anywhere. It does not fit in your pocket, can't fit in your car. It's probably super hot.

-Super Dave, thank you for allowing me to come to harass you at your great boardroom, my friend.

-Glad you're here.

-Hey, the tour was inspiring, and I'm not kidding. It's like Disney World in there. It's fun. You've got the monitors up there, where you manage all the metrics. You've got a big, open space. I love it. Does it pump you up?

-Yeah, it's fun. I like our environment, because it's a lot of good people, who've got great energy, who do good things. So, yeah, it's great.

-Awesome, awesome-- well, we're going to talk about the most common forms of small business financing, and this is something you know a little bit about. You're not a direct lender, but can you explain to the Thrivers around the world what exactly your organization Guidant Financial does?

-Sure, so Guidant Financial, we are a conduit for individuals that want to access capital. So most people, when they're looking for capital, will go to a bank and apply for a loan and likely get denied and then get frustrated with the process. So what we've done is we've built relationships with hundreds of capital sources around the country and have some proprietary services that we provide that allow people a variety of ways to access the capital that they need for buying a small business, starting their own, or even going into a franchise system. And it's very successful. Over the past 11 years, we've helped 10,000 entrepreneurs deploy $4 billion into small business franchising.

-$4 billion?

-$4 billion.

-Billion-- wow. Now, before we-- if you're watching this, and you're saying, $4 billion? Billion, I don't even know that word. Billion, that's a lot. And I'm just starting a small business. How am I ever going to get to that level? I want to give you some encouragement, and so I've put together a list of some entrepreneurs that I know of that started in a physical garage. Like, it actually started in the Garage Majal.

So you amazon.com. You have Apple. You have Disney. You have Google. You have Harley. You have Hewlett Packard, and you have Matel and Yankee Candle. They all started in a garage. And so, you're dealing with a lot entrepreneurs who are starting in the garage. You help people turn their dreams into reality by connecting to the funding they need, correct?

-Yeah, I mean our target market are people that are looking to acquire a business or capitalize a business with less than a million dollars. So we're talking about Main Street American small businesses.

-Quick question, if somebody's thinking about calling you, though, what's it going to cost? If I call you, am I going to pay $500 an hour if you help me find capital, or am I going to have to pay an upfront fee, or how does that work?

-No, generally, individuals pay us based on the type of funding they're looking to secure. And it's anywhere from $2,500 to $5,000, but it is only based on success. So if we can't help you find capital, you will not incur any fees.

-That's awesome. That's awesome. Well, we're going to deep dive now into the 10 most common ways to finance your business. And "Inc Magazine" did an article there called "10 Ways to Finance Your Business" where illustrate these. And so what I want to do is I want to just kind of off the top 10, and then I want to let you add some anecdotal feedback on each one here.

So, one is the bank loans. Two is the credit cards. Three is the 401(k) rollovers. Four is the crowdfunding. Five is the pledging some future earnings. Six is angel investors. Seven is the SBA loans. Eight-- family and friends. Nine-- microloans, and 10, factoring, where you sell your receivables for cash up front.

And what I wanted to do is focus on some of the ones that Guidant Financial specializes in, ones that are right in your wheelhouse. So, if we could start here with the 401(k) business financing, first off, what is 401(k)? Who's 401(k)? Is that a droid from a "Star Wars" movie? What is 401(k)?

-Yeah, so the 401(k) rollover that they're referring to is really more something that the industry term is actually rolled overs for business startups. The acronym being ROBS. So that process is something where an individual can use their existing retirement assets, and instead of buying stocks, bonds, and mutual funds, they can actually invest physically in their own businesses. So that can come from an IRA, an old 401(k) that you might have had at your previous employer, SEP IRA, a 403(b), if you're a teacher, or even a military plan.

-So if you have some kind of money set aside for retirement, you can tap into those funds and use those to start a business?

-So anyone that has an IRA, we'll use that as an example, can take that money and invest it in stock. And since we're in Seattle, let's use Microsoft as an example. So I can take my IRA, and I can send money to Microsoft, and in exchange, I get to hold shares in Microsoft. They get to use my money to go build and grow their empire.

