Business Credit: How to Build and Report It

In this unprecedented time, entrepreneurs must have a thorough understanding of business credit. How is it built? Why should you establish credit? Let’s take a look at how this works and what your startup needs for it.

What Is Business Credit?

This is the process of acquiring business credit cards or tradelines for business use. These credit cards and tradelines obtained under through our partnership only report to credit reporting agencies. This enables you to access capital and establish a credit file for the business. Similarly, it helps protect your personal credit at the same time. 

Now that you understand what this is, let’s start with the first question most people ask about why it’s necessary for businesses.

What Do You Need For Business Credit?

For instance, let’s say you structure a business as a corporation or form a limited liability company (LLC). The company is now a separate legal entity. It may enter into contracts.

Look at this new company as if it was a teenager. It’s a young business, just getting its start on the credit-building journey!

Therefore, once you incorporate it’s time to obtain an employer identification number (EIN). The IRS will issue small businesses with this tax ID filing. It helps identify your business entity to the IRS, banks, lenders, suppliers, vendors, and other businesses.

Your company may use an EIN to create a credit file with credit reporting agencies. Some of these agencies include Dun & Bradstreet, Equifax Small Business, and Experian Commercial.  

Aside from an entity formation and EIN, what else does your business need in order to build credit?

  • Separate legal entity — for example, forming a corporation, LLC, or another business formation
  • Evidence that the company is good standing
  • Employer identification number (EIN)
  • Business contact information
  • A business bank account

Think of your company’s EIN as the social security number (SSN) for the business. It will be your job as the business owner to cultivate and nurture the business’ ability to build and solidify a respectable credit score.

Building Credit? How Long Does It Take?

However, building this credit does not happen overnight. It takes time to establish credit. In other words, taking the right steps in the proper order allow you to see quick results. This tool helps expedite the process from years down to months. It uses a simple and effective solution that comes with a live business coach.

Is This Funding For You?

If any of the following questions pertain to you and your startup, business credit may be a priority for you.

  • Is it necessary to separate your business and personal expenses?
  • Do you need access to working capital at anytime, to use anywhere and for any business purpose?
  • Do your goods or services need terms?
  • Are you planning to grow your business?
  • Would you like access to revolving sources of cash and credit?

In addition to establishing business credit, you may also tap into working capital as a source of funding. Working capital is a quick way to infuse credit and cash into any business. What is working capital? This process utilizes the personal credit profile of the business owner to secure the funding for a short-term solution. 

Why Business Credit Card Funding?

There are a few reasons why credit for business and working capital are such popular funding programs.

Business cards do not report to your personal credit reports.

Business credit cards and tradelines should only report to the business credit profile when you do this correctly.

There are over 500 business credit cards in the marketplace. However, less than 100 cards report to business credit reporting agencies.

The best business cards only report to credit reporting agencies. Above all, knowing which ones to go after saves you guesswork and time. 

You can build your credit profile.

Business credit cards issued under the company’s EIN report to appropriate credit agencies. For instance, one agency includes Experian Commercial. 

The more tradelines, including business credit cards, which are reporting the better. Similarly, this will help speed up the creation and seasoning of the company’s credit profile.

Maximize credit limit approvals.

How do you get the highest credit limit possible for your business? It’s essential to be strategic in your approach. The following factors make our funding process so effective.

  1. Become lender compliant.
  2. Optimize your credit profile.
  3. Select the right vendors and bank cards.
  4. Personal credit optimization.
  5. Use the right credit.

Business Credit Overview

  • Become lender compliant. This means you become more bankable from a banking view.
  • Optimize your credit profile.
  • Establish a business credit file.
  • Report only to credit reporting agencies.
  • Ideally, your business should secure a minimum of 10 reporting tradelines of credit and or credit cards reporting to your business. 
  • Achieve a 70+ PAYDEX credit score.
  • Secure $50,000 or revolving and reporting credit.

Ready to learn more about establishing credit and working capital? Click here to schedule an appointment to speak with one of our Corporate Credit Advisors.

Jason Williams is the owner of Obsidian Bear Funding, LLC and has a passion for helping startups and small businesses succeed. He created a solution that when coupled with coaching has solved one of the biggest areas of concerns for small businesses. Establishing and reporting credit can now take a couple of months instead of several years. To learn more please visit Obsidian Bear Funding.