Business Credit is important for every business as it is used by lenders to determine how and if they are willing to give out small business loans or lines of credit. Therefore, building business credit is a no-brainer if you wish your company to succeed. The three major credit-reporting agencies are Dun & Bradstreet, Experian, and Equifax. Just like your personal credit score allows you to receive credit cards and other loans from financial institutions, your business credit score is just as important when you have a company of your own. These days, not too many businesses understand how important Business Credit is for growing and maintaining positive cash flow in your business.
Why it is important:
Business credit is very important for your growing your small business. When you build your business credit, you are in effect separating your personal credit from your company so you are not personally liable for anything if your business was to go wrong at any point or run into any problems. There are business opportunities out there that you may not be able to grasp if you do not build your business credit. Having good business credit is not only good for the company in the short run; in the long run your business credit shows that your company is viable and in good standing. This can lead to investors wanting to get a piece in the action (stock for example) because they know your business has stood the test of time and could be a good asset in the years to come. The most important reason on why business credit is important is because you cannot get a loan or line of credit without it, especially in the type of economy we are in today.
How you build business credit:
Business credit is built by some of the same ways personal credit is developed. Paying your bills on time will always help your business credit score, including any credit cards or loans your business may incur. Building business credit consists of six main areas, which will start helping your business right away. These steps contain your foundation, your fundability, credit agencies, vendor credit, credit cards, and bank credit. Within each of these steps, you will discover the foundation that you need to have to access capital. Building business credit does not happen over night. It takes time. There are many different kinds for business credit services that will tell you they can get you a good business credit score in 30 days. NOT POSSIBLE!!! If you build your business credit the correct way, it should take between four and six months. As you make your business payments in a timely fashion, your business credit sore will go up, proving to lenders that you are a low risk small business borrower.
What has your experience been with business credit? Has a lender ever asked you about your business credit score? Did you know business credit was important?
Author: Eric Henningson Director of Marketing, T3 Media
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I believe that there are two things that businesses can do when they are in the process of building business credit. One is to set up a business using a very simple and basic structure. This will help your business appear strong and stable to credit bureaus. Another thing is to buy products and borrow products from companies that will report their credit history. Mostly large and stable businesses are the ones with the highest credit scores.
To prepare a good busines credit all that a busines needs to do is to prepare a proper business paln and structure,be careful and diligent in business and credit practice and taking help of some volunteer retired businessmen.
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When it comes to funding to reinvest, personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds can become mind boggling as there is such a market for these services, and at the moment they they are in high demand, I think it’s important to do your homework and make sure you use the correct lender.
Thanks,
Laura
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