How To Build Small Business Credit

Introduction

Small business owners need a lot of things to get their business up and running. Without the capital to cover all of these expenses you will need to take out some small business credit from your local bank. Whenever you do this they will look at your credit standing within the business world in order to determine whether or not to actually grant you the loan. This is why it is imperative for you to build up good small business credit as soon as possible.

Step 1

To begin with you will want to find a bank that works with new businesses and offers in-house loans. This is actually quite easy to do. You simply need to make a list of banks and credit bureaus that are located near you then pick up your telephone and call to speak with a loan officer in their commercial lending department. Once you reach the right person you will want to ask them whether or not the institution makes in-house small business credit loans to local businesses. If they do, inquire about their policy in regard to unsecured business loans and what the requirements are to qualify for these loans. Usually, you'll need to have your main business account with them and maintain a minimum amount.

Step 2

Whenever you choose a lender to get a small business credit loan from you'll want to establish your banking with their institution. While they probably wont report your payment activity to a credit agency, they'll still want to track it. This is how they'll determine whether or not to give you another small business credit loan in the future.

Step 3

Open wholesale business accounts with merchants and suppliers in your niche. Whenever possible you should purchase major items from them on your small business credit card. By successfully paying them back your small business credit will increase. These businesses will then help you build your small business credit within the business community. You can then list them as a reference whenever you go for a small business credit loan.

Step 4

Always pay back your loans before they're due. This will quickly build your credit. Keep in mind that whenever you do make a late payment you are destroying your credit. So whenever you don't have the money to pay your loan on time, make sure to call and explain the circumstances. Request an extension and that they don't report you to a credit agency.

Step 5

Keep in mind that your credit rating plays an important role in determining whether or not your business should be deemed a credit risk. This is why you should keep a very close eye on it by requesting a free credit report once a year. Once you receive it, make sure to go over it really closely. If you find anything that you believe is incorrect, you should report it to the credit bureau immediately. They will then have 1 month to fix the problem or they must remove it from your credit report.

Tips

Remember, your business credit isn't dependent upon your personal credit. This is good because you will get a new start but just be cautious to guard it carefully, especially if you have messed up with your personal credit since you don't want to make that same mistake here.

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