Getting the money you need for your business can be rough. Just getting your business off the ground can sometimes require an enormous amount of money, and if you've got bad personal credit, you may not be able to find those funds on your own. Establishing business credit may be able to help you get the money you need, simply by allowing your lenders to look at your business credit, instead of your personal credit.
Establishing business credit is essential to your business. The first step to establishing business credit is to separate your business credit from your own personal credit. This can be done by establishing your business as a corporation, which creates your business into a separate legal entity from yourself. This means that your business acts as a different person, legally, and your personal credit isn't tied into your business credit. It means that lenders are looking at your business credit instead of your own. In order to do this, you'll need an Employer ID Number (EIN,) which acts for your business the same as your personal Social Security Number acts for you, providing lenders and creditors with a way of identifying you.
The second step in establishing business credit is to start building your credit score through small lines of credit. Suppliers are great places to start this, because they provide what you already have to buy; if you buy it on credit and pay it off in time, you'll be able to use this to stack up your credit score. You'll have to make sure these businesses are willing to report your credit history with them, though; otherwise, they won't be able to help your score at all. You'll need a total of five vendor lines of credit reporting to your potential lenders before you'll be able to get the funds you need.
In order to do this, you'll need a separate bank account for your business. You'll also need to have all the business licensing required to be open for business, and you'll need a separate phone line registered in the phone directory for your business. This is really just structural detail, but if you're missing any part of your legal paperwork or general business necessities, you won't be able to establish a good line of credit.
There are three business credit reporting agencies you'll need to file with: Equifax, Experian, and Dun & Bradstreet. These reporting agencies will be able to keep track of your credit and report it to the lenders you want to get loans with. You should be able to open files with these companies for free.
In addition to these three reporting agencies, you'll need to check out the lender requirements. There are twenty different lender requirements that you'll need to have established before any lender will consider you. These are simple requirements, but you'll need to get them all taken care of before you'll be able to find funding.
In addition to these, you'll need three different credit cards that report your credit history. Make sure you find a credit card company that's willing to set up an account with your business, not with you personally. Many credit card companies require your Social Security Number, and that won't keep your personal line of credit separate from your business line of credit. You'll need to find credit card companies that are willing to treat your business as a separate entity.
It will also help you build credit if you can find a bank loan. This may not be easy - especially with little established credit - but a small bank loan may be attainable. You'll want a bank that will report your credit history to other potential lenders, and the real purpose of this loan isn't to borrow the money; the purpose is to pay the money back. Really, all you're looking for here is a good name on your résumé. You may be able to establish a corporate credit line that will report your credit history with the bank; that will allow you to take out small amounts of money at little risk to either you or the bank.
Corporate Credit Concepts specializes in "KEY PHRASE". For more information about "KEY PHRASE" and how it might benefit your business, please CLICK HERE for a free phone consultation.