The 5 best online resources entrepreneurs can use to build their business credit
The author is a freelance journalist and PR specialist for Google News. He can be reached at [email protected] — ed.
Small businesses are the backbone of America’s economy, accounting for 46.8 percent of its economic activity. the US Small Business Administration showed in their report that 32.5 million small businesses in the US employ 46.8 percent of the workforce. Regardless of the industry, Bureau of Labor Statistics results show that two-thirds of these survive up to two years and only a third after ten years.
Unfortunately, liquidity problems are one of the main reasons for the failure of 82 percent of companies. Credit scores are vital to a business looking for financing and play an important role in approving loan applications.
The faster you can build business credit for your business, the faster you can get credit from lenders and build cash flow.
Online resources on building business credit
There are several steps to building business credit. Learn how to build business loans by utilizing all the invaluable online resources at your disposal.
1. Name your company
Your business name is vital to your creditors and the credit bureaus. Choosing a suitable company name makes marketing easier and ensures recognition among your customers. You will also use the name to register your legal entity and apply for an EIN and bank account.
Choosing a company name is much easier when you use a name generator. You can search for company names online to ensure they are unique and not used by any other company.
Once you’ve decided on your business name, check online for domain name availability.
2. Incorporation of a legal entity
Legal entities are more likely to get a loan from a bank because the business assets are protected. Whether you choose to form an LLC or a corporation, your business will have limited liability protection that protects the lender’s risk from any default or lawsuits that it may face.
Several online resources make forming an LLC easy and affordable. There are only six steps to registering your business with the state. An LLC formation service can also help you file your legal business entity online.
3. EIN and your business bank account
Your Employer Identification Number, or EIN, is critical to your credit score. Your company’s EIN corresponds to a social security number and appears on all credit profiles. Lenders use your EIN to check your creditworthiness. You will also need the number to apply for a business bank account and credit card.
You can get an EIN online at the IRS website, but you must first incorporate your business before you can apply for one.
Once you get the EIN, you get a business bank account and business credit card. Credit bureaus always check creditworthiness through banks, and some credit cards contact them. Online banking services make it easier for you to ensure you don’t miss payments and maintain your good credit rating.
4. Creating a business website
Your company website is one of the places lenders will visit when you apply for a line of credit. They are interested in seeing what your business is doing, its location and your customer profile.
Therefore, a good website will definitely bring more credibility to your business. Building a professional website that’s easy to navigate doesn’t have to cost you a fortune. Online website builders like GoDaddy and HostGator make it easy for you to create a scalable website that can grow with your business.
5. Net 30 supplier accounts and their connection to credit reporting agencies
Net 30 supplier accounts allow you to make purchases for your business on credit. These are easy to set up and order online, giving you more time to grow your business. You have a 30-day payment period from the invoice date and report your payments to credit reporting agencies. As long as you pay before or on the due date, you help build business credit
Once your company pays these regularly, you can apply for even higher credit lines. The more Net 30 providers your company has the better as they report to credit bureaus such as Dun & Bradstreet, Equifax Small Business, Creditsafe and SBFE.
Online resources are available everywhere today to help you ensure your business success and build your business credit. TRiC offers several online resources to help you every step of the way. Remember, it’s also important to keep an eye on your credit score, so make a point of knowing your credit history by checking online business credit reports from credit bureaus every six months.