Having trouble getting a small business loan? You may be getting turned down due to a bad credit score, or lack of credit altogether. It is important to build a strong credit profile in order to secure financing of any type, but it can be challenging to start from scratch. Here are a few ways to start building your business credit today so that you’ll qualify for loans in the future.
- Make Payments On Time
One of the best ways to build your business credit is by being prompt with your payments. Credit bureaus take your payment history into account when determining your credit score. If you have trouble paying on time, encourage your suppliers to send invoices to you as soon as possible and use the best invoice software available.
- Open Trade Lines With Suppliers
As a business owner, you have to purchase supplies, products or materials to remain in business, so why not build your business credit while you’re at it? Many suppliers offer trade credit, which gives you the opportunity to pay for inventory or goods after you receive it. If you have this type of payment structure with one or more suppliers, you can ask them to report your payments to a business credit bureau so you can establish your credit history.
- Keep Your Records Clean
Did you know that your business credit report details any liens, judgments or bankruptcies your business has? Negative things like collections, liens and judgments can stay on your report for up to seven years and can have a lasting impact on your credit score. Keep your public records clean and avoid these kinds of negative marks on your report.
Building good business credit is a challenge for startups, but it is worth the effort. Good credit can help you get better terms on your credit cards and business loans and will paint your business in a more favorable light. In addition to developing a good credit score, there are other tools available to help you run a successful business, including customer management software and estimate tool software.