Whether you are having financial difficulties or are looking to take your small business to the next step, you will need the ability to borrow money. Nevertheless, business credit can sometimes be hard to come by.
The issue of business credit can be confusing. There are various scores, different reporting agencies and available credit lines. It is an important subject for any business owner to understand because it could be a deciding factor in whether your business sinks or swims.
Understanding Business Credit
When one business issues credit to another, it is referred to as business credit. Your numbers are what vendors and lending institutions use to make a judgment regarding your ability to pay bills or repay fast business loans. This score is determined by factors such as your payment history and how long you have been in business.
In addition to Experian and Equifax, which are responsible for compiling personal credit information, business credit also gets reported by Dun & Bradstreet and Business Credit USA. The numbers range from 0 to 100, unlike the 300 to 850 scale for personal credit reports. Another difference is that this reporting is voluntary.
How Can You Improve Your Numbers
Since this is partly decided by your amount of available credit on bank lines and the number of inquiries made on your credit account, it is wise to work on establishing your credit and raising your score. One way this can be done is to apply for loans and other forms of quick business financing, but you want to do it the right way, without creating future financial hardships.
Your smartest move would be to contact a cash advance company like Financing Solutions (www.fundmypayroll.com). They can give you the funds you need to establish working capital, handle daily operations and grow your business.
Best of all, this kind of short term business funding can help your business credit score. They use a quick repayment schedule. Therefore, you will be able to pay off the money in a few weeks or months. This type of arrangement is viewed favorably by credit reporting agencies.
How to Separate Your Business Credit from Your Personal Score
When the business is in trouble, many entrepreneurs can find their entire lives in jeopardy. Owners may be in danger of losing their home. In addition, you may be personally liable for debt even after the business has gone under. The main reason for this is that some small business owners do not effectively separate their personal credit from their business credit.
One way to do this is not to use your personal credit history. It’s better to use your business credit score to apply for small business loans. You should apply for an employee identification number or federal tax identification number from the Internal Revenue Service.
In addition, you may want to establish a corporation or LLC, instead of operating as a sole proprietor or partnership. This will help to protect you against liability in case of bankruptcy or disaster.
Another way to protect yourself and your business is to contact Financing Solutions. They will help you get the business credit you need.