3 Ways “Mom & Pop Shop” Thrive in the 21st CenturySeptember 5, 2018
Whatever size your business is and no matter how much your business is making in sales or profits, having Business Line of Credit is one of the most important things you need to have.
A Business Line of Credit differentiates between your business’ financial health and your personal. When separating your business and personal credit, you protect one from the other, for example, personal loans cannot be collected from your business and vice-versa. As well, when applying for a business loan, a bank will not decide on your approval based on your personal credit if it isn’t in good shape. Good business credit means business loans, less prepaying for equipment and better terms with vendors and suppliers.
Here are 5 important instructions for building Business Credit:
- Incorporate: Separate your name and your personal credit from the business. As a separate entity, it will be considered as such.
- Get a Federal Tax ID Number (EIN): You’ll need this to open a business bank account
- Open a Business Banking Account – Again, this separates your personal funds from business
- Apply for Credit Cards with Banks and Lines of Credits with Vendors: Opening lines of credit gives your business flexibility and allows you to gain trust with both your suppliers and the bank.
- Pay Your Bills On Time: The most important aspect of building credit is paying when due. This gives you good standing, builds trust and will raise your credit score.
2 Hacks to Build Good Credit Faster:
- Pay Your Bills Early: Paying your bills on time shows your bank, vendor or supplier that you’re accountable. Pay early shows proactivity! By paying before the due date, your business builds a stronger trust and good standing which will help you down the line.
- Borrow: Even if you don’t need to, borrowing money – even in small amounts – from any institution which reports to Credit Agencies,and by paying them back on time, you will build trust with your bank and give you a higher credit rating.
If you’ve tried to apply for a business loan from the bank but have been denied, please reach out and a BridgePoint Capital Funding Specialist will be happy to help you grow your business: