One big reason many people fail building business credit is that their business isn’t setup credibly in the credit issuer’s eyes. The perception lenders, vendors, and creditors have of your business is critical. Before applying for business credit a business must ensure it meets or exceeds all lender credibility standards. There are over 20 credibility points that are necessary for a business to have a strong, credible foundation.
To ensure you are seen credibly, it is very important that you use your exact business legal name. Your full business name should include any recorded DBA filing you will be using. Ensure your business name is exactly the same on your corporation papers, licenses, and bank statements.
You can build business credit with almost any corporate entity type. If you truly want to separate business credit from personal credit your business must be a separate legal entity not a sole proprietor or partnership. Unless you have a separate business entity (Corporation or LLC) you might be "doing business" but you are not truly "a business“. You need to be a Corporation in order to separate personal from business.
Whether you have employees or not, your business entity must have a Federal Tax ID number (EIN) to start getting business credit. Just like you have a Social Security Number, your business has an EIN. Your Tax ID number is used to open your bank account and to build your business credit profile. Take the time to verify that all agencies, banks, and trade credit vendors have your business listed with the same Tax ID number.
Your business address must be a real brick-and-mortar building, deliverable physical address, cannot be a home address, cannot be a PO Box and cannot be a UPS address. Some lenders will not approve and fund unless this criteria is met. There are Business Address Solutions available at companies like Regus including “Address Only” where you receive mail and packages at your dedicated business address.
Virtual Office which comes with professional business address, dedicated phone and fax numbers, receptionist services, and part-time use of fully furnished offices and meeting rooms. You can even get a true office with your own full-time private office with receptionist services, dedicated phone and fax, internet, full furnishings, meeting rooms, and more.
You must have a dedicated business phone number that is listed with 411 directory assistance, under the business name to successfully obtain business credit. Lenders, vendors, creditors, and even insurance providers will verify that your business is listed with 411. A toll-free number will give your business credibility, but you must have a LOCAL business number for the listing with 411.
Lenders perceive 800 number or toll-free phone numbers as a sign of business credibility. Even if you are a single owner with a home-based business, a toll-free number provides the perception that you are an even bigger company. It's incredibly easy and inexpensive to set-up a virtual local phone number or a toll free 800 number. rnA cell or home phone number as your main business line could get you "flagged" as an un-established business that is too high of a risk. DON'T give a personal cell phone or residential phone as the business phone number. You can forward a virtual number to any cell or land-line phone number.
Lenders perceive a credible business as one with a fax number. As a business you will need a fax number to receive important documents, you will also need it to fax in some of your credit applications. You can setup an e-fax that goes directly to your email.
Credit providers will research your company on the internet. It is best if they learned everything directly from your company website. Not having a company website will severely hurt your chances of obtaining business credit. There are many places online that offer affordable business websites so you can have an internet presence that displays an overview of your company's services and contact information.
It is important to get a company email address for your business. It's not only professional, but greatly helps your chances of getting the thumbs up from a credit provider. Setting up a business email address is just too easy and inexpensive to neglect.
Avoid using free email services like Yahoo and Hotmail. There is nothing worse than credit providers seeing an email address like
partychic2009@yahoo.com. The email address should be yourcompany.com. A great example is an email like
support@yourcompany.com or
john.smith@yourcompany.com.
Your business banking history is vital to your future success of being able to secure larger business loans. The date you open your business bank account is the day that lender's consider your business to have started.
So if you incorporated your business 10 years ago, but you just opened the business bank account yesterday, then your business started yesterday. The longer your business banking history, the better your borrowing potential will be. Having a high account balance is essential in obtaining an excellent Bank Rating. Having a good Bank Rating is essential for approval. Try to keep a bank balance of $10,000 or higher for a High 5 Bank Rating.
One of the most common mistakes when building credit for your company is non-matching business addresses on your business licenses. Even worse is not having the "required" licenses for your type of business to operate legally. You will need to contact the State, County, and City Government offices to see if there are any required licenses and permits to operate your type of business. Ensure that your state business filings are listed correctly, county license and/or permit filings are listed correctly, city license and/or permit filings are listed correctly and IRS filings are listed correctly.
rnEnsure your business is setup credibly so you can easily build your business credit and use it to obtain money for your business without a personal guarantee or credit check.