Starting a new business is expensive. Whether you have a physical location or are entirely online, there are a lot of start-up expenses involved. Getting a bank loan is an obvious solution to a lack of funds, but it can be hard to qualify for one. Banks want to see a credit history for your business, but if you are new, you don’t have one. Dealing with business credit issues takes work, but is doable.
How To Build a Credit History
As an individual, it is not too difficult to build a credit history. Open up a credit card account and pay it off monthly to show that you are reliable to repay a loan. Building a credit history as a business is much more difficult. Open a business credit card and make sure to use it. You need at least one transaction a month to be reported to business credit reporting agencies. To make sure you are using your business credit card monthly, set up an automatic payment with that card. That way you don’t need to remember to use it. It’s also important to pay off your business credit card monthly.
Register Your Business
Lenders and credit providers will do their research before they decide to lend to you. You want to look like an established business to the lender. Make sure you have registered your business with your state’s business registry. Doing so will make it easier for you to establish a credit history and make you a more attractive prospect.
Come Up With a Solid Business Plan
When you speak to a lender about financing, they will ask you about your business plan. They want to make sure you have a plan and stick to it rather than moving from idea to idea. You will appear more reliable, and financial institutions like reliability. Have a business plan that includes financial information, sales projections, a summary of your company and who your market is. You should also be prepared to explain what the money is for.
Building business credit is not as easy as personal credit, but it is not impossible. Come up with a rock-solid business plan, register your business and open a credit card that you use regularly. New businesses are established every day and most of them have to go over the same hurdles. If you take your time and do it correctly, you’ll be set for business credit success.