Build
Business Credit
most businesses wish to be able to borrow money when they need it, with no owners having to guarantee the loans personally. This means less risk towards the owners. However, wanting to get credit for your business and actually getting it can be two various things.
One company recently approached us because in the last two years they had made a successful business, with over twenty employees. However they could not get a business loan because they had not taken time to build a company credit profile and did not know how to start.
most businesses wish to be able to borrow money when they need it, with no owners having to guarantee the loans personally. This means less risk towards the owners. However, wanting to get credit for your business and actually getting it can be two various things.
One company recently approached us because in the last two years they had made a successful business, with over twenty employees. However they could not get a business loan because they had not taken time to build a company credit profile and did not know how to start.
You might have seen marketing hype about how a business credit profile can overcome a poor personal credit file. In most cases, however, it is important that smaller businesses have both good business credit, as well as solid personal credit for owners. This is especially true in the current environment where investors and venture capitalists are not handing money out to just anybody who can breathe and has a company idea! Even established businesses will find it necessary in some instances to supply the business owner's personal guarantees on some loans or charge cards.
Building business credit is completely different from building personal credit, though your individual credit may be linked somewhat. For instance, credit rating giant Experian sells a business credit rating that is based on both the risk of the company and the personal credit from the owner of the organization.
Additionally, you do not have exactly the same credit protection laws with business credit that you simply do with personal credit. Therefore, you want to make sure you start out on the right foot, or it can be difficult to make corrections.
The key to correctly establishing business credit is twofold:
1. Setup the correct business structure and take basic steps to ensure your business appears "real" and stable to the business credit agencies. That means obtaining the proper occupational licenses, along with a telephone number that is listed with directory assistance within the businesses' name, amongst other things. Your company will normally take some type of corporate structure to effectively develop a business credit rating.
2. Borrow or order products and services from companies that will report your credit report towards the major business credit reporting agencies such as Dunn & Bradstreet and Experian.
Unlike personal credit scores, where one can possess a small income yet obtain a top FICO credit score, the best business credit scores are restricted to large stable businesses, individuals with into the millions dollars in sales a year and 25 to 50 or even more employees.
Try not to let that prevent you! If you take several careful steps, you can begin small; still build a decent business credit score to help you get the borrowing power your venture needs.
Entrepreneurs are usually hard working, creative and willing to get the job done. Fortunately, these same qualities may help you with the process of building strong business credit. Start now! To learn more about building business credit, visit to http://www.noriomatsumoto.com/.
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