Building Business Credit

Starting a business is overwhelming in itself, never mind having to think about credit.  Your business will need good credit to maintain itself and become more successful.  You can get and maintain good credit for your business in a few different ways.  You might apply for a business loan to start your business and this will show up on your business credit report.  

Make sure if you take out a loan to start your business, it is a payment that you can realistically make and make on time.  Try to pay it off early as long as there aren’t any early pay penalties, ask your bank about this before signing any paperwork.  Realize that this loan will be your most important payment each month and make it the first bill you pay, the next being rent!  

You might also find yourself applying for credit with vendors or suppliers; this can help you build up some credit so that you can apply for a business credit card down the road.  If you purchase supplies for your business, such as restroom supplies, office supplies, shop supplies or anything for your business, ask those suppliers if you can apply for a charge account where you can order and receive a bill from which to pay.  

This will help you to build your business credit with them and then you can use them as a reference as long as you pay them on time.  When you apply for a business credit card, you can list your business loan and these suppliers as references.  Even if this results in a small line of credit, that can grow as your business grows.  

If your suppliers offer you credit and send you an invoice, notice if they offer an early payment discount.  If the terms are net 30 but there is a 2% discount if you pay within 15 days, take advantage of that.  It not only helps your business credit, it saves you money.

Bio

Michelle Dunn is an award winning author and columnist frequently featured in the Wall Street Journal, CNN and Forbes. Look for her newest book being released in May by Wiley Publishing titled, "The Guide to Getting Paid, weed out bad paying customers, collect on past due balances and avoid bad debt, available for pre-order now on Amazon.