When starting a business, securing a business cash advance can be very tricky and can determine whether your business fails or survives. Many of the banks and credit facilities are very wary of lending any money to a new business as they are considered credit risks. But there are several ways in which you can help to improve your credit rating which would open up new avenues of business credit. Some of this ways are very simple and play a vital role in the growth of your business.
One of the key factors is to separate your personal credit from the business credit. This is because mixing the two can jeopardize your company as well as limit the amount of business credit that your company can receive. It is also important to have your business incorporated as this gives you your Federal Tax ID number. All the necessary documentation required such as business licenses, verifications should be done as it is impossible to receive business cash advances from credit institutions or banks without it. You will need to make sure that you select the correct business classification codes.
You should also build a solid payment history by paying all your invoices on time or before their due date as this increases your paydex score. Having a solid payment history can guarantee a line of credit. Having your business listed with multiple credit bureaus especially those that cater to your specific industry can be a big boost to building business credit. Keep an eye on your business credit file and open a business bank account where you can also get secured business credit cards.
It is vital to establish a small business credit line and to have a wide variety of credit which allows you to build a strong credit rating. You can do this by opening multiple account types such as trade credit, revolving credit, loans and leases. You will also need to have a well thought out business plan as this gives you a better picture of where you want your business to be in the next year.
Another key step is to keep proper financial statements which are a requirement when seeking a business cash advance. Your personal credit should be high as a personal credit check might be requested by a lender or creditor. Be well informed by joining trade forums, social networks, reading widely and blogs.
- Building Business Credit – A Business Is Your Key To Obtaining a Fortune (debt-consolidation-2u.com)