In deciding how to start credit for your business, accept the fact that every single bit of credit that you get initially will be personally guaranteed by you.
The bank will demand a personal guarantee;
Your major suppliers will demand a personal guarantee;
Your landlord will demand a personal guarantee.
It doesn't matter whether you are an individual or a corporation, in the beginning a personal guarantee is how to start business credit growing.
So why do they call it "business credit"? And why even bother incorporating? Well, those are great questions.
Being a corporation will help you down the road a ways, after you have built up a track record. But in the beginning, you will guarantee everything. Don't believe what incorporation companies tell you -- you WILL guarantee everything at first.
Most importantly, remember that yours is a new business. Put yourself in the banker's shoes. Just how much money would you lend to a business that had no history, no creditors, no recommendations? Probably not very much.
Well, that's the position that lenders, landlords and suppliers are in when they look at your company. So they look to your personal credit history instead.
Most people assume they will look for credit with landlords, major suppliers, and the bank, which is true.
But entrepreneurs often overlook getting a credit card in the company name, which is actually an excellent tactic. Many credit card companies will report to Dun and Bradstreet and to Experian, the two major business credit reporting agencies, so it is well worth while.
Just start somewhere. It's actually easier to get cards in the beginning. After two or three years, credit card companies wonder what's wrong with you that you don't have any credit cards. So go for it now.
Learning how to start credit for your company really isn't difficult. Watch your company's credit as you watch your personal credit. For instance, it does make a difference if you pay immediately, rather than in 60 or 90 days.
There are no magic formulas on how to start credit for your company. Basically, it is just good common sense.
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![]() Lon Levine, Startup Business Specialist
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