Business is credit is the ability for a company to access borrowed money which it can use to purchase products or services based on the trust that payment will be made in future.
Apart from using credit to make daily or major purchases business credit goes beyond just the purchasing power in that your company’s creditworthiness in future funding opportunities.
Below are easy steps from momentum which you can use to build a profitable business credit.
1: Make sure your business exists.
This is the most basic thing to do when building a business credit, you need to prove you have a functioning business that’s separate from your personal finances, in order to qualify for business financing. Choosing not to do this means that your business and personal credit history are largely viewed as the same
2: Apply for credit before you need it.
It is advisable for a business to at list apply for credit soon after starting up, this helps in building a credit history for your business, although most banks get comfortable to offer loans to businesses which have been running for at list 2 years, there are ways you can go about it. You can get a business credit card and start applying for small loans but if you have problems doing that you can start by getting credits from small retailers that supply to small businesses and that can help you build a credit history.
3: Create Relationships with more than one lender.
Bank policies can change on a moments notice and cut your credit limit overnight. It is therefore advisable to have a relationship with different lenders that is, you can choose to have a credit card through a major bank and get your credit line through a locally owned bank or credit union.
4: Consider alternatives.
You should always remember that traditional banks are not your only option for credit, there are a growing number of other options such as securing investors, asset-based lenders and peer to peer lending.
Using these alternatives can at least indirectly improve your chances of getting credit in the future.
5: Get friendly with your vendors and suppliers.
You are most likely to interact with your vendors and suppliers most of the time when running a business, establishing a relationship with them can help you build credit.
Vendors and suppliers who trust you may agree to offer inventory or services without making you pay in advance.