3 BUILDING YOUR BUSINESS CREDIT 101

For many, the idea of running your own business is like a far away dream. Many people stay up late into the night thinking up plans for a business that will never exist. The problem is that many people don’t know how to fund their ideas, and haven’t got a clue on establishing business credit. Luckily, with the right amount of ambition, starting your own business is not as difficult as you may think.

Building business credit is a very important part of starting your business, although many people do not find that out until it is too late. It is easy to confuse your business credit with personal credit, but try not to do so. Your business credit must remain separate from all of your other finances, because this protects you if your business goes under. Don’t be scammed into buying business credit from agencies who claim they can help you as this leads to trouble down the road.

Establishing business credit is easy once you know where to look. Try to find larger companies that might be willing to give you a loan without a personal guarantee. It is important that the company reports you’re on time payments or the loan will serve you no other purpose than to supply you with cash. Oddly enough, there are some non-profit organizations that can help you with building business credit.

The single most important part to building credit for your business is establishing a business credit line. Getting your own credit card for your business not only gives you a line of credit to work with, but it guarantees that your payments will be reported to credit agencies. Never fill out a credit card that asks for personal information like your social security number, as these are really just personal credit cards.

Before you look into getting a line of credit for your business, make sure that you have all of the proper paper work filled out. This makes your business legitimate. You will need to apply for business Tax ID number and have your business incorporated. It also helps to have a thorough knowledge on how your business is going to be run.

Your corporate credit relies solely on the fact that your loaning agencies report to business credit bureaus. Ask any loaners about who they report to and how often. Of course at the same time it is extremely important that you make on time payments on all of your business credit line loans, otherwise you will make your corporate credit bad. For this reason, never spend more on a card then you are able to pay back, even if the card gives you a large amount of money to your disposal.

Now that you know how to get the credit for your business started, you need to go out there and do it. It takes time to build credit for your business, so make sure you get started as soon as you can. At the same time make sure you are keeping all of you personal finances separate, including your assets, so you don’t suffer if your business does.

<< BACK TO ARTICLES