Business credit is an important tool for businesses. It allows business owners to qualify for various forms of financing and loans from banks. The goal of every business should be to have good credit. Considering that almost all businesses grow through loans, bad credit can hinder you from getting any type of financing. But how do you build and establish business credit? Here are some tips to help.
Establish Your Business
The first step is establishing your business or company legally as a corporation, sole proprietorship, partnership, or LLC. Set up a company’s phone number, then start opening accounts with various vendors. Establishing your company legally makes the business known to business credit reporting bureaus.
Get Your EIN
An EIN (employer identification number) is like the Social Security number of a business. The government uses it to identify a business, and it also plays a role in paying business taxes. You can use this number to apply for licenses and open a business account.
Open A Business Account
Never mix personal finances with business finances. Have a separate bank account as that will help you get a business credit card and start developing a relationship with the bank as a partner.
Building Relationships With Vendors
As your business continues growing, establish and build relationships with suppliers and vendors. You will be building credit by paying on time with suppliers that report to credit agencies.
Using The Business Credit Card
You can also build business credit by using and paying off the company’s credit cards. Find out the right credit card for your business as there are cards that offer rewards, and this can be beneficial for certain types of businesses.
Pay Early And Often
Paying your bills on time will help you build business credit. This shows that you keep your word and pay debts on time. Plus, paying early will help build your business credit score faster.
Focus On Credit Utilization
Business credits come with a recommended usage which allows you to maximize your credit score. Following that recommendation will show a lender you are a responsible borrower.
These tips mentioned above can help you run a healthy and financially viable business. And if you are looking for a financial partner to continue growing your business, call Aspen Capital Solutions. We can meet your financial needs to continue growing your business.