Star up businesses are known for having robust products, lean business models, and agile thinking. However, finding start up financing is not always the easiest endeavor. For many,…
Once new entrepreneurs register their companies and get a business tax ID, they also establish business tax ratings. This is usually heralded by lots of junk mail with “special introductory” offers for business credit cards, and the like. However, business credit ratings also help determine the amount of financing entrepreneurs receives, as well as the terms and rates attached to those agreements. For these reasons, it is important to build your business credit ratings as soon as possible.
Vendors Can Help Build Business Credit Ratings
Some vendors are willing to establish business lines of credit with their customers. Be sure to ask your vendors if they send information to a credit reporting agency. If they do, then even making small purchases here and there can improve business credit ratings quickly. If our vendors do not use credit reporting agencies, it may be time to look for new vendors. If they do not work with credit reporting agencies, then you can make millions of dollars worth of purchases, and not see you business credit ratings improve by a single point.
Secured Business Credit Cards
When starting out, it is wise to get a secured business credit card. Much like secured credit cards for personal expenses, a secured business credit card is directly tied to funds available in the business bank account. By using the secured card, your will build your business credit ratings and then get access to unsecured credit cards. When you move onto unsecured lines of credit, be sure to shop around to get the best interest rates and spending limits possible for your business.
Asset Based Lending
Asset based lending helps to build business credit ratings by structuring a revolving line of credit around items such as real estate, vehicles, equipment, and receivables, which are owned by your business. This lines of credit can be accessed as you need it, instead of having to take on debt with one lump sum through a traditional bank loan. As your business improves and grows, the spending limit on your line of credit will also increase, and your purchasing and payments will be reflected in your business credit ratings.
Learn More Today
If you would like to learn more about asset based lending and how it can potentially improve your business credit ratings, contact CNH Finance today. Our team of experts will work with you directly to create an asset based line of credit for your business to help promote growth without debt.