How to get small business credit

Most business owners find that at some point they need to acquire business credit. Today, it is virtually impossible to run your small business without some form of credit. If you are trying to run your small business on a day to day basis you may find that you cannot purchase the supplies you need without some kind of credit. One of the major advantages of using business credit is that it allows you to have very detailed financial records that can not only help you keep more accurate recordsbut can also be a valuable tool at tax time. It is also important to keep in mind that obtaining small business credit can be a needed step toward establishing a credit history for when you need additional financing. Without having some kind of established credit history it can be a serious determent toward getting a business loan. Here is what you need to know about how to get small business credit-

- Establish a legal entity-Today; the rules are lot more stringent as to who can obtain business credit. You need to make sure that your business is registered as a legal entity in order to separate your business credit from your personal credit. It is important to understand that most of the time you can take care of this online easily and it will only cost you a minimal fee. You should not overlook this step. This will be the beginning of setting up a credit history and credit profile for your small business. In addition, you should make sure that you register your small business with all three of the credit bureaus.
- Know the requirements-It is important to keep in mind that the requirements are different when it comes to business credit. You need to make sure that you have a thorough understanding of the requirements as it applies to your small business. Keep in mind that it can seriously damage your business credit if you do not carefully comply with all of the requirements. If this happens you may find that certain lenders will comment negatively on your credit history which can in turn damage your ability to get further business credit and may affect your business finances for a long time to come.
- Have a well written business plan-You may think that your business plan and your business credit are two separate entities. However, you may be surprised to find out just how closely connected they are. Your business plan will need to accurately reflect that your small business is financially strong. Whenever you apply for any type of business credit or financing your lender will want to see your business plan and will look closely at how you are showing financial solvency. It is important to understand that even if you are trying to get business credit for a startup having a well written business plan can often compensate for a lack of business credit. There are some lenders who may consider offering you business credit simply because you can show that your small business is a good risk.
- Stay on top your business credit-Just like your personal credit you need to be vigilant in taking care of your business credit. One of the most important things that you need to do is make sure that your business pays its bills on time. This is the most effective way to improve your business credit history. In addition, you want to be monitoring your credit history so that you can always be aware of what your business credit standing is. Remember, while it may be tempting to carry a lot of business credit it can be a liability to your small business.