Corporate Credit

How to establish corporate credit

Corporate credit is vital to the success of any company, and it's a good idea to establish credit for your business well before you intend to use it. Although your personal credit history can help to carry your business startup costs, you will want to build a separate line of credit for your business as quickly as possible in order to avoid an overlapping mess of debt and receipts at tax time.

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Get Corporate Credit

From secure lines of credit to the rewards of corporate or even small business credit cards, credit can do more than provide you with some quick cash – it can actually help you to save money and expand your business sooner. However, it may not be easy for you to get corporate credit if your business is just getting started; due to the high failure rate of new businesses, creditors will likely consider you to be a high-risk borrower.

While it is a fact that successful existing businesses will have an easier time securing the credit they need, there are some options for a new business owner looking to establish corporate credit. Ensure that you have good personal credit – you may need to sign a personal guarantee, which will extend your personal credit to your business. And if you do decide to extend your personal credit, make sure to pay your bills on time – this will result in good credit references that will help you to build future credit relationships. A good way to build a credit rating is for another company to report your responsible financial practices to a credit services company.

The bottom line is that a new business owner must provide the creditor with some level of comfort in order to begin a relationship; a personal guarantee will show that you truly believe in your business, and therefore the creditor should, too.

Build Corporate Credit

Many business owners that have established some corporate credit look to banks for a larger corporate line of credit. An existing relationship with a bank may help you to get a good deal on small business loans, as a customer who subscribes to a variety of financial services is more valuable than a customer with one account. If you decide that you need more credit than what you are currently working with, you can prepare a convincing and insightful presentation to pitch to your bank. In your presentation, be sure to demonstrate a good understanding of your business finances and how corporate credit helps you develop and increase your business.

The best way to build corporate credit is to pay all of your bills on time. Building credit can be a relatively lengthy process, but a few years of good payment practices can provide you with a substantially larger amount of credit than when you began.