How to Get Small Business Credit As a Startup

How to Get Small Business Credit As a Startup

Starting a small-business venture is one of pride, excitement and risk. What can make this even riskier is if you put your personal assets at stake. To help eliminate this risk, small-business owners should start building business credit separate from their own personal credit line. Getting small-business credit takes small steps when trying to achieve bigger lines of credit, which can take a few months. The wait is worth it because your small-business startup's financial status will not reflect        on your own personal credit and vice versa.

Instructions

1. • 1
     Incorporate your business or form a limited liability company (LLC). This will establish your business as an entity separate from your personal finances so you can get small-business credit.
   • 2
     Write a business plan. Doing this will show you are planning to pursue your venture for the long term and that you have a well thought-out plan. A business plan is also helpful when applying for small-business loans, which will help you get credit as a startup.
   • 3
     Apply for a nine-digit Dun & Bradstreet (DUNS) number through Dun & Bradstreet and a Federal Employer Identification Number (EIN) through the Internal Revenue Service. You will need to use your EIN number instead of your personal Social Security number on credit applications.
   • 4
     Separate your startup and personal funds. One way to do this is by opening a bank account for your small business.
   • 5
     Register with small-business credit bureaus. Under your company's name, report all your startup transactions and payment history with bureaus such as DUNS, Experian and Business Credit USA to build your credit score so you can get small-business credit.
   • 6
     Apply for a small-business loan if you need funds for your startup. You can apply for a small-business loan through a bank, credit union or the U.S. government's Small Business Association. Each type of lending institution has a different application process, so talk to a lender about the specifics.
   • 7
     Link business credit cards to your small business, not your personal line of credit. You should first look for credit cards though creditors that are friendly to new small businesses, such as Net-30 companies. Net-30 companies include big-chain office supply stores.
   • 8
     Pay the debt balances you have with Net-30 companies in full so your small-business credit matures. This will make you eligible for larger lines of credit. Additionally, always pay your business credit card bills on time.