If you run your own business, there is no doubt that at some point you will want to borrow money and apply for business credit. Very few businesses can survive on cash alone. So it is worth taking note of some of the strategies you will want to follow to ensure that you present yourself as a good credit risk to potential lenders.
If you apply for business credit at any stage and are denied, this can go on your record so that it becomes much more difficult to borrow money in the future. You could even find yourself blacklisted as a result of an unsuccessful application and you definitely don’t want that to happen.
So here are some tips on how to go about building your business credit.
1. Apply for a few small lines of credit with local office suppliers or stationers (e.g. Office Max or Office Depot). This doesn’t have to be more than $50 or so at each store but it will go a long way towards building your overall credit, as long as you pay your bills on time. This of this as your first round of funding.
2. Take out a business credit card, use it and pay off the amount owing each month. This, which you can think of as your second round of funding, will establish an even better credit record for your business.
3. The third round of funding, which will establish you as a strong, creditworthy company with a high Paydex score, will be to establish a bank line of credit. Don’t attempt to do this until you’ve completed rounds one and two however.
One last piece of advice. When applying for any credit, always ensure you fill out the forms correctly and include all the information and documentation you are asked for. You don’t want to be refused on some small technicality!
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