Awesome steps to establish and build credit for your new startup
According to the March 2016 Analysis of Biz2Credit, large banks have approved 23 percent of small business loans. Even if you do not need to take a loan for small businesses in the early stages of its implementation, it is a good idea to make sure you establish and build your business credit from the start – you never know when you might need capital for growth opportunities, acquisition, and expansion. Here are ten tips to help establish and build credit to start from the beginning.
1. Set up your business entity.
Consult your accountant to determine how to incorporate its implementation – LLC, S-Corp, etc. Whatever route you choose, you need to do this before thinking about building credit. a legal entity is required to use as a base to build on. They can be incorporated into the websites of the State or use a third party such as the corporate network, which is owned by his partner Entrepreneur.com contributor Nellie Akalp.
2. Place an EIN.
Once you have the entity of the boot in place, an EIN (Employee Identification Number) from the IRS is required. If you use a third party service to incorporate, you will help in this regard. If you do on your own, go here to apply.
3. Get a business address and telephone number dedicated.
If you do not have a physical office location for your home, consider renting a virtual office for a single business address. For a phone number, choose a VoIP service instead of a cell phone. My company uses RingCentral for our telephone system but also has several options for line also needs.
You will need an address and a telephone number dedicated to submitting to directories business, as YP.com and local.com. These are the directories credit agencies and lenders provide their data from, so it is important that its implementation has constant contact information that appears in all popular directories. For a complete list of 50 online business directories, see this resource HubSpot.
4. Opening an account in investment banking.
You do not want to mix personal and business expenses, to open an account in investment banking as soon as possible. You can do this as soon as they issued their EIN. If you have a long-term relationship with your personal bank, consider opening your own business there. Sometimes a relationship can lead to automatic pre-approval for credit card companies and credit lines.
5. Open a secured credit card.
A new entity applying for a credit card rarely results in approval because there is no credit history for the business. If you have extra money lying around, open a secured credit card. Most banks offer these lines and you can get up to $ 25,000 – the limit is equal to the deposit used to finance the card. Even if you can save $ 1000, make – monthly reports to the credit bureaus will help you establish a positive credit history for your business. You can check the credit card product of Wells Fargo secured to get an idea of ??how they work.
6. Place a DUNS number from Dun & Bradstreet.
Dun & Bradstreet is one of the major credit bureaus company, and Paydex score is used by many lenders to determine the creditworthiness of your business. You will need a DUNS number assigned to your company, and contrary to popular belief, you can get for free. Although D & B has several payment and credit creation programs, you do not have to pay for issuing a DUNS number.
7. Make sure Equifax and Experian know they exist.
With D & B, Experian and Equifax are the credit bureaus of the main company. While you can register and create a credit file company D & B, Experian and Equifax only complete a report based on the information they have. Make sure your company name, address and phone number are listed in major directories and opening a secured credit card that reports to the credit bureaus, will ensure that a good credit history is maintained for the deal.
8. Establish credit lines with suppliers.
Office Depot, Staples, FedEx, Home Depot and Lowes are just some of the great stores that offer credit lines and report to the credit bureaus. This is a relationship that might already establish, you only need to contact them and request a line of credit net-30. There are also several specific to the industry that can be a sign that the credit bureaus and suppliers: Just contact them to find out. Also, consider a gas card – most service stations have business cards fuel that report. Ideally, you want to have more than five of these accounts D & B, Equifax, and Experian.
9. Avoid application without restrictions.
Do not apply for several credit cards and loans for business at the same time – in the eyes of a lender that can look like you are trying to secure multiple amounts of capital at a time, leading to assume that the company is difficult . credit application only if absolutely necessary.
10. Be diligent and always pay your bills early.
This is common sense – always try to pay your bills early or at least on time! A late payment can only destroy your business credit.