1. NAME YOUR COMPANY - The first step in this process is to select a company name. Be sure you pick one that has not been selected by another company in your state, You can check with you Secretary of State and once that is done you can move onto the next step.
2. INCORPORATE YOUR COMPANY - Now that you have selected your business name, you are going to need to establish your corporation with the state of your choosing. To do this, you can go to "Free Registered Agent". which is owned by InCorp Services. They will give you registered agent services free for the first year. They also only charge a nominal fee plus your states filing fees to incorporate your business.
3. OBTAIN AN EIN - Once you have incorporated your business you will need to obtain a Federal Employer Identification Number. You can file form SS-4 online at the Internal Revenue Service website.
Once you have completed this form you will obtain your EIN in a matter of seconds. Be sure to print it out and write it down because they do not send you an email confirmation. This is the number that you will need in order to apply for credit under your business name without a personal guarantee.
First you need to build trade lines that report. This is also referred to as vendor credit. 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 begin getting revolving store and cash credit.
These varieties of accounts have the tendency to be for the things bought all the time, like coffee, shipping boxes, outdoor work wear, ink and toner, and office furniture.
But to start with, what is trade credit? These trade lines are creditors who will give you preliminary credit when you have none now. Terms are ordinarily Net 30, instead of revolving.
Therefore, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, such as within 30 days on a Net 30 account.
Net 30 accounts must be paid in full within 30 days. 60 accounts must be paid in full within 60 days. Compared to with 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 proper way, you need to get approval for vendor accounts that report to the business credit reporting bureaus. Once that’s done, you can then use the credit.
Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
Not every vendor can help like true starter credit can. These are vendors that will grant an approval with a minimum of effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
But you may need to apply more than once to these vendors, and you may have to purchase some things you don’t need, to demonstrate you are responsible and will pay in a timely manner. Consider giving nonessential things to charitable organizations.
Once there are 5 – 8 or more vendor trade accounts reporting to at least one of the CRAs, move to revolving store credit. These are service providers such as Office Depot and Staples. These companies are likelier to have items you need.
Use the corporation’s EIN on these credit applications.
One example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a DUNS and a PAYDEX score of 78 or higher.
Are there 8 – 10 accounts reporting? Then progress to fleet credit. These are companies like BP and Conoco. Use this credit to purchase, fix, and take care of vehicles. Make certain to apply using the small business’s EIN.
One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or more and a 411 company telephone listing. Shell might claim they want a particular amount of time in business or profits – but if you already have adequate trade lines, that won’t be necessary and you can still get approval.
Have you been responsibly managing the credit you’ve up to this point? Then move onto cash credit. These are companies like Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.
One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or better; 10 trade lines reporting on your D&B report; and a $10,000 high credit limit reporting on D&B report (other account reporting). Also they want you to have an established company.
These are service providers such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are commonly MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.
Know what is happening with your credit. Make sure it is being reported and attend to any errors as soon as possible. Get in the habit of checking credit reports and digging into the specifics, and not just the scores.
So, what’s all this monitoring for? It’s to challenge any errors in your records. Mistakes in your credit report(s) can be taken care of. But the CRAs normally want you to dispute in a particular way.
Disputing credit report inaccuracies usually means you mail a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always send copies and keep the original copies.
Disputing credit report inaccuracies also means you specifically detail any charges you dispute. Make your dispute letter as crystal clear as possible. Be specific about the problems with your report. Use certified mail so that you will have proof that you sent in your dispute.
Always use credit responsibly! Don’t borrow beyond what you can pay back. Keep an eye on balances and deadlines for payments. Paying off on schedule and in full will do more to boost business credit scores than nearly anything else.
Establishing business credit pays. Excellent business credit scores help a business get loans. Your loan provider knows the small business can pay its debts. They know the corporation is authentic. The company’s EIN links to high scores, and creditors won’t feel the need to ask for a personal guarantee.
Business credit is an asset which can help your business for years to come.
Once you understand what affects your company credit score, you will know. And you’ll be able to answer anyone who asks: how long does it takes to build business credit.
When you are first starting to build business credit, your first step should be vendor or trade credit. You want to get into good credit habits. So this is everything from not borrowing too much, to paying your debts back on time, to staying on good terms with your sources of credit.
You will need to start a business credit profile and score with what are called starter vendors. Starter vendors are ones who will give your small business initial credit even if your company has no credit, no score, or no trade lines.
Note that most stores like Staples will not give you initial starter credit, so don’t even try applying with them.
Here are 5 vendor accounts that build your business credit. This is the vendor credit tier.
You can find Uline’s website here. This company sells shipping, packing, and industrial supplies. These include janitorial supplies, shipping boxes, and material handling products like hand trucks and dollies. Most importantly, they report to Dun and Bradstreet.
Therefore, your small business must have a DUNS number before you start trying to get vendor credit with them. Uline will ask for two references and a bank reference. Your first few orders might need to be pre-paid to initially so that your company can get approved for Net 30 terms.
You can check out Quill online here. They sell office, packaging, and cleaning supplies. Their products also include toner, office furniture, and even stencils and snacks. You can even get your company’s vacuum cleaner through them.
Quill reports to Dun and Bradstreet. You must place your initial order first unless your D & B score has already been established. In general, they will put you on a 90 day prepayment schedule.
