5 Best Ways to Build Your Business Credit

Diving into a new business venture or growing a company often requires establishing a line of credit to fund your operations. But what if you don’t have any business credit? Fortunately, there are several ways to improve your status as a borrower for equipment financing and working capital loans. These tactics will help you to receive the funding you need for your business to grow and succeed.

According to a report by the U.S. Small Business Administration, as of 2017, there were more than 29 million small businesses in the U.S., all of which are competing for funding. To positively position your small business, you’ll want to build and maintain good credit.

Here are the five best ways to build your business credit and get your venture started off on the right foot.

  1. Start with Clean Personal Credit

First, it’s necessary to check the status of your personal credit in order to establish business credit. Take advantage of the free online resources, such as Credit Karma, Annual Credit Report or Nav.com, that will deliver regular reports about your personal credit ratings. Often your personal credit card will also have credit monitoring for free. If they do, be sure to add this to your account features. In addition to checking your personal credit regularly you shouldn’t max out your personal credit limits.  Also, when starting a business keep your personal and business credit and expenses separate. Follow these recommendations to check on (and improve) your score prior to when you want to start or grow your business.

  1. Incorporate Your Business

File the proper paperwork with your state to incorporate your business. You want your business to be recognizable as a company rather than a sole proprietorship or general partnership. By doing this, it becomes a legal business, which further demonstrates additional credibility to potential lenders. Another reason to incorporate is to show business history and longevity. Also, it’s helpful to provide proof that you’ve filed tax returns under your business name.

  1. Get a Business Credit Card

Establishing a line of credit through a business card can quickly build your business credit. Plus, it may be an easier way for you to track business expenses. All credit cards include specific benefits and/or fees. Take time to perform research and list the pros and cons of each before applying. Also ask a fellow business owner for recommendations on cards they use or have used for their business. This will help you to get the most from the credit card you choose.

  1. Apply for a Loan or Lease

If you want to purchase equipment or software, get a loan or lease. Even when you can pay in cash, getting an equipment lease can help build business credit and show lenders that you have a positive payment history. Starting with smaller amounts will be reported to the bureaus and initiate your business credit. LendSpark can advise on which option(s) are most favorable based on your company’s needs and goals.

  1. Establish a Line of Credit or Term-Loan

Set up a line of credit or term loan with your local bank or through a specialized lender like LendSpark. The purpose is to show lenders you are a good creditor and will make payments on time. We provide flexible, financing options for small- and medium-sized businesses and will guide you through each step of the process.

At some point, all businesses will need funding to get their company started or to advance it to the next level. However, there’s not a cookie-cutter financing option or answer. We customize financing plans and provide the most competitive terms and rates for our customers. We want to help our clients to succeed and provide the level of customer service that lets them know we are passionate about what we do.

Have questions about building business credit or finding an alternative lending solution? Contact us at [email protected] or call (760) 671-3402.