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4 Ways to Build Business Credit

As a small business owner, you are likely well aware of the importance of having a good credit score when searching for funding. While you may believe that your business will be able to ride on the back of your own personal credit score, doing so could end up putting your credit score at risk while also subjecting your business to severe limitations. As such, you will need to establish a credible credit history in your business’ name. While building personal credit happens automatically as you make credit transactions, building a business’ credit history takes time and is less straightforward. Fortunately, there are several methods that business owners can use to build a strong credit history.

  1. Business credit cards: By far the easiest way to begin establishing credit for your business is to use a credit card specifically registered to the entity. Many of these cards offer the same rewards as personal cards and are excellent to be used for large transactions. As long as you use the card and pay it off faithfully and on time, you will build a solid history.
  2. Trade credit: A more traditional way of building business credit is to negotiate terms with vendors and suppliers. Instead of paying up front for inventory or services, negotiating for a monthly billing arrangement will create a credit relationship, allowing you to prove your creditworthiness.
  3. Lines of credit: Yet another excellent way to boost your company’s credit is to take out a line of credit at a bank or some other type of lending institution. This will grant you access to set amount of financing, say, $100,000, but you will only make payments or incur interest on these funds as they are used. Think of them as like an insurance policy which provides a certain amount of cash if you should ever need it. Lines of credit can be either unsecured or secured by some sort of collateral, such as inventory or receivables. Business lines of credit are best for short-term financing needs, though it is important to note that they can incur substantial interest hikes if you should miss a payment or borrow more than allotted.
  4. Registering under your business name: As previously mentioned, registering everything under your business name, including your phone number and opening a business bank account, can be crucial for financial institutions and other parties to verify your business information. Any and all expenses that are incurred in your business’ name and paid on time will contribute to your credit score, including utility bills, vehicle registrations, and more. Likewise, financing equipment rather than paying for it all up-front can help to boost your credit and prevent you from having to hand over a massive sum of cash all at once.

Need Funding But Have No Credit?

Unfortunately, a poor or nonexistent credit history can often prevent many startup companies and small businesses from ever receiving the funding they need to reach their goals. If your small business is struggling to receive loan approval from traditional banking institutions, contact Green Ocean Solutions today. Even if you have no collateral, no business history, or a challenged credit score, our Los Angeles small business lenders are willing to work with you to ensure you receive the financing you need. With approvals up to $2,000,000 in as little as 24 hours, when banks say no, we say yes!

Call (888) 997-2179 or apply online today to get started!