Many small businesses could benefit from having additional capital available to free up their cash flow, but unfortunately most will never know that they can establish and generate business credit for their business without using their personal credit.
There are 3 critical things any small business can do to ensure it is building business credit.
Beware of “business” credit cards
Don’t apply for credit cards claiming to be “business credit” cards if the app asks for your personal information, like your social security number. This is a clear indication that it is a personal credit card disguised as a business credit card.
Prepare your company documents
Make sure your small business is set up correctly from the start. That means having your articles of corporation properly filed with the secretary of state in the state in which you do business, as well as filing with the IRS a tax identification number (sometimes called an EIN number). This information is essential to complete a true commercial credit application.
Get your business listed correctly
Make sure your business is listed by business credit reporting agencies like Dun and Bradstreet. You can visit them at dnb.com and see if your company is already on their system.
Establishing and developing business credit is the most important thing you can do to help your business grow. Following these critical steps will help ensure that you can properly build business credit.
Having these things in place for your small business before applying for a business loan or line of credit can mean the difference between being approved or denied.