Building Business Credit

1 replies
Every once in awhile someone posts a thread about building business credit. If you are at all familiar with business credit you know that if you have it, you don't have to, in most cases, put your personal guarantee on the loan or funding documents. This means your personal assets aren't at risk (again in most cases).

I thought I'd post 20 steps that are very helpful in building business credit. Of course, you may have a steady cash flow and not require a D& B number or an Experian or Equifax number. If so, diregard this thread.

The 20 steps:

1. State Records: Your entity must be open, active and in good standing.
2. Federal EIN: Your Employer Identification number filing must match your state filing exactly.
3. Bank Account: The day you open your "business" bank account is the day your business starts in the eyes of lenders.
4. Business Licenses: All applicable business licenses must be filed.
5. DBA: Any DBA's must be on all state/federal/banking records.
6. Separate business phone: Your business must have its own phone number.
7. 411 Directory: Business phone number must be listed with 411 under the exact legal name.
8. Experian: File must be open with a credit history and good score.
9. Dun & Bradstreet: File must be open with a credit history and good score.
10. Equifax: File must be open with a credit history and good score.
11. Business Credit Histories: No lates or derogatory on the business reports.
12. Physical Address: The business needs its own physical address.
13. Bank Rating: Your business bank rating should be a minimum of a low 5.
14. Tax Returns: All applicable business tax returns must have been filed.
15. Public Records: No liens, judgments pending against the business.
16. Credit Cards: At least 3 business credit cards with payments made early.
17. Vendor Credit: At least 5 vendor lines of credit with payments made early.
18. Comparable Credit: A larger loan from a non-bank lender with payments made early.
19. Bank Loan: Securing a small bank business loan with payments made early.
20. Business Model: A summary of your business plan with revenue projections.

These aren't the end all be all but they are a fantastic start. If you have the above, you probably already have an excellent business credit standing.

From what I read in this thread, folks are searching for ways to make their company viable in the eyes of their prospects. This is one method.

Like I said, if you already have a great cash flow and don't believe you need this advice don't read this post. I hope this info helps.

#building #business #credit
  • Profile picture of the author sandalwood
    I forgot to mention that once you build your business credit it won't matter if you have good or bad personal credit. The reason: You will be borrowing money in the business name. Since you took the necessary action to build superior business credit, your personal credit won't matter in most cases.

    Didn't want that point to pass by.
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