The U.S. Small Business Association is the go to resource for many young small businesses across the United State’s.  For many entrepreneurs, they were able to start their business because the SBA was willing to assist them with obtaining start-up funding.  That’s a fantastic way to start a business, however research has shown that nearly 82% of business fails within the first two years of being open because of lack of one thing: Cash money baby!  With that kind of a statistic it’s not likely that all of those business offered a bad product or service.  What’s more likely is that they did not have sustained capital to help them to reach their consumers and to keep them afloat as they work on expanding their empire.

Business credit is not a topic you are likely to hear at your local small business meet-ups, it’s not something many business owner’s know even exists…but it the most important factor in you getting approved for lower rates on business loans and opening up lines of credit up to 20 times higher than what you could using you personal credit attached to your SSN.

Don’t just take our word for how important this is to the success of your business, according to the SBA there are 5 Easy Steps To Earning Business Credit:

  1. Determine whether or not you already have a business credit file. Small business owners should first know if they have a business credit file with D&B. You can find this out by calling D&B Customer Service at 1-866-785-0430 or visiting you don’t have a business credit file, establish one by applying for a D-U-N-S® number. Small businesses should apply for a D-U-N-S® number, a unique business identification number, as soon as they start their enterprise to start the process of creating a business credit file.If, when you call or visit the D&B web site, you determine that you already have a business credit file, review it completely to understand what information it contains. Add or modify the information as necessary to ensure that those looking at your business credit (such as vendors, suppliers and financial institutions) are making decisions based on complete and accurate information.
  2. Establish a business credit history. When they are starting up, many small businesses use their personal credit and finances to get their business going. But they should establish a credit history by putting expenses (such as a business phone line) in their business name and using a commercial bank account to pay their bills.
  3. Pay bills on time – and understand other factors that influence your credit rating. In order to improve your commercial credit scores and build a positive payment history, the most important thing to do is pay your bills on time. Be very careful not to overextend your business, and use any line of credit judiciously. While payment behavior is important, credit ratings are based on multiple factors. D&B, for example, maintains 150 factors that go into a credit rating, such as industry, revenues and number of employees.
  4. Monitor your business credit file and keep it up to date. According to D&B, the credit score of about one in three businesses declines over just a three-month period. By monitoring your business credit file, you will be aware of any change in your ratings before it affects your relationships with customers, suppliers and financial institutions. You should keep your credit file current and accurate, reflecting changes such as location, number of employees, outstanding suits/liens and revenue – all of which impact your credit rating
  5. Monitor your customers’ and vendors’ credit. Monitoring credit reports that provide a clear and complete picture of the credit standing of your customers can help you to determine how much credit, and on what terms, you should extend

Growing your business and making your ideas come to life is already a daunting task for most small business owners, especially for those that are one man or one woman shows!  Trying to juggle every role as business should have will only leave you stressed and exhausted at the end of each day.  Didn’t you start your own business so there could be some enjoyment and time to spend doing the things you want to do?

If you are using your personal credit to funds your business you are putting you and your loved ones at great risk.  Thankfully, we at Credit ReInventors can help you to put an end to the madness!

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