Building Business Credit
Most businesses want to be able to borrow money when they need it, without the owners having to guarantee the loans personally. This means less risk to the owners. But wanting to get credit for your business and actually getting it can be two different things.
It's important that small businesses have both good business credit, as well as solid personal credit on the part of the owners. This is especially true in the current environment where investors and venture capitalists aren't handing money out to just anyone who can breathe and has a business idea!
Building business credit is completely different from building personal credit, though your personal credit may be linked in some ways. For example, credit reporting giant Experian sells a business credit score that is based on both the risk of the business and the personal credit of the owner of the company.
The key to properly establishing business credit is twofold:
1. Set up the proper business structure and take basic steps to ensure your business appears "real" and stable to the business credit bureaus. That means getting the proper occupational licenses, and a phone number that is listed with directory assistance in the businesses' name, among other things. Your business will generally need some form of corporate structure to effectively build a business credit rating.
2. Borrow or buy products and services from companies that will report your credit history to the major business credit reporting agencies such as Dunn & Bradstreet and Experian.
The biggest insider secret to building business credit is a 1-3-5. Where "1" is a bank loan, "3" is revolving business credit cards and "5" is vendor/supplier lines of credit. The "must have" insider secret to building business credit is that all these accounts must not be connected to your personal credit and they all must report your payment history to the business credit agencies.
The last insiders secret to building business credit is that you must completely separate your business credit from your personal credit. Unfortunately most business owners are either unaware that business credit is just as important as personal credit or they never invest the time to do it.
A business cash advance is one way to obtain financing for existing businesses without a good credit score. You can apply for a business cash advance in the form to the right.