Unless you are running a business that specializes in providing financial services, dealing with your own business finances probably isn’t your favorite thing in the world to do. One of the first financial barriers business owners face is securing capital. Female entrepreneurs, on average, have even more difficulty. But did you know that there are things you need to do before even approaching an investor to secure funding? Or that there are things you can do to increase your chances of successfully securing that funding? Getting your business credit in order is the first step.
What Is Business Credit?
Many business owners assume their business and personal credit are one-in-the-same. But, the truth is, your business has its own credit score and credit report separate from your own as an individual. The most important thing about business credit is that it can affect your ability to secure funding.
Building Business Credit
Establishing business credit is relatively easy. If you’re not sure where to begin, follow this easy list to get started:
- Incorporate your business- this will officially separate your personal and business credit.
- Get a federal tax identification number (EIN)- this is required to open a business bank account and file your business’s taxes.
- Open a business bank account- it’s important to keep your personal and business finances separate. Open a bank account in your business’s legal name and use that account for all business expenses.
- Apply for a business credit card- this should be in the business’s name, not your personal credit card. Choose a credit card company that reports on-time payments to the major credit reporting agencies.
- Establish credit with vendors and suppliers- ask vendors or suppliers to extend a line of credit to you when doing business and ask them to report on-time payments to the credit reporting agencies.
Benefits of Business Credit
As a business owner, your goal should be to have a “strong business credit profile that alternative and traditional lenders can trust and finance.” Our friends at Nav have made doing this so easy. If you haven’t already used their FREE service to check your business credit report, get over there and do it RIGHT NOW. Seriously, it’s FREE!
Greg Ott, Nav President & COO says, “By affording our customers the opportunity to easily build business credit we’re helping them better position their business in the eyes of a lender, unlocking new financing options and rates, and increasing the likelihood that they will be considered for the financing of their choosing.”
You can still do all of the free credit checks on Nav for no cost. But, they’ve added some exciting new pay-for options to help you take your business financing strategy to the next level. Here’s what they’ve added to their line-up and how it can help your business secure the funding it needs:
Business owners looking to take full control of their financing future are great fits for Business Manager, which gives full transparency into details lenders get, including full, in-depth credit reports and scores from the 3 major business credit reporting agencies, Dun & Bradstreet, Experian, and Equifax.
Best for business owners looking to boost business credit and gain access to better business financing. With this plan, business owners will have their Nav monthly plan payments reported to major bureaus — Dun & Bradstreet, Experian, and Equifax — all with no risk of negative payment history.
Business Loan Builder
Perfect for business owners looking for large-dollar loan options. Business Loan Builder is the only place business owners can access their FICO SBSS score — the score used to prescreen SBA loans — as well as full reports and scores. The new package also reports customers’ monthly Nav payments to the three major business bureaus to boost their business credit profile.
Good Credit is Good for Business
The bottom line is this: Good business credit can save you money. It can put you in a position of trust and credibility with banks and lenders to receive better interest rates and terms. Once you’ve established good business credit, protect it! Just like your personal credit, it’s important to periodically check your business credit reports to make sure there is no suspicious activity. If you catch something crazy on your credit report or suspect your business has been a victim of fraud, Nav can help with that, too with these new services:
Lost Wallet Replacement. One call and a dedicated specialist will cancel all lost cards, report missing documents, and initiate a fraud affidavit and a police report for stolen wallets.
$1 million identity theft insurance. Coverage includes reimbursement for legal costs, loss of income, travel expenses, childcare, and fraudulent withdrawals.