Why It’s Important to Build Business Credit: Your ability to build a positive business credit history reflects your past payment habits and future borrowing potential. Begin building your credit history by taking steps to set up your business, opening business accounts formally, and slowly transitioning to making payments with credit and taking loans when necessary.
Taking the First Steps
- Establishing a business credit history requires defining your business, which separates your personal and business finances and identifies your role in the marketing community.
- Incorporate your business as a separate legal entity.
- Use the IRS’s online website to set up an Employer Identification Number (EIN).
- Register with Dun & Bradstreet Corporation, a major business credit bureau, to receive a DUNS number.
- Open a business checking, and savings account using your newly acquired EIN and DUNS numbers.
- Apply for a secured credit card for smaller purchases.
Reaping the Benefits
- Your credit-building endeavour may offer the following benefits:
- Access to Capital
- Approval for lines of unsecured credit
- Improve cash flow
- Easy expense tracking
- Avoid accruing debts with collateral
- Lower financing lease equipment
- Lower financing for purchasing company vehicles
- Increasing your eligibility for obtaining business loans
- Rewards, like airline miles that can be used for business travel
Being a successful company is not just about having high-quality products and/or services, but also proving that you are financially reliable.
Wanting a business loan, bad credit keeping you down? Don’t worry, there are options.
Why It’s Important to Build Business Credit because the fact is that if you have bad personal credit, you are severely limited when it comes to finding business financing. However, it is not impossible to get business loans with bad credit. There are three things you must have to get a small business loan with bad credit:
Credit Report
One of the first things you need to do is make sure you don’t have bad credit by signing up for credit monitoring services such as Credit Karma. For many people, their credit is poor, but not bad. Since it is not as high as they are used to, they think it is bad.
Find out what the lenders think is bad credit. Then, get your credit report, and do a good sweep of it to make sure everything is accurate and that you share any mistakes right away with our partner Perfect Credit Consulting. Look at your credit report and see if you have any R9s. If not, you should be fine, but if you do, you will need to explain to them to the lender, or there is no way you are going to get a business loan.
Collateral
If you want a business loan with bad credit, you must have something to leverage the debt. Assets worth something are a must if you have bad credit and want a business loan. This might be cash, real estate, vehicles, machinery, etc. Provide the lender with some reassurance that if you were to default on your loan, there is something of value they could collect to minimize their losses. Getting an unsecured business loan is not possible with bad credit.
Comprehensive Business Plan
If you have bad personal credit, your best chance of getting a business loan is to have a great business plan. No lender will even look at you if you don’t have a great business plan. Ensure you include why you are qualified to work in the industry, your competitive advantages, what you do, who your competitors are, and why you can beat them out for market share. Do not assume the bank knows your plan or why you are better; spell it out in a comprehensive business plan that they can easily read.
Last but not least, if you have poor personal credit and want to get a business loan, consider establishing some business credit that you can use to apply for a loan in the future. There are other options if you can’t get SBA or some other traditional loan. Lenders have different qualifications, so if you aren’t a good fit, you might be for a different lender. You also may qualify for a business line of credit, microloans, peer-to-peer loans, or a cash advance.
Don’t give up if the lender turns down your request initially. BitX Funding is a marketplace for small business loans, and we work directly with lenders to provide more insight into why they should approve your loan. BitX Funding’s mission is to empower your small business by making small business loans simple through options, speed, and trust. Find out which business loan is best for you.
Why It’s Important to Build Business Credit
Let Us Help:
BitX Funding is the online marketplace for small business owners looking to fund a project. We specialize in connecting small business owners with lenders who will compete for your business. We believe small business owners drive the economy and are passionate about helping your company reach its full potential.
You can reach a loan specialist toll-free at 1-800-824-2407 or email [email protected] or apply online here, and we can guide you on which loan is the best fit for your business.
