12 Aug Five Barriers to Accessing Business Credit & How to Overcome Them
Having access to business credit is critical to the success of your enterprise. It allows you to build strong business credit, which leads to improved relationships with suppliers and vendors, increased sales, better terms, and better financing. Here are five barriers standing between you and the business credit you deserve:
This is a no-brainer. Just like your personal credit score, your business credit score will suffer if you fail to pay back the amount you owe on time monthly. The only solution is to repay on time, or even better, repay early.
Too much debt
If you have previously applied for too many credit accounts within a short period of time, your business credit score will be down in the dumps. Space out your applications, pay off your debt, and borrow responsibility.
Lack of incorporation
In order to establish business credit to obtain loans, you must set up a registered business entity. There is no legal or financial separation between you and your business if your business structure is a general partnership or sole proprietorship. Consider one of the following structures:
- Limited liability company (LLC)
- Limited liability partnership (LLP)
No Employer Identification Number (EIN)
Having an EIN is critical because the IRS uses them to track businesses for tax purposes. It’s your business’ social security number, and it will help build your business credit. Apply for one on the IRS website. It’s free!
No established phone number or address
This may seem insignificant, but establishing a phone number and address for your business solidifies its existence and helps you get placement in business directories. Credit report agencies often pull information from these directories, so be sure to add the correct information consistently.
Don’t panic–these are common obstacles that many small business owners face. Once you break down these barriers and resolve these issues, you will have established business credit and your enterprise will grow right before your eyes. For guidance and accountability, schedule a consultation today at nbiconlinedev.wpengine.com.