Many people nurture an ambition to start their own business. To this end they focus on finding a great business opportunity. Once they are convinced that they have a good business opportunity, they focus on coming up with the perfect business plan.Even if they have some seed capital for the initial investment, they soon find that they need at least some credit to scale up their business and generate sufficient profits. When this happens, they look for business credit. However, most credit institutions are wary of leaning to a business unless the promoter has taken the trouble to build business credit. The steps one needs to take for this are similar to establishing personal credit.
To build business credit you first need obtain all the necessary licenses and permits for the business to operate legally. Though this might take time and involve some amount of red tape, banks and other credit institutions view such a business more favorably. Yet another step in establishing the business credit profile is to have a separate phone number and yellow pages listing for your business. Even if your business address is the same as your residential address, you need to ensure that the phone number is distinct.
In order to establish business credit, you also need to incorporate your business. A limited company is a separate business entity, entitled to its own credit. Once these steps have been taken, the business needs to contact vendors and others who will offer small amounts of credit and report the credit behavior of the business to the credit reporting agencies such as Dun and Bradstreet as well as Experian. To ensure a good report, something that is essential to business credit success, ensure that your business pays the creditors on time. Apart from this, monitor what the creditors are reporting to the credit rating agencies. In case of inaccuracies, get the information corrected by providing proper documented evidence. This is vital to build business credit.
Most agencies offering credit to corporates look for a viable business plan. To convince creditors of the soundness of your business idea, document your business plan. When meeting potential creditors, you need to take along this document and also be prepared to defend your financial projections and forecasts. Make sure your expenses and profits are in tune with industry standards as most creditors will be aware of general industry figures. In case you are projecting greater that average profits, you need to show how you plan to achieve this. This will help you to build corporate credit.
Once you get a few creditors on board, it will be easy for you to convince the rest. This is because your timely payments will help build business credit. Moreover, creditors will take it as a positive sign that others besides you find the business idea a viable one. In case you have angel investors in your business, make it a point to highlight this to other creditors. Ultimately, it is prompt payment of dues that will help you to maintain a good business credit.