Why Build Business Credit?Simple. Because it establishes a solid business foundation that gets you “APPROVED.” It doesn’t matter if you’re a new or seasoned business owner. One day financing will become one of your primary concerns.It’s just like how we eventually learn the importance of our personal credit. We know that our personal credit must be at a certain level in order for us to get approved for a car or a home.In fact, if you never build credit for your business, you’ll be stuck with using your personal credit for practically every business financing opportunity. That’s why many business owners suffer from poor credit to this day. It’s because of over-leveraging their personal credit.Here is the difference when you build business credit.Lenders can evaluate your business credit profile to get you approved instead of your personal credit. They’ll base the terms of the loan on the creditworthiness of your business instead of you personally.More benefits are…1.) You can maximize your access to cash since loan approvals are almost automatic.2.) You can get the best possible credit terms including low interest rates and fees.3.) You can reduce your expenses by improving the flow of cash infusion into your business.4.) You can enjoy peace of mind since it protects your personal assets and reduces your personal liability.These are really just a sample of the benefits that you can receive.To enjoy these benefits, it’s absolutely essential that you build a solid credit profile. Then you’ll be in a position to open up more opportunities for yourself and the growth of your business.Information Established By Your Business Credit RatingThese are the type of data lenders will review on your business credit profile…
The date you started the business
Information on the leaders in your company
The number of employees
The past financial behavior of your business and predictions of future behavior.
Building Credit – How ToAs mentioned earlier, building a good credit profile results in many advantages for you and your company.It will assist in securing lines of credit, credit cards, as well as any other business loans that you apply for.It will help you to secure future financing with a credit supplier.It can even assist you in purchasing supplies and/or investment property to use in the day to day operations of your business.At this point, you may think to yourself, “Ok, it sounds good, but how do I build business credit to begin with?”Here are fundamental tips to help you build business credit:1. Create and establish a business profile. One of the best ways to do this is to incorporate or create an LLC.2. Obtain an “EIN.” It’s a federal “employer identification number” that identifies your business like a social security number identifies an individual.3. Ensure that you have a copy of all the licenses that your business is required to obtain by law.4. Obtain an official telephone number and location associated with your business operations.5. Create a Web site and business email address.6. Open a business checking account with a financial institution.7. Create a profile with the 3 major business credit bureaus.8. Establish a positive reputation by paying bills on time among creditors such as vendors, retail businesses, small retail credit cards, major credit cards, and major financial institutions such as banks.9. Deal with companies and agencies that report to the 3 business credit bureaus.10. Limit credit use in the early days of operation to avoid falling into the trap of too much credit.Remember, even with a poor personal credit history, you can successfully develop a positive credit history with your business.If you follow the steps above you’ll begin to build a solid business credit foundation that gets you “APPROVED!” Having the financing you need when you need it will ultimately allow for many opportunities to achieve the success that you desire.