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Building Business Credit: A Guide for Small Businesses

Building business credit

We’ve all seen the job listings “entry-level position, five years experience required.” It’s like you need experience to get experience.

The experience trap isn’t only relegated to job hunting, either. 27% of small-business owners and entrepreneurs aren’t able to get the funding they need. 82% of startups are funded by the founders themselves.

Paying for your business out-of-pocket is a recipe for disaster in the long-run. Especially when you consider the fact that 82% of small businesses fail due to cash flow problems.

Business credit can be your saving grace when finances are uncertain. This can be a bit of a “chicken before the egg” scenario, however, as lenders might be reluctant to extend you a line of credit without an established history.

Here’s a guide to building business credit to get you started.

Your Guide To Building Business Credit

Business finance is complicated, as are most things to do with money and the law. You could write volumes on each of these steps so consider this a guideline to get you started and jumpstart your due diligence.

Start A Business Entity

To keep your business finances separate from your personal money, you need to establish a business entity. The most common – and uncomplicated – business setups are sole proprietorship and partnerships.

These are the simplest to establish but won’t protect your personal finances. It also means your ability to build business credit will still be tied to your personal credit score.

Get A Tax Identification Number

The IRS keeps track of employers using Employer Identification Numbers (EIN). It’s essentially the social-security number of your business. That’ll make it easier to begin building business credit.

An Employer Identification Number is free and easy to sign up for on the IRS website.

Start A Business Bank Account

When it comes to securing financing from a lender, you need to be able to prove your financial viability. A business bank account is the easiest, and probably most essential, component when you’re wondering how to build business credit fast.

Lenders will be able to see how much money you’re putting into and out of your business. They’ll use this to determine your business credit score.

Apply For A DUNS Number

Dun & Broadstreet are probably the most well-known business credit reporting agency. A rating from their Paydex business credit score is often used by lenders and suppliers.

A DUNS number isn’t required, as it’s a non-government agency, but their scores are used by lenders all over the country. It’ll make obtaining business credit faster and easier, so you can focus on building your business and brand!

Looking For A Business Loan In Georgia?

We’d love to help you! Small business is such a vital part of building a healthy, local economy.

Whether you’re just getting going building business credit or are trying to extend your limit to grow your business, we’ve got something for you! Check out our different business loans today.

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