So You Want To Know About Business Credit...
Boy oh boy! This is like the new trend. Everyone has become a business credit expert. Are they really? Is it really that hard? Why is it so important? More importantly, how do I build business credit? Let's talk about it.
Where do we start? We start from the beginning. In our last conversation we discussed how to properly start a business. So let's go a step further. Jen, how do I build business credit? I would first answer that question with a question. How's your personal credit? Wait! Wait! Wait! Don't leave just yet. I know you've heard, you've read you can build business credit without using your personal credit. Well, I am here to let you know that is few and far between. 9 times out of 10 when you are first establishing business credit you will need to use your personal credit to be a PG (personal guarantor). UGH! I know you didn't want to hear that but it's really not that bad. I mean just think about what makes you or a creditor believe you will handle business finances better than your personal finances. (Clears throat) Stepped on some toes. Ok! I won't go down that road. Let's discuss steps.
The first step to start building business credit is making sure your personal credit is good.
Step two is making sure you have an EIN and DUNS for the business.
Step three obtain 4 to 6 net 30 trade line accounts. Girl, what the heck is that? Uline, Quill, Home Depot, and the list goes on. These are all trade lines that offer net 30 accounts. And just what is a net 30 account? An account that you have 30 days from purchase date to pay balance in full.
Step four get a small secure business credit card from your business account bank. YES, you need a business account whether you are bringing in revenue or not (eye roll). Side note: Please! Please! Please! Establish a business email address even if you do not have a website. I have had creditors not let clients move forward with their application because they have a gmail account for their business account. This is not shade, this is knowledge. There is no final step because building and maintaining business credit is an ongoing process, but I will stop at step five which is pay your bills before time, not on time. Utilize about 10% of the available credit you have been given.
In closing, we'll discuss why it is so important to build business credit. The number one reason you want to establish and maintain good business credit is because you do want to use all your personal finances to continue to fund your business. When it's time to take your business to the next level you don't want to break the bank on your personal finances or even the business available cash. Did you know you can purchase a home, a car, land, another business just by having good business credit? Seriously!! People are literally doing it everyday. So, what are you waiting for? Are you motivated to get started? I surely hope so. Well I'm done pricking your brain. Just remember if you have questions we are here at your service. B&H Business Solutions "Your Favorite Consultants" Follow us on Instagram, Facebook, and Tik Tok @bhbsfirm
Have an awesome week! Be great!