Business credit is the ability of a business to qualify for financing. Businesses have credit reports and scores just like people do. Business credit bureaus Dun & Bradstreet, Experian, and Equifax all keep a record of debt payments and other credit information on businesses.
Your business credit report may be used by lenders, creditors, suppliers, insurance companies and other organizations evaluating a credit or insurance application or business deal.
These tips on how to establish business credit and then build a business credit profile can help you bring your plans and aspirations to fruition.
Strong business credit can help you grow your business. Many banks, investors, and companies rely on your business creditworthiness when setting loan terms, determining insurance premiums, increasing lines of credit, or considering you as a viable partner
You must actively work to build business credit. But you can do it easily and quickly – much faster than building consumer credit scores. vendor credit is a big part of this process. If you try to do the steps out of order, you will be turned down repeatedly. Fortunately, we know the steps to take. And we know the order in which you need to take them. There are a ton of benefits that business credit provides. This includes that you can build a credit profile for a business that is completely separate from you personal credit profile. This effectively gives you DOUBLE the borrowing power as they have both personal and business credit profiles built.
Business credit scores are based only on whether the business pays its bills on time. You can get credit much faster using their business credit profile versus their personal credit profile. Approval limits are much higher on business accounts versus personal accounts. This is yet another benefit. Per SBA, credit limits on business cards are usually 10 – 100 times higher than consumer credit. The business can use its credit to qualify for credit cards from major retailers, even MasterCard or Visa. The business can also qualify for credit lines and loans. When done right, you can build business credit without a personal guarantee. You can get business credit quickly, regardless of personal credit quality. Plus you can get a lot of business credit without taking on personal liability, or a personal guarantee. This means in case of default; your personal assets can’t be pursued.
The four tiers of financing
There are four tiers of financing available to small business owners. It is important to be familiar with each tier and to develop a strategy for financing your business that cleverly uses these tiers.
Here is a brief summary of each:
Set up your Articles Of Incorporation
Get an EIN
Business phone number
Setup a website
Business credit monitoring
Business strategies & consulting
Learn how to dine for free
Learn how to fly for free
Why use a small business credit card instead of a personal card?
Small business credit cards are an easy way to start building credit for your business – so you have the credit when you’re ready to take your business to the next level.
Check out this great video out about PAYDEX.