Establishing and maintaining solid business credit rating is crucial for growing and managing your business. Here are 8 easy steps that will greatly increase your chances of securing a small business loan or credit line- at the best terms offered!
1. Form a separate entity. First, you must separate your personal credit profile from your business, which is done by legally organizing your business as an S corporation, C corporation or Limited Liability Company (LLC). Establishing your business as a separate legal entity allows you to build a business credit rating that is separate from your own personal credit rating.
2. Open a business checking account. Business funds must be separated from your personal funds. Make sure that your account is titled in the same name as the business entity, using the correct business address.
3. Take a number. If you haven't done so already, you'll need to obtain an Employee Identification Number (EIN) for tax purposes. Additionally, you should also get a DUNS number - issued by Dunn & Bradstreet - to ensure that accurate, impartial and trusted information about your business is available.
4. Permit yourself! Make sure you have all of the necessary permits and licenses of your business to legally operate in the city, county or state where you are operating.
5. Get the "411" for your business. Your Business phone line should be listed with 411 directory assistance under the exact business legal name. Additionally, take time to verify that all business accounts (utilities, business credit cards, etc.) list your business using the same name and same address.
6. Start Building "from the start." Instead of putting your personal money directly into your business, invest in a CD (Certificate of Deposit) at your local bank and then take out a business loan against it. Securing this business credit will help build a better business credit score.
7. Leverage "business friendly" vendors. Establish credit with vendors and stores that are business oriented and more apt to provide business credit cards or lines of credit than traditional lenders. You can establish a stronger business credit rating by adding various creditors to your credit file.
8. Pay your bills on time. Timely loan and bill payments create a strong credit profile. Pay on-time....every time!
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