Business Credit for Startups

Business Credit for Startups

If you’re brand new to the business world, one of the first things you should do is establish your business credit file by getting a D&B® D-U-N-S Number. Tweet This This nine-digit number creates a business credit profile for your company, which you can impact and leverage. Once you’ve gotten your D-U-N-S Number, you can start building your business credit and reputation.

Why Startups Need Business Credit

As a startup, you’ll likely be relying on friends, family, savings, and possibly investors to help you fund your business, but it’s imperative you start building your business credit early so when your established business needs a loan, you’ll have the scores and ratings to help you get one.

Business credit may help you with more than funding; it can also help grow your business by helping you get contracts. By monitoring others’ business credit, it can additionally help you manage the increased risks to your growing business and manage your cash flow so you can safely grow and succeed.

How to Build Business Credit as a Startup

As a startup, you may not have many opportunities to build business credit, but there are a few things you can do.

1. Set up a business bank account

It’s imperative to keep your business credit separate from your personal credit to help protect your personal assets and build your business credit. Setting up a business bank account and keeping your expenses separate is the first step.

2. Set Up and Pay Bills in Your Company’s Name

Until you start working more with other companies, one of the best ways to help build your business credit is by paying bills in your company’s name. This can help establish a payment history for you, which can help build your business credit until you establish a payment history with other businesses or institutions. Be sure to pay early or on time to build good credit.

3. Get a Small Loan

Your business credit may be leveraged to help you get elusive bank loans, but you may be able to get alternative funding from lenders with less strict requirements. If you can obtain a small loan or line of credit that you pay back early or on time, you can help show that your business can handle a bank loan or larger amount of financing.

Once you transition into a medium-sized business, you’ll have more options for building business credit. Until then, focus on separating your personal and business credit and paying your bills on time.

Want to learn more about business credit and how it can be leveraged? Check out our business credit guide or learn the basics.

Photo Credit: o.hatton, Twenty20