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Building Business Credit Can Be Easy and Fast

Suzanne Llanera

Can your business have ready access to additional funding when you need it most? As a business owner, it’s a question you have to ask yourself. At some point in time, in the course of running a growing business, there will be a need for more capital to support a range of urgent development plans. These could involve the purchase of updated, efficient and more productive equipment, hiring additional personnel, conducting critical market research or even relocating to a site more convenient for your clients.

There are always the traditional banks, financing companies or investors from whom you could access needed funds. The harsh reality though is that getting a loan from these guys is easier said than done, These are serious, hard-nosed, no-nonsense people who will dig deeply into your background to find out if you’re a high-risk or a low-risk borrower. Sure, you might be enjoying a great personal credit standing (this too helps) but the importance of business credit scores cannot be overemphasized. If it’s good and solid, it will get you not only lower interest rates on your loan but also allow you to access a variety of products and services without paying up front.

A bit of learning from Juan Antonio Rodríguez

Juan Antonio Rodríguez is a California-based small business owner. He had a big order for an item that required delivery in four months but he needed urgent funds to purchase a modern, fast producing equipment that would meet the delivery deadline. He went to a bank to apply for a business loan. His application was denied. Why? Poor business credit score. Undaunted, he resolved to improve his business credit ranking, get some advice from management experts and before long he was ready to face another financing executive of a lending institution.

This story has a happy ending. Juan Antonio’s customer agreed to a deadline extension and with the funds he got because of his improved business credit score, he was able to get the needed equipment to make the delivery on time.

Not every business owner gets to have a happy ending. Some fall on the wayside because of low business credit score. The good news is that there are ways to get that business credit rating up in a short time.

Some important steps to building your business credit score

  • Pay your bills on time. One of the first things potential creditors and even your suppliers will check is whether you have a good track record when it comes to paying your bills. A good track record serves as a testimonial that will let them know that when it comes to paying your bills you are dependable.
  • Get a credit card for your business. If you get for instance a company credit card and establish a good record with your credit card company, this might make it easier for your business to get bigger loans from other financial institutions. However, apply for a credit card with a company that provides information to major credit reporting agencies.
  • Do not ignore small loans. When you are building a good credit record for your business, applying for a small loan and paying it on time will eventually help you when you need to get a much bigger loan. Of course, make sure that your creditors send reports to credit agencies.
  • Establish good working relationships with your suppliers. Generally, suppliers do not provide information to credit reporting agencies. However, because of a good credit rating, suppliers may not require you to pay in advance for their goods or services. Likewise, you can use them as your references when other financial institutions require such.
  • Regularly check your credit report. Reporting agencies, like any other organization, are not infallible. It would be wise for you to check your rating to make sure that the information on your business is fair and accurate. Also, the credit report on your business gives you an idea of where it stands and if you need to take more action to improve your rating.

For your business to stay on a growth path you need to have access to affordable funding. If you don’t have any business credit history or if it’s showing a low score, it’ll be like putting a wrench on your development plans. Adopting these steps cited to build your business credit score is crucial.

Need more strategies like these to build your business credit score quickly? Check out the tips we give you in How to Build Business Credit.