Many businesses have somehow recovered from the 2008 recession, but not the small ones. Many of the small businesses are still slow in their recovery process. According to the Joint Small Business Credit Survey in 2014, which was a collaboration between the Federal Reserve Banks of Philadelphia, Cleveland and Atlanta, there is a large difference in the number of micro-businesses, small to medium size businesses, and large commercial businesses that received financing. For starters and small ones, here is a list of start up business credit building info that could increase chances of getting credit.
Set Up a Legal Business Entity
Lenders don’t and won’t offer business loans to businesses with sole proprietorship. For them, that is personal loan. To better your chances of receiving loans, you need to separate the business from you. You can do this when you set up a legal business entity. For example, you can create a Limited Liability Company. You can also turn it into a corporation. For the best choice, consult with your CPA. The choice depends on the implications to your business.
Get Your Business an EIN
The EIN or Tax ID number is a requirement in opening a business bank account. When you apply for EIN, the Internal Revenue Service will assign you a nine-digit number, which is what they also do to businesses that operate in the United States. To lessen the hassles, you can apply online. When you already have a business bank account, you can start building your business credit profile.
Always Have Your Credit Profile Rated
To easily convince creditors, it is a wise and practical idea to have a third party or credit bureau rate your credit profile. What they do is provide you a credit file number, which does the rating of your profile. Lenders use the file number to determine whether you are worthy of credit or not. One of the main credit bureaus for businesses is Dun & Bradstreet. You can go to their website and have your application for their credit file number called DUNS number processed in a few minutes. You need take note though that you need to accomplish first your business’ legal entity and EIN. These are required when you apply for a credit file number.
Accomplish these very important requirements and you surely will increase your chance of having your credit requests granted. Of course, you need to maintain a good track record of credit payments.