How To Build Business Credit

Having their own business is something many millions of people dream of doing. Many do, of course, but so many others never quite get around to it. One of the factors that may discourage people from getting that business off the ground, is a lack of start up capital; and another may be the risk of losing their own money.

With a bit of thought, planning and effort, though, it may be possible for you to not only raise some start up capital, but do so through business credit. In other words, borrow against the business rather than personal assets.

You may be thinking that you have no business yet. That may be so, but it does not mean you cannot obtain business credit to get your plans started

Building business credit is completely different from building personal credit, and it is best to keep them separate if possible. Some credit reporting agencies will sell a business FICO score based on both the risk of the business and the personal credit of the owner. In some instances, the owner's personal credit is linked to the business credit, separate credit records are profitable. You should also bear in mind that you do not have the same credit protection laws with business credit as you do with personal credit.

There are some important steps to follow in building a good business credit record. Here are a few for you to take into account:

1. Prepare Business Plan And Structure

You are now in the world of business credit, not consumer credit. This means that you are trying to project yourself in a business-like way. In preparing yourself to do this, you will have the added bonus of preparing yourself for the transition from being an employee to being a business man or woman. The more business-like you become, the better your business will do in the future.

But first things first. Your first job is to convince potential lenders you are going to have a viable business. The quality of your preparation is important; if you go seeking business credit without doing your homework, you will be sent back to the drawing board.

To begin with, set up a proper business structure, and if you require any licenses, make sure those are in place. Also, prepare a business plan, with the aid of an advisor if necessary. You can use this to show that you have thought about the business: the products, the markets, the competition, pricing, and all the other elements of the business. Be prepared to defend your projections for sales, and your estimate of start up and running costs.

Again, this has the added bonus of being a good preparation for you, regardless of seeking credit for your business. You will become a better business person for preparing your business plan. Hopefully, that will stand you in good stead as your business grows successfully. Planning will become a part of your monthly or annual routine.

Another preparatory move that will help you is, in the US at least, getting a business credit profile. This can help you to build up business credit without using your personal credit. The benefits in having a business credit profile are many. Most importantly, you will have more cash for the business, convenience in purchasing, protection of your personal assets, limiting of personal liability from the business, and the ability to prepare your business for future lending needs.

2. Become A Good Credit Customer

You will, of course, need to buy equipment, services, stocks and other materials for your new business. If you can find vendors who will grant you credit, all the better; but is best if they are companies who will report your credit history to the major business credit reporting agencies. Dunn and Bradstreet is probably the best know internationally. Unlike with personal credit ratings, or FICO scores, with business credit scores income or income potential play an important roll. The top scores are reserved for the large stable businesses, but with careful and diligent business and crdit practice, you too can achieve a good credit rating.

3. Obtain A Credit Assessment

In order to enter the business credit market, it is best to do a credit assessment. This will determine if you comply with the lender and credit bureau's requirements. Once you have done that, look for businesses that issue credit without the need for established business or personal credit checks or guarantees. Once you have transacted business with vendors on credit, you can utilize those references to build your credit profile with the credit reporting agencies.

In many US states, there are non-profit organizations and/or government organizations that will help you with obtaining business credit. Often there are loans available for start-up businesses or even government grants. Check your state government, or national government if not in the US, web sites for such organizations.

Many retired, or semi retired, businessmen volunteer to help start-up businesses. If you can, take advantage of such help; it will all build your knowledge as you set out on the road to a successful business with a good credit standing. Experienced business people will forewarn you of many of the pitfalls of starting your own business, and you will be better prepared.

This how to build small business credit article was written by Roy Thomsitt, owner author of the Eliminate Credit Card Debt Now website. Roy is a former finance and business professional, now a full time online author.

---

Five Tips for First Time Entrepreneurs

It seems so long ago that I started my first... Read More

Bogus Investor and Consumer Complaints and Consumer Misrepresentation

Like most regulatory bodies in the United States, the Federal... Read More

Multiple Clients Create Your Independent Business

Would you rather have one good client paying you five... Read More

Asking the RIGHT Questions

Which questions do you need to ask to even get... Read More

How to Profit Handsomely From a Secret Business Model Virtually No Small Business is Using!

Have you been searching for the perfect home-based business? I... Read More

The End -- Fireworks or Fizzle?

Seems as though there are a lot of business closings... Read More

Small Business Mistakes: Are You Making Enough of Them?

That's right ­ are you making enough mistakes in your... Read More

Increase Profits With a Small Investment of Time and No Money

The less a business pays for goods and services the... Read More

Expanding your business.

Are you a small business owner who wants to expand... Read More

Franchising in The Middle East There Will Bring Significant Opportunity for US Based Franchisors

As stability emerges in the Middle East there will be... Read More

More Business Card Uses

Why would you use an event pass?Event passes are often... Read More

Franchise Company Operations Manual Sample Outline

Many companies wish to expand and a few wish to... Read More

Government Does Not Pay Its Bills on Time

Many small companies work very hard to get new accounts.... Read More

Small Business Grants - Tips from the Pros

Every business starts with an idea or a dream. To... Read More

Selling Your Business, Entrepreneurs Role

$elling $elling $ellingWhat makes a great sales person? Well, the... Read More

Boy oh Boy, The Obstructions and Obstacles

The bad things starts with the letter 'O'?.like Obstacles, Obstruction,... Read More

When to Say NO!

When is it a good thing to say no to... Read More

Questions to Ask as Your Business Grows

Here are some of the questions that you need to... Read More

How Is the LEGAL SYSTEM Dishing Out JUSTICE in Your Town?

Thankfully, most of us will never find out. That is... Read More

Routine Maintenance of High Pressure Hot Water Motors

If you run a pressure washer business you need complete... Read More

Small Business Success: Thriving During Change (And Landing On Your Feet!)

If I had $1.00 every time I heard someone say... Read More

6 Steps to a Successful Medical Spa Expansion

According to the American Society for Aesthetic Plastic Surgery, since... Read More

Pressure Washing Graders and Tractor Motors

When pressure washing heavy equipment each piece of equipment has... Read More

Home Based Franchise; What About Future Expansion?

As a franchisor I am always asked by new and... Read More

A Key to Success: Be Consistent

Over the years I heard the best way to learn... Read More

The Power of Why: Your Psychological Ally To Marketing Success!

Here's why 'WHY' is such a profit-making marketing trigger."Stop taking... Read More

Becoming Recession Proof

A lot of business owners I've spoken with lately have... Read More

How to Successfully Avoid Becoming One of The 80% of Small Businesses That Will FAIL

It's a commonly quoted statistic: 80% of all small businesses... Read More

Survival Tips For Small Businesses

You may be in Mail Order, Direct Mail, or you... Read More

Truck Wash Business Case Study

Often smart entrepreneurs look for out of the way businesses,... Read More

Modern Clear Coats, Auto Detailers and visit to Lexus of North America

We visited Lexus USA, home of the Lexus North America... Read More

Simple Business Tactics Are Your Key To Success

In a world full of complications sometimes we overlook the... Read More

Have You Thanked Your Competitors Today?

Competition in the business world is often viewed as a... Read More