Most Americans think about their personal credit history, but few give attention to their business credit. But as you start your new business, it's important that it build its own solid credit history so that it can take the financial burden off you as the owner. How can you do this? Here are a few ways to get a jump start.
Establish a Presence. A business is an entity in and of itself. So it cannot get a credit history before it's been legally and officially established. This generally means registering with your state's Secretary of State, obtaining an Employer Identification Number from the IRS, and having contact information with various agencies. While these steps may not be much fun, they are the first move in getting credit as a separate organization.
Get a Bank Account. Your local bank is a great place to start establishing credit. Community banks have motivation to support local businesses and will help walk you through the process of learning what's required for business credit. Start with a basic checking and savings account for now, then graduate to some form of credit line.
Apply for a Business Credit Card. The next step that most businesses take is to get a business credit card. Having established yourself as an entity, you should be able to obtain at least a small line of credit that will help lead to more and will make life as a business easier from week to week.
Establish Credit with Vendors. Have you considered working with your vendors to obtain credit lines? This will make it easy to buy goods, since you can buy them on your account and not write checks or make charges all the time. In addition, they know and work with you, so extending a credit line should be easier than it would be with unknown lenders.
Expand Commercial Lending. After working with these small creditors, it's time to go larger. Commercial lending institutions specialize in helping businesses find the credit they need to expand, to hire employees, and to offer new products. With your basic credit established, working for larger credit lines will become easier and easier. You also know the routine at this point, so coming up with the paperwork will be simpler as well.
No matter what your business needs, working hard and steadily to build your credit will pay off in the long run. You'll be more stable as a business and more able to adapt to future growth. Get started today to meet the challenges of tomorrow.Share