How to Establish Business Credit
Almost all businesses need adequate financing to maintain their business operations, increase inventories, maintain their working capital, and expand their business. A business loan is one of the ways an entrepreneur can finance his or her business. The loans are simple to secure since there are many lenders who are willing to support promising businesses.
Just like other financiers, business lenders use a firm’s credit score to determine its financial conduct. As such, enterprises with a weak credit rating will find it difficult to secure a loan, while those with a strong credit score find it simple to secure a business loan of any amount.
One problem that entrepreneurs encounter is how they can establish their businesses’ credit. If you are one of such entrepreneurs, here is a guide to help you build and maintain a good business credit score. A strong credit will establish a good relationship with financial institutions, suppliers, creditors and business partners.
4 Tips to Help You Improve Your Business Credit
Check Your Credit Report
The first step towards a good business credit is to request your business’ credit reports from the national credit bureaus. Go through the reports, and make sure that they contain accurate and up to date information. In case your business’ credit report contains incorrect information, contact the credit bureaus and request them to update it.
Furthermore, your business’ information like business size, the number of employees, standard industrial classification codes, years in operation and financial statements are used to calculate your business credit. Therefore, you need to update your business information contained in the credit bureaus.
Build a good relationship with your business creditors
At times your business may receive supplies in form of credit. If your business is of this kind, then you have good chances to build your credit. In this case, you need to settle your credit on time. Since not all companies report their trade information to the national credit bureaus, you may request your supplier to file your credit report with the credit bureaus. Positive financial reports will boost your credit.
The more your suppliers and vendors give a good payment report, the more your credit is boosted. For this reason, you will need to establish a sound financial relationship with many creditors. You can prepare a trade reference sheet and list some vendors who may not be reporting to credit bureaus. The credit bureaus will ask the vendors to provide your payment report.
Secure A Business Loan From Lenders Who Report To Credit Bureaus
Your firm’s credit rating may also depend on reports from business lenders. For this reason, you need to pay your loans on or before time to ensure that the report sent by your lenders to credit bureaus is positive.
However, you may face a challenge is securing a business loan from banks and other traditional lenders. One option you can consider in this case is a small-business lender that gives credit regardless of your credit score.
Advance Funds Network, is one of the lenders that works with businesses whose credit score is weak. It operates in all the 50 states of America.
Advance Funds Network has a reputation of helping small businesses establish. You can secure loans up to $3 million. The loan application process is easy and it is approved within the shortest time possible. Given the quality of service, Advance Funds Network is given an A+ rating by Better Business Bureau.
Another advantage of securing a loan with AFN is that the company will help you design a flexible payment plan to make repayment easy. This gives you the advantage of improving your credit rating.
Clean Your Enterprise’s Reputation
Another important way to improve your credit score is to maintain a good reputation. Issues like bankruptcy, liens, and judgments will lower your credit score. Such problems will affect your firm’s credit score for up to ten years.
A good business credit is essential for the success of any venture. Some of the advantages include an interest rate on business loans that is relatively low, easy approval of a loan application, and good relations with suppliers and creditors. The secret to maintaining and improving your business credit is to pay your creditors early, secure loans from lenders who report to credit bureaus, and avoid instances like liens and bankruptcies that lower your credit score.