3 Tips to Build Corporate Credit Fast

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A man climbing up on a red arrow with a white animated character standing behind the Credit score chart

3 Tips to Build Corporate Credit Fast

Start-up and small businesses often require credit to survive or grow. Financing through credit is a common way to get funding when a company is in its early stages. However, it is generally a period where most of the lenders find that the business’s credit record is nonexistent or too poor to offer credit to. Under such a scenario, the owners and top manager wonder how to build corporate credit fast.

Maybe you know that you will require cash to finance working capital, or you need to invest in a team, technology or other business expenses. No matter your specific reasoning, you probably cannot wait for months or even years to get corporate credit. You need it soon, and you need it from a source that you can trust.  

If you think that obtaining business credit is too complex because you do not have a business credit record yet, please keep reading the following 3 steps to know how to build corporate credit fast.

 

TIP:1.  Prepare your Business to Build Corporate Credit Fast:

  • Separate the business from your personal credit history:

 Some people tend to start a business without making a legal distinction from their personal situation. However, in order to build corporate credit fast, it is important to begin with a separation between the legal entity of the business and your personal record. Sole proprietorships and general partnerships do not allow that separation. The owner should choose either a Limited Liability Corporation (LLC) or a corporation (S-corporation or C-corporation). For small and medium-sized businesses, a common choice is the LLC thanks to its numerous advantages over other types of legal entities. The LLC structure allows owners to enjoy a good combination of protection from liabilities and more flexibility to affect the operational and financial life of the firm. After this legal step, it is possible to work on the business’s credit record without worrying about the owner`s credit history.

 

  • Get the federal tax identification number (EIN):

This is a unique number that is assigned to your business entity. The Employer Identification Number (EIN) is also known as the Federal Tax Identification Number. It is used for many procedures such as hiring employees, paying taxes, and opening a bank account. In short, your company must obtain an EIN, and you can do it directly with the Internal Revenue Service (IRS), free of charge.

 

  • Open a bank account:

This sounds obvious but it is a necessary initial task in order to build a corporate credit fast. Avoid informal or cash payments despite the size of your operations when you are commencing. Use a business bank account for all your transactions rather than your personal account and prepare to get corporate credit.

 

  • Set up a phone line for your business:

Sometimes the owner uses his or her personal phone to make all commercial deals as a way to simplify the processes at the beginning of the business’s life. Avoid this mistake. You will need a business number to build business credit quickly. The line has to be dedicated to your company.

 

  • Open a business credit file:

Use the main credit reporting bureaus, including Experian, Dun & Bradstreet and Equifax. Open a credit file for your business with each of them. Other entities (banks and other lenders) interested in your creditworthiness will ask for your scores from those agencies so you have to be ready for that eventuality.

TIP:2.  Start Small to Build Corporate Credit Fast:

These actions are useful if you want to build business credit quickly.

  • Get business credit cards:

Apply for business credit cards that only report to business credit reporting agencies. They are issued in the company`s name, and this credit record will help the process to get corporate credit in the near future.

 

  • Open trade lines with suppliers:

 Ask your regular providers for credit lines. Most of them make few requirements. You can start with large stores such as OfficeMax or Home Depot and later try to negotiate credit terms with your main suppliers. They will probably give you 30-day credit but you can try to get longer terms. This will help you build business credit quickly because it will give you more cash to pay other debts.

 

TIP:3.  Use the Credit and Pay On Time to Build Corporate Credit Fast:

  • Once you have some open credit lines, start using them:

Of course, it is recommended that you use only the credit you really need, especially if you have to pay high interest rates. Analyze your business’s real requirements related to assets, inventory, and technical support. Identify which of them can be solved through taking on debt and then use the credit lines according to those criteria.

 

  • Only use credit that you can easily repay:

Analyze your cash flow. Do not stress your finance with interest payments that will position your business at risk of default. Be extremely cautious and only choose the credit amount that you are sure the company can pay on time, no matter the business scenario that takes place in the future. This is a necessary condition to build business credit quickly.

 

  • Pay on time or earlier:

Be very careful with the date of your payments at this stage because you are trying to build business credit quickly. It is particularly important to pay all your debts on time or even earlier. Any bad performance will be tracked and will affect your reputation as a payer.

 

These suggestions explain how to build corporate credit fast. They are useful no matter what specific trouble that your business is facing. If you are ready to start a business, they will help you from the beginning to reduce the chances of delays. If you already have spent months or years operating a firm, these recommendations are valid too.

    

This article is for Grand Teton Professionals for Corporate Cash CreditFor Credit Repair Solutions and Support, please Contact Us at 203-528-0587 or email us at Support@CorporateCashCredit.com. For Media Relations, please Contact: Misty.Burrell@GrandTetonProfessionals.com.

 

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