Don’t Let a Low Credit Score Hold You Back From Small Business Funding
Sometimes bad credit can prevent you from expanding your business to achieve the desired growth. Most lenders assess the credit of a small business owner, and having credit troubles in the past may hold you back from qualifying for a small business loan in the present. Below is a list of ways to improve your business credit score.
Make Your Payments Routinely
Once you secure a business credit through loans, trade credit, or credit cards, you should pay it back in due time. The approach may not be an ideal credit-building process, but it is crucial. Most lenders assess your business credit score before releasing the funds to know if you can reliably pay back the funds. You should make timely payments by scheduling automatic payments and setting reminders.
Assess Your Credit Report
Assessing your business credit score reports is a foolproof way of building solid business credit. Checking your business credit report may cost you money, but it is a worthwhile investment as it affects your ability to secure financing in the long run. Ensure your creditors and vendors make timely payments as agreed, and note any errors that may drag your credit score down.
Register Your Business
Before worrying about other things, you need to ensure your business is set up properly and legally. Set up an address and a name for your business with an appropriate legal entity such as a limited liability company, corporation, or sole proprietorship. You must secure an employer identification number (EIN) from the IRS to ensure there are no legal hurdles along the way. Create a business bank account to separate your personal funds from business funds.
Utilize Your Business Credit
Securing and using business credit takes several forms, depending on your business needs. You should secure trade credit to pay for purchases if you work with specific vendors. Business lines of credit and classic business loans provide a great option to utilize your credit. Request your potential lender about credit reporting policies before committing yourself to business credit to secure the credit score boost you want.
If you’re a startup, you should take the time to build business credit. Your business’s credit score and credit history affect everything from your business’s insurance premiums to its ability to secure a business loan. Contact an expert from Charis Commercial Capital to secure commercial financing for your startup.