This is because by separating the finances of the business from that of the business venture, the entrepreneur reduces the personal risk in the event of a failure of the business.
Initial Steps
The initial steps of building the business credit profile are fairly simple. You need to register the business, incorporate it, obtain all the necessary permits and licenses, and get a business telephone number. Ensure that this telephone number is listed in the Yellow Pages. Most banks and financial institutions check for these before extending credit to your business.
For building business credit you need to take other steps as well. For instance, you need to obtain a few business credit cards and use them to help fund small purchases for the business. Make sure that you will have the funds to repay the credit card companies in full when the amount becomes due, or you will end up damaging the credit rating of the business. Once the credit card companies report this positive payment pattern to the credit rating agencies, you will be able to obtain business credit with no personal guarantee.
Ensure Listings
You can also improve the credit profile of your business by making sure that it is listed with all the business credit bureaus. Apart from the major credit bureaus, approach the niche bureaus with your company's profile and ask them to rate it.
To build business credit you need to also approach vendors and suppliers for credit. Ask them to supply goods and services on credit and pay them back on time. They will report the prompt payment to the credit rating agencies. One can also pledge the assets of the business with the bank to obtain a low-cost loan. If this loan is serviced properly, the bank will soon be willing to increase the loan amount even if there is no corresponding collateral.
Stick to Business Loans
By avoiding using your personal credit score to obtain finances for your business, you will be able to use personal credit for personal emergencies. A savvy entrepreneur is one who starts building the business credit score even as they work on building the business. This is crucial as no business can sustain over the long run unless funds are injected into it at appropriate times. By working right from the beginning at convincing creditors to extend business credit with no personal guarantee, the entrepreneur can lay a firm foundation for obtaining funds as and when needed. This makes it easier to change the business direction to meet emerging market trends and ensures the success of the business over years.
Initial Steps
The initial steps of building the business credit profile are fairly simple. You need to register the business, incorporate it, obtain all the necessary permits and licenses, and get a business telephone number. Ensure that this telephone number is listed in the Yellow Pages. Most banks and financial institutions check for these before extending credit to your business.
For building business credit you need to take other steps as well. For instance, you need to obtain a few business credit cards and use them to help fund small purchases for the business. Make sure that you will have the funds to repay the credit card companies in full when the amount becomes due, or you will end up damaging the credit rating of the business. Once the credit card companies report this positive payment pattern to the credit rating agencies, you will be able to obtain business credit with no personal guarantee.
Ensure Listings
You can also improve the credit profile of your business by making sure that it is listed with all the business credit bureaus. Apart from the major credit bureaus, approach the niche bureaus with your company's profile and ask them to rate it.
To build business credit you need to also approach vendors and suppliers for credit. Ask them to supply goods and services on credit and pay them back on time. They will report the prompt payment to the credit rating agencies. One can also pledge the assets of the business with the bank to obtain a low-cost loan. If this loan is serviced properly, the bank will soon be willing to increase the loan amount even if there is no corresponding collateral.
Stick to Business Loans
By avoiding using your personal credit score to obtain finances for your business, you will be able to use personal credit for personal emergencies. A savvy entrepreneur is one who starts building the business credit score even as they work on building the business. This is crucial as no business can sustain over the long run unless funds are injected into it at appropriate times. By working right from the beginning at convincing creditors to extend business credit with no personal guarantee, the entrepreneur can lay a firm foundation for obtaining funds as and when needed. This makes it easier to change the business direction to meet emerging market trends and ensures the success of the business over years.