Same thing happens here. Except for instead of investing in a publicly traded company, I'm investing in stock in my own privately held organization, one where I'm working in the business, and I can directly impact the value and the performance of that investment.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • The 7 Most Common Credit Mistakes: 7) Monitoring your credit
  • Action Step: Be proactive in managing your credit by subscribing to sites such as Myfico.com or Creditexpert.com.
  • Notable Quotable: "What you measure gets managed."
  • Lesson Nugget: These websites allow you to see your credit in real time, dispute any inaccuracies, it alerts you when any changes have been made, and when your balance goes up or down.

-Let's say that I'm married to somebody. Should she get credit over here? So she applies for funding over here. And then if I apply for funding, does that count as not co-borrowing? Or are we both on it together if we're married?

-Well, now we're getting into family law.

-Oh, OK. Sorry.

-No, it's OK. Your spouse and you are typically going to be bound to the same debts.

-But if you were sitting together with two dudes, related to a dude, or whatever combo-- they're partners. You would say, hey, you go ahead and apply for the capital, the working capital, let's say. And this other person, you can apply for this capital here. And we're not going to do it together, so you both [INAUDIBLE].

-If they can, it may make sense. Yeah.

-OK, awesome. Now, the seventh-- this is the final one here. Ba da dum bam bam bam. OK.


-This is one of the most common areas of mistakes that people make with managing their credit is monitoring your credit. How do most people get it wrong when it comes to monitoring their credit?

-Yeah, so I think this is the most important piece in general. And it's probably just a good lesson for entrepreneurs in general. What you measure gets managed. Period, right?

So I wear a Fitbit. I do that because I want to measure whether I'm sedentary or I'm getting new steps in every single day that I want as an individual. I set a goal, and I measure that every single day. With credit, the same thing.

In a business, you might have a corporate dashboard-- the key metrics that are most important to you for being successful. So when it comes to credit, there are companies out there. I personally subscribe to myfico.com. There's another one, creditexpert.com.

These are organizations that allow you to see your credit in real time, allows you to dispute any inaccuracies that you find on it straight through that dashboard, and it also will alert you when any change has been made. If somebody has inquired on my credit, I get an alert. If a balance has gone up, I get an alert. If one's gone down, I get an alert.

And it helps me understand what is happening in my credit real time. If there is something on your credit that's inaccurate, it can take up to six months to get that off. So if you're in the middle of a funding event, and you go to apply for credit, and you realize, uh-oh, I have something I need to fix. That can set you back a long time. So it's being proactive about managing what I think is one of the most important financial tools we have as people.

-So you really do believe that we need to measure this, to manage it. How often? Should we check it every day? Every month?

-Well, the good news is it's a push system.


-So in fact, it's funny. I was doing a speaking event maybe three or four months ago. And I'm talking about this exact thing. And I had felt a buzz on my phone. And I thought, oh shoot. I should have turned my phone off.

So here I go. I go to turn my phone off just to be polite to the audience. And there it is. I got an alert. Some credit balance had changed on one of my credit accounts. So the report that had gone in. And it comes straight to me.


-So I don't actually have to go in every single day and look at it. But I'm being proactive as in the fact that as changes are made, I can react to those if necessary.

-I don't expect you to be like the pricing Moses for myfico.com, but roughly what does that cost per month?


-$20. Awesome. That's a good investment in your mind?

-It's an imperative investment in my mind.

-OK. Now, final question. This is the one that the Thrivers really want to know. I'm sure that they're motivated to hear this one. So I'm going to ask it. It's a tough one. It's a tough one.

We're in Seattle. Obviously, Bill Gates, Microsoft, it's all here. I mean very near here-- Microsoft.

If you had to choose the mayor of Seattle-- you know, it's up to you-- Bill Gates or Steve Jobs? And when Steve was alive. Bill Gates, Steve Jobs. Who would be the mayor of Seattle in your mind if you had to choose?

-Who would I choose?

-Yeah. I mean if you had to choose. You're the sultan. You're the head of mayor. You can choose the mayor.

-Is there a C option?

-OK, so you have-- let's try again. You have Bill Gates, you have Steve Jobs, you have Howard Schultz, and you have Ichiro Suzuki. Who would you choose?

DAVID NISSEN: So yeah. I'm still going to go with Bill Gates.


DAVID NISSEN: I think Bill is a phenomenal businessman. I think he's done some amazing things for this community. And I love his personal vision for philanthropy.

-Awesome. Hey, thank you so much, by friend. I appreciate you.

-Thanks for having me.


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