If you are in the process of starting your own small business you may be wondering how you go about building your small business credit. There are several steps you can take that will help you to establish a solid credit history which will allow your business to grow when the time comes along. The most important steps are establishing your business as a separate entity, having a well written business plan, and ensuring that you have the appropriate funds to run your newly formed business.
When you are first thinking of starting your own small business it would be a smart idea to form the business as a separate entity. By registering your company as a corporation or Limited Liability Company you are allowing your personal credit to be separate from your business credit. This is doubly as important if your current personal credit is less than perfect. You certainly would not your poor credit history to affect your business’ ability to grow and thrive.
You will also want to have a well written business plan when starting a new small business. By thoroughly writing out your business plan and how the day to day operations are going to take place you will be able to prove to any potential lenders without hesitation that your new company will succeed.
When you have a well thought out business plan lenders will be much more likely to loan you money without a lengthy credit history. When you do secure these small business loans it will also be a great way to start building a positive credit history by repaying the loan in a timely fashion.
Making sure you have enough funds to run your business when it first forms is also a very important step to help build your credit. Most likely your new business venture will not be profitable in the first few months of operation.
This is true for most start up companies so do not be alarmed if it happens to you. You should be prepared to pay off any bills that you have accumulated with your initial start up costs and having extra money in the bank is the best way to do this. Again paying any bill on time will be essential to creating a positive business credit rating.
If you are wondering how you go about building a strong business credit rating there are several easy steps that you can follow. Creating your business as separate entity so that your personal credit history does not affect your business’ rating is the first crucial step. Next you will want to have a well written business plan to make getting a loan from the bank or other lenders as easy as possible.
Lastly, you will want to make sure that you have enough funds to properly run your business during the early stages. When you have more than enough money to run your business you can easily pay off any bills you may collect which will positively affect your business credit rating.