How to Build Credit for Your Business

Open A Business Bank Account to Increase Credit for Small Business Loans

How to Build Credit for Your Business

If you haven’t been in business for very long or have not yet established credit, it should top your to-do list.  Establishing business credit should be a priority for any small business owner for two reasons:

  1. 1.It separates your personal credit history from your business and allows both to run somewhat independently. If your company is structured as a sole proprietorship or general partnership the government will consider you and the company as one and the same. This means your personal assets could be attached to a company lawsuit, a lien, etc
  2. 2.When you accumulate a positive credit history it will ultimately provide benefits. For example, good credit makes it easier to obtain a commercial loan from a financial institution, should you need it in the future.

Business People

Tips on Building Credit for your Business

1)      Corporation vs. Sole or Partnership. How you structure your business matters.If your business is already a corporation or LLC, excellent. When your business is structured as a sole proprietorship or general partnership, your personal and business financials are legally the same. Therefore the credit rating is the same. Additionally, there is risk as a sole proprietorship or partnership. If someone was to sue your company, your personal assets could be at stake.

2)      Open a business bank account. Make sure you have filed and received your Employer Identification Number (EIN) from the state, a necessary tax-related number for corporations and LLCs. The account will be opened in the legal corporate name. It goes without saying that you will then pay for all business transactions from this account as well as deposit any revenue received.

3)      Acquire at least one business credit card:  Your commercial bank will be happy to provide a debit card immediately. Within time, the bank will offer a business credit card. Once obtained, you should make a few purchases with the card and pay off the entire balance each month. This is not an invitation to go into debt. This is simply a technique to initiate movement from the credit reporting agencies: Experian, Equifax and TransUnion.

4)      Establish a line of credit with vendors and suppliers. If you have been paying your vendors and suppliers C.O.D.,ask for credit applications and start paying off of a monthly invoice instead. When appropriate, ask them to report your payment history to the credit reporting agencies.

5)      Pay bills on time and don’t go into debt. This is a no-brainer. On-time payments equal good credit and a high debt-to-asset ratio is death in the credit business. So again, don’t carry a balance on your credit cards – pay everything on time and you’ll quickly experience credit success for your business.

Success Ahead

Benefits of Having Good Business Credit

Having good business credit can provide a number of benefits, including:

  • Positioning your company for more favorable payment terms with new vendors and suppliers.
  • Reducing the number of times you will need to prepay for products or services purchased.
  • Allowing you to obtain better interest rates and credit terms from lenders and banks.

Once you have established good business credit, protect it, as it will act as a positive calling card for most of your future needs.

How Greenbox Capital Fits In

Whether you have impeccable credit or not, Greenbox Capital may be able to help build your credit. Take out a small loan and pay it off. We offer flexible terms and several financing options and solutions. Amounts as small as $5,000 can be financed in 24-hours and we also offer business credit lines.

Our finance specialists are available for consultations, or go direct and fill out the qualification form which will get the process started. Our goal at Greenbox Capital is to provide comprehensive pro-grade loan servicing from start-to-finish. Supporting small-to-medium businesses is our goal.