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5 Strategies For New Businesses To Build Credit

Posted by admin on Aug 11, 2011 11:11:00 PM

This post was written by guest blogger Michael Dolen.

Building credit for your small business can seem like the ultimate catch-22. You can't get credit without first having a credit history. So what are supposed to do? Well, here are 5 strategies you can use to establish and build credit for your new LLC or corporation.

Strategy #1: Open a business bank account

While this in and of itself won't build your credit, it is an important requirement for obtaining credit down the road. In order to apply for an unsecured business loan, typically you must have a bank account that has been open for 2+ years. However, if you demonstrate a strong history of deposits/cash flow into this account, then your bank may make an exception to the typical 2 year requirement.

Strategy #2: Obtain a secured loan

Even if your business has absolutely zero credit history, it still may be possible to get a loan. How so? By putting up your cash as collateral. For example, your bank may allow you to borrow $5k if you sign away a $5k CD for collateral. Since essentially you are borrowing your own money, obviously a loan secured by cash is useless for financing purposes. However what it does accomplish is kick-starting your credit history, now your business will have an installment loan on its record.

Strategy #3: Establish trade lines

Even with no credit history, it may be possible to obtain a trade line with some local suppliers, such as construction and lumber companies. These usually operate on a net-30 basis, which means your balance must be paid in full within 30 days. Because these are unsecured, the amount of credit you start out with will almost always be low. However if you use it responsibly over time, your credit limit should go up. The only drawback with trade lines is that in order to have these show up on your D&B credit profile, you may have to pay Dunn & Bradstreet for their "Credit Builder" program, unfortunately.

Strategy #4: Piggyback on your personal credit

In order to apply for a business credit card and get approved solely under your company's credit, your business typically must have 2+ years of solid cash flow (with solid bookkeeping to back it up) and often the requirements are quite high; $2M to $5M annually. Obviously that's an impossible feat for a new business! However you can apply for small business credit cards under your personal credit. If you do so, please note that AmEx business cards(as great as they are) will not be reported to your business credit file. However Chase and some other issuers will report, assuming you provide them with your business tax ID number.

Strategy #5: Keep Your Personal Credit In-Check

Even after you do all of the above, don't be surprised if down the road a lender asks to see your personal credit when you apply for a loan (typically this goes for anyone owning 20% or more of the business). Some people feel this is not appropriate, but it makes common sense when you think about it, a person good at managing their own credit will probably be a lower risk in managing business credit, right? Depending on the size and type of loan, the lender may also ask you to co-sign for it under your personal credit. Conclusion? As a small business owner, having good personal credit can be very useful, both now and in the future.

Michael Dolen is a small business owner himself, the founder of Category Media, LLC, which is the parent company of CreditCardForum.com (a website which he built to offer the best credit card deals, or at least that's what he strives for it to be). On the site he has a section featuring credit Q&Aís for small businesses.

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Topics: Small Business

Easy Gift Buying Guide

Posted by admin on Aug 3, 2011 2:38:09 AM

Between duties at work and responsibilities at home, it is often hard to even remember special occasions, much less come up with a great gift idea for them. Often, if you have to come up with a gift in a hurry, you resort to boring old gift cards or an impersonal cash gift. Here is an easy gift-giving idea guide that can help you come up with the perfect present for any occasion.

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Tips For Saving Money On A Website

Posted by admin on Jul 29, 2011 2:20:00 AM

Many small businesses struggle with the idea of putting together a website. It might be for creative reasons, or perhaps they simply do not have the money to spend on something elaborate. However, no matter how big or small the budget, it is possible to create a good, working website.

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Topics: Small Business

6 Ways to Keep Your Kids Busy and Keep Yourself Sane This Summer

Posted by admin on Jul 27, 2011 2:32:00 AM

It’s summer time again which means that the sun is shining, the flowers are in full bloom, and your kids are home from school for the summer. While there are many activities that can be done in summer, like going to the pool or making a trip to an amusement park, budget and time prevents them from being a daily outing which means that most of the time your kids are at home, with you, complaining about how there is nothing to do. Save your sanity and cut off that endless chorus of how bored your children are by providing them with one of these projects to keep them entertained and out of your hair.

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Topics: Education

Using Social Media for Small Business Promotion

Posted by admin on Jul 26, 2011 2:46:00 AM

It's no longer satisfactory to simply have your business represented online by a lone website. In the age of social networking and quickly-spreading online trends, every business needs to be considering a presence on site like Twitter and Facebook. These websites present great opportunities for brand awareness, promotion and even hype. So, how is it done and what do you need to know before you experiment with social media?

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Topics: Small Business

How to Trim Your Small Business Budget

Posted by admin on Jul 19, 2011 2:34:00 AM

In these uncertain economic times, many small business owners are looking for ways to cut back on their expenses and make sure they're in a sound financial position -- just in case the worst-case scenario becomes a reality. There are several great ways to reign in your small business' spending and ensure your financial integrity for the long haul.

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Topics: Small Business

Six Items to Welcome Home Your New Pet

Posted by admin on Jul 19, 2011 2:31:52 AM

Welcoming a new puppy into your home can be a fun event for both children and adults alike, but pets require a lot of responsibility and certain supplies to keep them happy, healthy, and safe. Here is a list of six items to have on hand before you bring your new family member home.

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School Supply Giveaway Contest Feature

Posted by admin on Jul 12, 2011 2:33:00 AM

Marc Joseph, CEO/President and Founder of DollarDays International Inc. has been featured for an article in the Huffington Post.

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Topics: Giveaways

How to Bring Your Business Into the 21st Century

Posted by admin on Jul 12, 2011 2:25:00 AM

There's no longer any debate as to the pros and cons of taking a business online: it's simply a requirement for any serious business to have a website and a serious online presence that engages current and potential customers. But many business owners simply don't know where to get started when taking their business digital. There are a few key concepts and options to consider when beginning this process.

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Topics: Small Business

Facebook $500 School Supply Giveaway Contest

Posted by admin on Jul 7, 2011 3:58:00 AM

Enter your school to win $500 in school supplies from DollarDays.com! Budgets are tight. Finding it hard to get the supplies you need for your students? DollarDays.com is here to help! Enter your school to win by nominating them for the prize. Then the voting begins! The school with the most votes wins the giveaway...it's that easy!

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Topics: Giveaways

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