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Your Guide to Gaining Business Credit


your-guide-to-gaining-business-creditBusiness credit can help a business in countless ways, no matter what their size. Perhaps you’re the owner of a small business and want to raise capital to fund equipment. Or, you could be the Managing Director of a well-established firm in your field, but you need the funds to take it to the next level with an investment into marketing materials. Whatever the reason, business credit could be your solution, but what exactly is it?

What is Business Credit?

In the same way that personal credit helps you get a credit card or mortgage application approved, business credit allows you to borrow much larger sums of money from authorized lenders. It can take a while to set up, as you will need to make sure all the legal requirements are met in relation to the business.

It must be a completely separate entity from yourself, with it’s own tax ID, address and so forth. Plus, you will need to provide certain documentation, such as three trade references from suppliers and creditors who you’ve made transactions with.

Why is it so important?

Many business owners avoid using business credit by investing their own money and personal credit into a company. This can be a huge mistake though, as it can make you personally liable for the business’ actions, and can land you in some hot water with creditors if you fall behind on payments.

There are a number of other benefits to business credit though, such as the ability to negotiate better interest rates, the knowledge that you have a financial safety net, and of course the ability to invest in your business and generate bigger profits from expansion.

It’s hard to know where to start though, which is why it’s always best to get expertise and go through a business credit workshop. Aside from providing you with coaching and access to the most up to date lists of vendors, workshops can help you prepare for the process of building lines of credit, supporting you through the set-up process of your credit profile.

How do I get business credit?

There are several steps you need to go through to get business credit for your company. After you have been through the legalities as mentioned above, you will need to start establishing relationships with local banks and vendors, and building your credit history. For this, you will need to set up small trade lines of business.

These are a way of reporting payment histories to the business credit bureaus. In order to create these though, you will need to set up a business credit profile first. Once you have this, anyone you do business with can report to the business credit bureaus that you pay on time. These smaller trade lines will be absolutely crucial in establishing you as a company that banks can trusts.

I hope you found this go-to guide useful. Are you in the process of getting business credit? Leave us a comment and tell us your story.

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Business credit can help a business in countless ways, no matter what their size. Perhaps you’re the owner of a small business and want to raise capital to fund equipment. Or, you could be the Managing Director of a well-established firm in your field, but you need the funds...