Plus if you order items each month for three months, they will typically approve you for a Net 30 Account.
You can find Grainger Industrial Supply here. They sell hardware, power tools, pumps and more. They also do fleet maintenance. To qualify, you are going to need the following:
For less than $1000 credit, they will approve nearly anyone with a business license. For over $1000 credit, they want to see trade and bank references. Fax them your application or apply over the phone.
Check out Behalf online here. Behalf is a means of having your customers pay you using an app. They also provide funding. The two go hand in hand, so if you start off with your customers using their app, you will have a better chance at getting good funding terms.
They offer purchase financing, and also have a virtual MasterCard in order to facilitate funding your purchases.
They can give you terms of 30 to 180 days. Behalf reports to all three of the big business CRAs: Dun & Bradstreet, Experian, and Equifax. That makes them extremely valuable for building business credit.
Behalf’s fees are based on the terms they offer to customers. Their fees rise as the number of days to pay rise, with an apparent cap at 3%. Behalf offers products to both merchants and their business customers.
For business customers, you select the amount to finance, and the amount of time to pay it back. Then choose if you will pay on a monthly or a weekly basis.
Since the end of 2017, all funding from Behalf is through FinWise, a Utah-chartered bank which is located in Sandy, Utah.
There’s one important thing to note. Behalf online lender will make a hard inquiry on your personal credit when you first apply for financing.
Behalf has a maximum line size of $50,000. It can extend this in instant purchase capacity to any business customer. Their minimum transaction size is $300. Plus there is no upper limit on individual purchase transactions.
Monthly fees start at 1%, and there is a fixed monthly rate. There are no origination fees and no maintenance fees. You can save 10% on finance fees by choosing a weekly plan.
Advantages to online lender Behalf include a fixed monthly rate to make your budgeting easier. In addition, there is a discounted rate option if you select weekly payments.
Disadvantages include higher fees if you give your clients longer payment terms. As a result, a business will suffer a penalty for providing better payment terms to its customers.
For companies just starting out, allowing for longer payment terms for customers can help to convert one-time customers into regulars. But because Behalf effectively penalizes a company for providing longer terms, this is a strike against using them.
That is, if your company is a startup trying to build a reputation with your clients.
Have a look at the Wells Fargo Business Secured Credit Card. It allows cardholders to secure a credit limit of $500 – $25,000. The amount available equals the amount of money you offer to secure the line. Your purchase APR rate can be as low as a variable 13.15%.
The yearly fee is $25. However, the more cards you have the more expensive your annual fee will be.
This card allows business owners with unsatisfactory personal credit to acquire a card to make purchases and develop business credit. The card will only report to the personal credit bureaus if you default or are behind on payments.
Get it here: https://www.wellsfargo.com/biz/business-credit/credit-cards/secured-card/. They report to Experian.
Business Credit Cards for no Credit History: Credit Builder Business Credit Cards – Make Your Credit Surge!
Check out the Wells Fargo Business Secured Credit Card. It enables cardholders to secure a credit limit of $500 – $25,000. The amount available is the same as the amount of funding you offer to secure the line.
Your purchase APR rate can be as low as a variable 13.15%. And the annual fee is $25. But the more cards you have, the higher your yearly fee will be.
This card lets business owners with poor personal credit to acquire a card to make purchases and develop business credit.
But the card will just report to the personal credit bureaus if you default or are overdue on payments.
Business Credit Cards for no Credit History: Credit Cards with 0% APR – Pay Zero!
For a 0% APR time frame, we like the Ink Business Cash ℠ Credit Card. Also, you pay no yearly fee. It’s got an interest-free period. It has flexible cash-back rewards. There are spending limits for your employees. But you will need to have a credit score of 690 or higher.
Blue Business Plus from American Express
For an introductory 0% APR period, we also prefer the Blue Business ℠ Plus Credit Card from American Express. So it has an introductory 0% APR for 15 Months. Also, you can earn twice the points on everyday company expenses up to a yearly cap. But the standard APR is 12.24% – 20.24%. So this APR is variable.
Get it here: https://creditcard.americanexpress.com/blue/
Business Credit Cards for no Credit History: Reliable Low APR/Balance Transfers Business Credit Cards
For Low APR/Balance Transfers Business Credit Cards, we prefer the U.S. Bank Business Edge Platinum. So you start with twelve months of 0% APR financing on new purchases and balance transfers. There is a 3% balance transfer fee.
After that, the purchase APR is a variable 10.49% – 18.49%. And this depends on creditworthiness. There is no yearly fee. But this card is solely on offer to people with great or superb credit. But there is no rewards program for purchases.
Blue Business Plus from American Express
Also, have a look at the Blue Business Plus Credit Card from American Express. It has a 15-month introductory 0% APR offer. There is no annual fee.
Right now small businesses can earn double points. But this is on the first $50,000 in purchases every year.
Get it here: https://creditcard.americanexpress.com/blue/
Business Credit Cards for no Credit History: Secure Corporate Credit Cards for Fair Credit
For Fair Credit, we like the Capital One Spark Classic for Business. It has no yearly fee. There are cash-back rewards. But you will need a credit score of 690 or better.
But TAKE NOTE: the ongoing APR is 23.99% variable APR.