ENHANCE YOUR BUSINESS PLAN

THE PROCESS OF BUILDING BUSINESS CREDIT.

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solid business credit portfolio

good personal credit

In addition to good personal (consumer) credit, a solid business (commercial) credit portfolio gives your business greater borrowing ability. In order to get business credit, you must have one of the 3 Cs – Credit, Collateral, Cash Flow. A business with little to no accounts on its business credit reporting portfolio will be issued a failing credit score, causing it to be construed either as unestablished or facing imminent bankruptcy by lenders, which makes it nearly impossible to get funding. The more accounts that are listed on a business credit report, the higher the recommendation that business will get for credit.

business credit

It is a continuous undertaking that requires constant attention; you must keep building upon its foundation and fortify it as the business expands and becomes increasingly lucrative.

business credit portfolio

Building a business credit portfolio normally takes years, but it is possible to accelerate this process through determination and tenacity.

Develop a Business Credit Portfolio

Follow this seven-step process to develop a business credit portfolio and maximize your business’s ability to obtain the funding necessary for its growth and success:

1. FUNDABILITY
Begin building a foundation of fundability by setting up the business properly: name, address, phone/411, EIN, NAICS code, web site, e-mail, business license, and business bank account. Make sure this data is consistent everywhere. Inconsistencies with the business data will significantly undermine your ability to obtain funding. For example, if the business name/address on the credit application doesn’t match that listed with the Secretary of State, the lender will consider the application fraudulent and immediately issue a denial.

2. ESTABLISH BUSINESS CREDIT REPORTS
ESTABLISH BUSINESS CREDIT REPORTS with Equifax, Experian, and Dun & Bradstreet.

3. BEGIN BUILDING BUSINESS CREDIT – TIER 1 ACCOUNTS
Open accounts with “starter vendors” that you are certain report to the business credit reporting agencies mentioned in step 2. (Otherwise, you’re wasting your time with non-reporting accounts that do not build credit.) Consistently pay these accounts early or on time to establish a business credit foundation.

4. MONITOR REPORTS

Get credit monitoring to determine how many accounts you’ve amassed on your business credit report. Be sure to check it regularly. Also monitor your business’s value as it grows so you can determine how investors will perceive its solvency and creditworthiness.

5. TIER 2 ACCOUNTS

Once you’ve established five Tier 1 accounts, begin to establish retail credit from places like Staples, Lowe’s, Walmart, Amazon, etc. Use these to purchase supplies and materials for your business. Pay on these accounts early or on time as well. This will strengthen your business credit portfolio.

6. TIER 3 ACCOUNTS

After eight accounts appear on your business credit report, open fleet credit accounts with Sunoco, BP, Chevron, etc. Utilize these cards to purchase gasoline. Paying these accounts timely will further fortify your business credit.

7. TIER 4 ACCOUNTS

With fourteen accounts on the business credit report, your business will have built enough credit to qualify for bank credit, such as VISA, Mastercard, and American Express. This type of credit is the most difficult to get, and it gives your business optimal spending power for the materials, equipment and supplies it needs to grow and succeed without sacrificing or restricting cash flow.

expound business credit portfolio

Continue to further expound on the business credit portfolio you’ve built. Use your business credit as leverage to get the best rates and terms and conditions for other financings, such as business loans and lines of credit from either traditional or alternative financing sources. A solid business credit portfolio is a tremendous asset which will maximize your business’s fundability and chances for success.