Starting a business is much easier when you are aware of the industry standards for what is considered “credit ready”. This denotes the markers that your business or business idea must display to make yourself attractive to banks and other lending institutions (including angel investors, crowdfunding, etc). Primarily, a strong history of credit is necessary. But, if failing, you may be able to provide sufficient collateral to acquire the necessary business funding.
Incorporating Your Business Entity
In general – but quite pervasively, you’d find – sole proprietors cannot obtain business funding through traditional methods; because of their specific type of incorporation, they only qualify for personal loans. If business loans are what you want (which can be useful for employing a credit history other than your one), then you need to incorporate an LLC or a traditional Corporation.
Once you obtain a tax ID number for your business, you are officially “in business”. You can now begin building a credit history specifically for your business. Whatever bank account you wish to establish as your business account must be two years old to begin applying for business funding.
An Extension of the Above: Business Credit Listings
You will want to get listed with the various business credit bureaus, to have your universal credit rating on record. This number will be reported when you apply for a business credit card, loan, or other types of business funding. It also makes it easier to monitor it as you establish some history and improve your score.
Ultimately, establishing good history in the business is the best way to qualify for superior rates when it comes to the bulk of business funding opportunities. Other than using collateral for specific types of non-traditional loans, this is the most effective method. For more, peruse the KPI Commercial Capital site for information, and contact us for specialized help.