Resolve Debt

If you are starting a new business then it is vital for your companies health to start growing corporate credit as soon as possible. Building corporate credit will show creditors that you are worth of credit and it will become very important once you need financing on big purchases such as equipment for your company operations.

Your first step is decide what types of credit your company needs because you must have a real business and not just a shell company. You need to form a corporation or a limited liability corporation in order to operate your business. Forming a corporation will ensure that you will not be held personally liable in case you are sued. Next, you must get a Federal Tax ID from the IRS and this will be used to separate your personal and corporate financial activities from one another.

The next step is to create a business address and telephone numbers so that creditors will have a place to contact you. Also, make sure to get all permits, licenses, and pay all fees to the local, state, and federal governments. It would then be wise to create a company like Dunn and Bradstreet in order to establish a data universal numbering system (DUNS) for your corporation.

It is important to start small. Look for creditors that will give you a credit line of around $500 to $5,000. By only taking small amounts of credit in the beginning, you will look more legitimate and your corporation will avoid looking desperate for credit. Be sure to shop around for the best interest rates and fee structures you can find when looking for a corporate credit card. Since you are not borrowing much money, corporate credit cards will be easy to find and they will have very competitive rates. You should also check to see if the vendor would offer business credit for things like office supplies, computers, or office furniture.

You must be sure to always pay your payments on time. Establishing a good payment history will reflect very well on your corporate credit report. This in turn will save you lots of money down the road in the form of reduced interest rates. Also, by paying on time you will also be able to secure bigger lines of credit because creditors have developed trust for you. If you think that you will have a hard time remembering to pay your bills you might consider a service like Paydex which will send your bills out automatically.

Now that you have learned to build corporate credit and have therefore established yourself as a reputable corporation, it is time to take out a bigger line of credit. Start with around $5,000 to $50,000. You would then use the same process as above to keep the creditors trust. Always pay on time and do not use much of your available credit. This makes it look like you do not need credit. The general rule is that if it looks like you don’t need credit, then you will be able to get it easily.

To get to the last level of financing you will need to form a solid business plan. Once you have written a formal business plan you will need to take this into banks and try to “sell” your plan to them. If they like what you have laid out then they will accept your plan and give you the financing you need. It is very good that you have built your credit history all this time because that will also play a very big role in their decision to accept your plan or not.