Credit Suite Blog

Get current information on getting credit and loans to grow your business

CLICK HERE TO LEARN MORE

What’s the Best Way to Build Business Credit in a Recession? We Have the Secret!

Published By Janet Gershen-Siegel at December 16th, 2020

What’s the Best Way to Build Business Credit in a Recession? We Have the Secret!

Thinking of throwing in the towel, as it looks like the US slides further and further into a recession? Don’t! This can be a great time to regroup and get your business set up for even more success down the line. Building business credit should be on your to-do list. So, find out the best way to build business credit in a recession.

Learn the Best Way to Build Business Credit in a Recession

We can show you the best way to build business credit in a recession! Get the kind of business funding that can take your business to new heights! And it can happen no matter what goes on with the economy.

Economic Downturns and Company Funding

The United States economy has been through any variety of changes throughout the years. Our financial fortunes can depend upon developments in technology, diplomatic ties (or cutting those ties), the weather, and also more. Business credit, fortunately, is an asset which you can develop even during financial slumps. Nonetheless, you may need to get a little creative with it, and with various other forms of business funding.

The Best Way to Build Business Credit in a Recession – But What’s Business Credit, Anyway?

Small business credit is credit in a business’s name. It doesn’t link to a business owner’s personal credit, not even if the owner is a sole proprietor and the sole employee of the small business.

Accordingly, a business owner’s business and individual credit scores can be very different.

The Benefits

Because business credit is distinct from consumer, it helps to secure a business owner’s personal assets, in the event of a lawsuit or business bankruptcy.

Also, with two separate credit scores, a business owner can get two different cards from the same merchant. This effectively doubles buying power.

Another benefit is that even start-ups can do this. Heading to a bank for a business loan can be a recipe for frustration. But building company credit, when done the right way, is a plan for success.

Individual credit scores rely on payments but also various other factors like credit usage percentages.

But for company credit, the scores actually just hinge on whether a company pays its debts on a timely basis.

The Best Way to Build Business Credit in a Recession – The Process

Building business credit is a process, and it does not occur automatically. A business will need to actively work to build company credit.

Nonetheless, it can be done easily and quickly, and it is much speedier than building consumer credit scores.

Merchants are a big aspect of this process.

Undertaking the steps out of order will lead to repetitive rejections. Nobody can start at the top with business credit.

The Best Way to Build Business Credit in a Recession – Enhancing Company Fundability™

A company must be Fundable to credit issuers and vendors.

Therefore, a company will need a professional-looking web site and email address. And it needs to have site hosting bought from a hosting vendor.

Also, business telephone numbers must have a listing on ListYourself.net.

Also, the business telephone number should be toll-free (800 exchange or comparable).

A business will also need a bank account dedicated strictly to it, and it needs to have all of the licenses essential for operation.

Licenses

These licenses all have to be in the exact, appropriate name of the company. And they need to have the same business address and telephone numbers.

So bear in mind, that this means not just state licenses, but possibly also city licenses.

1231766  Content Updated CklistRec Bk Banner op1 120721 min - What’s the Best Way to Build Business Credit in a Recession? We Have the Secret!

The Best Way to Build Business Credit in a Recession – Working with the IRS

Visit the Internal Revenue Service website and get an EIN for the company. They’re free. Select a business entity like corporation, LLC, etc.

A company may begin as a sole proprietor. But they absolutely need to change to a type of corporation or an LLC.

This is to limit risk. And it will make the most of tax benefits.

A business entity matters when it concerns tax obligations and liability in case of a lawsuit. A sole proprietorship means the owner is it when it comes to liability and taxes. Nobody else is responsible.

The best thing to do is to incorporate. You should only look at a DBA as an interim step on the way to incorporation.

1231766  Content Updated CklistRec Bk Banner op1 120721 min - What’s the Best Way to Build Business Credit in a Recession? We Have the Secret!

The Best Way to Build Business Credit in a Recession – Starting Off the Business Credit Reporting Process

Begin at the D&B website and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s web sites for the business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

By doing this, Experian and Equifax will have something to report on.

Starter Vendor Credit

First you should establish tradelines that report. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start to get credit for numerous purposes, and from all sorts of places.

These kinds of accounts have the tendency to be for things bought all the time, like marketing materials, shipping boxes, outdoor workwear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who give you starter credit when you have none now. Terms are usually Net 30, instead of revolving.

Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, like within 30 days on a Net 30 account.

Details

Net 30 accounts have to be paid in full within 30 days. 60 accounts have to be paid in full within 60 days. Unlike revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you used.

To launch your business credit profile the right way, you should get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then make use of the credit.

Then repay what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit – It Makes Sense

Not every vendor can help in the same way true starter credit can. These are vendors that grant approval with very little effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

As you get starter credit, you can also start to get more credit. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

The Best Way to Build Business Credit in a Recession – Accounts That Do Not Report

Non-reporting trade accounts can also be helpful. While you do want trade accounts to report to a minimum of one of the CRAs, a trade account which does not report can still be of some worth.

You can always ask non-reporting accounts for trade references. Additionally, credit accounts of any sort should help you to better even out business expenses, consequently making budgeting less complicated.best way to build business credit in a recession Credit Suite2 - What’s the Best Way to Build Business Credit in a Recession? We Have the Secret!

The Best Way to Build Business Credit in a Recession – Monitor Your Business Credit

Know what is happening with your credit. Make certain it is being reported and deal with any inaccuracies ASAP. Get in the habit of taking a look at credit reports and digging into the specifics, and not just the scores.

We can help you monitor business credit at Experian, Equifax, and D&B for 90% less than it would cost you at the CRAs.

Update Your Data

Update the data if there are mistakes or the data is incomplete.

The Best Way to Build Business Credit in a Recession – Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any inaccuracies in your records. Mistakes in your credit report(s) can be taken care of.

Disputes

Disputing credit report inaccuracies generally means you precisely itemize any charges you dispute.

1231766  Content Updated CklistRec Bk Banner op1 120721 min - What’s the Best Way to Build Business Credit in a Recession? We Have the Secret!

The Best Way to Build Business Credit in a Recession – A Word about Building Business Credit

Always use credit smartly! Don’t borrow more than what you can pay off. Monitor balances and deadlines for payments. Paying promptly and in full will do more to raise business credit scores than nearly anything else.

Building company credit pays. Good business credit scores help a small business get loans. Your credit issuer knows the small business can pay its financial obligations. They recognize the small business is bona fide.

The business’s EIN links to high scores and lenders won’t feel the need to ask for a personal guarantee.

The Best Way to Build Business Credit in a Recession – Takeaways

Business credit is an asset which can help your company for many years to come. The recession will not last forever.

Leave a Reply

Your email address will not be published.