Entrepreneurs are discovering the power of building business credit to access capital for their ventures. Typically in the first six months a business will need to start with smaller credit cards and vendor accounts to build up a solid base of positive reporting accounts on their business.
Once a business has established 5 to 6 smaller credit accounts, it is then easy to move to major credit cards and get approved.
Another strategy that entrepreneurs are using is finding strong fight though borrowers with 700 fico credit scores and cosigning in behalf of the business. When cosigning for a business loan, you simultaneously build the business credit while taking minimal risk as a ghost guarantee cosigner. When cosigning for a business loan, this does not report a get your personal credit and must there is a default. And many times this does not report against your personal credit and less there is a fraud default.
Many business credit services teach about the power of utilizing a strong personal fico score to cosigning behalf of the company. This is truly one of the most robust strategies an owner today can utilize when operating a business in the first year. Normally it takes 2 to 3 years in operations for the business to qualify on its own merit. In addition the business will need to establish a base of smaller business credit lines, and credit cards to show at least 5 to 10 reporting lines against the business entities EIN # number. In addition a Dunn’s number that is provided by Dun & Bradstreet, the primary business reporting bureau, will be required.
So for those who are interested in launching a new business, consider using a business entity and establishing a number of smaller trade credit or vendor lines that are easy to obtain, and combine this with a strong personal fico, and you will have easy access to business lines of credit within the next 90 days.
It is important to note, that it without using a personal fico, it can take 2 to 4 years, and up to two years in tax returns to qualify for business credit that is based entirely on the business itself.