Building Business Credit for a New Startup

Business Credit Grows Slowly

business creditSmall business growth can require access to capital, and you should be ready to obtain credit for your new startup as soon as possible. Lenders will be reluctant to lend a large amount of money to a new startup, especially if the business founder does not have a record of building successful businesses.

The first step towards building business credit is to obtain a D&B D-U-N-S® number. Creditors will report payments using the D-U-N-S® number. Banks and other potential lenders will also use this number to review your credit history.

Utility companies may be able to serve as initial credit references for a startup business, so it is important to open the account under your D-U-N-S® number. Credit cards from office supply stores and major gasoline companies are often available to startups. They come with small credit limits but could be a first step towards the small business loan you may eventually want.

Office equipment leases are also among the sources of credit a startup can access. A lease has the added benefit of lowering the initial cash requirements for acquiring the equipment you might need in addition to helping build credit. Secured credit cards are another step towards unsecured credit.

Bank Loans Require Preparation

Banks could be a source of financing and SBA-backed loans can be inexpensive, especially when compared to the costs of an unsecured loan. There will be a number of documents you will complete as part of the application process but all banks will also want to see your business plan. Your actual financial statements will show how well your business is doing and the financial projections in a business plan will offer insight into the future potential cash flow and income of your business.

It will take time to get the credit you deserve for your business startup. By having a solid business plan, keeping good records of your business, and using small credit sources whenever possible, you will be doing all you can to prepare for a larger loan that could fund an expansion

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