Need To Build Your Small Business Credit?

December 27, 2018 by OSYB Staff

Having good credit is important for individuals as well as small businesses.  Most small business require steady access to cash and credit to create and maintain operations.

When your business credit is established your small business will start to develop a credit identity or business credit profile.  To run your small business, you may need to apply for loans or other financial services which will require an examination of your business credit profile before they will be granted.

The U.S. Small Business Administration shares some tips on how to establish a  credit profile:

1. Set-up your business as a separate legal entity.
2. Apply for a tax identification number, also known as an employer identification number for tax filing and reporting purposes.
3. When your business is appropriately formed and operational, start to apply for credit in your company’s name.

Some basic credit to establish when your company is in its infancy stage:

1. Vendor credit – often a vendor that you use will extend credit to you with minimal requirements.
2. Supplier credit – Sometimes your  supplier will give you what you need and defer payment for a later date.
3. Retail credit – Check to see if a specific business that you use regularly offers a credit card.
4. Service credit – Your service providers like phone, internet, web hosting servers, etc.
5. Business credit card – Open a business credit card to separate your business from your personal credit and to build your business credit.

Establish, maintain and guard your business credit as your business credit profile will affect your financial picture.  The amount of credit, payment terms, interest rates and insurance premiums your business will pay will be determined by your business credit profile.

For more information:  How to Establish Business Credit for the First Time

Image Credit:  Deposit Photos