Regardless the length of time you’ve been a business owner, at some point you will need to build your business credit to ensure that you have the funds you need to keep your business running smoothly. If you are a new business you may ask friends and family to invest in your company or draw from your personal funds. Whereas, an established business needs things such as inventory, equipment, and real estate, and are likely to seek help from banks and credit card companies.
These days, unfortunately, financial institutions are more cautious when it comes to extending credit to small businesses. Due to tough markets and faltering revenues, even many well established businesses may find it challenging to obtain loans. For this reason, it’s more important than ever to establish good business credit.
To convince potential lending institutions that your business is a good risk you should be prepared with a well written, detailed business plan. Your plan should include details about your products/services, pricing, basis for cash flow projections, your competitor research, as well as any financial statements. These details will assure lenders that you have addressed any obstacles that could hinder the success of your business.
Establish your business entity before approaching lenders. For example;