Lets face it, you want to grow your business but realize you are at a stand still and you need additional line of credit, new vehicles, bigger building & new equipment. So you decided to build your business credit in order to grow your company.
You should grow your business but I want to point out five things you need to beware of before taking your first step. Otherwise, you may grow weary if things don’t go right.
First. Contrary to popular opinion, a bank is not going to extend a significant amount of credit to your business if your personal credit is damage. I know you have been told that you can get business credit without a personal guarantee.
That may be true with trade credit, but if your business is new to business credit, trying to acquire a Visa or Master credit cards without a personal guarantee is going to be difficult.
If your company is not producing several million dollars in sales a year and have 25 – 50 or more employees; yes! your credit will be check.
You will need to clean up your personal credit before applying for a Visa or Master business credit card. (note: who is going to grant you $35,000 in business credit without checking you out first?)
Second. If you are planning to incorporate your business, make sure you set up your structure properly. If you set up a corporation just to acquire business credit, you may have a problem with the taxing authorities. You need to operate your business like a real money producing company.
Third. Some companies will want to check your Dun and Bradstreet profile, if this is a requirement, you will need to set this up. If you already have a Dun and Bradstreet profile, review your business credit just like you would your personal credit report before applying for credit.
Four. Before you go out and apply for a business loan and you have not establish a business credit profile, you are not going to get the loan, however; there are other sources you can tap into. Friends, family, home equity, sale un-wanted items, partnership and advertise for capital just to name a few.
Tip: Once you have your personal credit in shape, you are going to be flooded with all kinds of credit cards offers. You can apply for these cards with a credit limited from $1,000 to $7,500.If you qualify for $7,500 on three cards, that’s $22,500 without a business plan. Sound great! ( I though you would like that tip. )
Five. Keep your personal credit and your business credit separated. Do not deposit personal funds into your business account. If you do, it shows additional revenue into your business account and therefore, you will need to write a statement indicating where the additional fund came from in case you are audit. To learn more: Click Here!
