There are lots of reasons why your business needs good credit. For example, when you’re borrowing to grow, you’ll get better terms. Also, when you’re buying products or services from another business, you’ll be in a stronger position to negotiate, so you don’t always have to pay in advance.
But what if you’re just starting out and don’t have credit? Or what if your credit isn’t as good as it could be? Not to worry — here are four ways your business can build credit.
1. Prove your legitimacy
Make sure your business is registered. This doesn’t mean you have to be incorporated; you can register a sole proprietorship, partnership or corporation, too. Establish a business banking account and start using it to pay all your business’s bills and make time to speak with a local business relationship manager. Not only can a local business relationship manager ensure you have the correct business banking account, but they can also assist with cash management services to help manage your accounts.
2. Pay bills on time
Make the due date every time, whether you’re paying a big or small vendor. Paying bills on time demonstrates to lenders that you’re fiscally responsible. It’s also a key piece of being organized and keeping your business running smoothly. Missing due dates, especially if it happens on a regular basis, can be detrimental.
3. Use a business credit card
Using personal credit cards to cover business expenses won’t help you establish business credit. You need a card that’s just for your business, that you use regularly, and that you always pay on time. Using a business credit card also helps keep your finances organized. It simplifies the accounting process and can save you from possible extra fees your bookkeeper or accountant may charge to track your personal credit card usage.
4. Take advantage of other business banking products
Speak to a local business relationship manager about utilizing commercial overdraft protection, line of credit or loan to responsibly handle bill payments, cash flow capital-intensive purchases and establish great business credit that you can grow as your business grows.
Curious how your credit is doing? The same credit bureaus that track personal credit also track business credit: Equifax and TransUnion. Ask to see your business credit report from time to time. This won’t affect your credit rating and is important so you can correct any errors.
To learn more about building credit, submit a credit application or discuss your unique business needs, contact a Prospera Business Relationship Manager now at prospera.ca/business or call 1-888 440-4480.