Getting Business Credit

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While there are many ways to fund your business; not all people have the resources to borrow; maybe your personal credit is negative, or you don't have personal savings or even friends and family that are willing to lend you money. Certainly if these are all the case, you can't get a bank loan.

 

There are, however, some ways to gain business credit even if your personal credit is negative.

 

Here's how:

 

First, setup a corporation or an LLC. These two forms of business are different than operating as a sole proprietor or partnership, because they are separate entities not attached to your personal credit information.  This means that you can get a separate line of credit for the business and the businesses' credit score will not affect your personal credit, and vice versa, your personal credit will not affect the business.

 

Second, ensure your business is 100% compliant with the requirements of the credit market.  Make sure that you have all the licenses that you are required to obtain. Even such simple things as ensuring you have a phone line can be important. For a complete list see Business Credit Due Diligence.

 

Third, register your company with the business credit bureaus.  These are Dunn and Bradstreet,  Experian Business, Business Credit and Equifax Business. 

 

Fourth, determine if there are credit bureaus specific to your industry. For example, the transportation industry has TransCredit, the floral industry uses Red Book Credit Services and the mariner industry utilizes Lloyd's MIU. CreditWorthy.com has a link to each reporting agency and the industry it serves.

 

Once you've done this, you can obtain an FIN or EIN.

Second, ensure your business is 100% compliant with the requirements of the credit market.  Make sure that you have all the licenses that you are required to obtain. Even such simple things as ensuring you have a phone line can be important. For a complete list see Business Credit Due Diligence.

Third, once you are compliant and have done your due diligence, register your company with the business credit bureaus.  These include, but are not limited to Dunn and Bradstreet,  Experian Business and Equifax Business. 

Fourth, determine if there are credit bureaus specific to your industry. For example, the transportation industry has TransCredit, the floral industry uses Red Book Credit Services and the mariner industry utilizes Lloyd's MIU. CreditWorthy.com has a link to each reporting agency and the industry it serves.

Fifth, create the documentation required to get credit.  First, you'll need a business plan. Click here for information about creating your business plan.   Other financial documents such as an operating budget or financial plan will also be necessary.

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