How to Build Startup Business Credit to Obtain Business Loans

How to Build Startup Business Credit to Obtain Business Loans 

Main Keyword: Startup Business Credit

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If you decide to run your business as a sole proprietorship, you should understand that there will be no financial or legal separation between you and the business.

Building startup business credit will play a crucial role in your company’s ability to get funding. Whether you operate as a corporation or Limited Liability Company, your business can establish a credit file that is separate from you as an individual.

When registering a business (corporation, LLP, or LLC) it is seen as a separate legal entity that can enter into contracts. It is seen as being totally separate from you as an individual.

Individuals who function as a sole proprietorship should know that there is not any financial or legal separation between them and the business. In that case, when they apply for funding or obtain credit, this will be solely tied to them as an individual and reflected on their personal credit reports.

To keep your personal and business finances separate, you’ll need to start building credit in the company’s name. If you want to build startup business credit fast, the following eight simple steps will help.

  1. Choosing an Appropriate Business Structure

If you want to make your business a distinct separate legal entity you first need to choose a business structure like a corporation, LLP, or LLC. A sole proprietorship does not count as it doesn’t create a separate business entity.

Once the business entity has been formed, you need to register the business. This step depends on where the business is located and which structure has been selected.

  1. Obtaining a Federal Tax ID Number (EIN)

It is easy to apply for a federal tax ID by using the free IRS assistance tool. This nine-digit number is assigned to a company and it will be used when you do things like opening a business bank account, filing company tax returns, applying for startup business credit, and applying for permits and licenses.

  1. Opening a Bank Account for the Business

Next, you’ll have to open a business bank account for the company. This step is mandatory if you want to create a clear separation between your personal and business finances.

To ensure that business and personal funds are kept completely separate you need to have two different bank accounts. One small business checking account and the other a personal checking account. This will allow you to do accurate and clean bookkeeping so that when it’s time to file your tax returns, it will be much easier for your accountant.

Your relationships with your bank will play a crucial role in your company’s potential to get funding. Your business bank account will not only provide key data that lenders will use during a funding request but also serves as a bank reference on credit applications.

  1. Applying for a DUNS Number 

In the United States, a DUNS number is the most widely used to identify a business. It will enable you to build a credit identity for your business that is totally separate from your credit profile as an individual. 

One of the big agencies that issue DUNS Numbers is Dun & Bradstreet. The company’s credit file is linked to its DUNS number. When you apply for a Dun & Bradstreet number, you are actually registering your company with a business credit agency.

  1. Opening Utility Accounts for The Company 

The utility services you use for the business should be opened in the company’s name. This includes things like cell phone services, business phone lines, cable services, internet service, etc. As these service accounts are some of the expenses the business needs to pay every month, it’s important to handle them as such.

  1. Acquiring A Business Credit Card

One of the main tools used to separate business and personal expenses is by using a separate business credit card. A business credit card will make it easy to build your startup business credit, control spending, and track the business’ expenses. Some cards also offer special perks and rewards.

Startup business credit cards are based upon the borrower’s personal credit history. Learn more about how to use personal credit to fund a business at

  1. Establishing Credit with Suppliers and Vendors That Report

One of the best ways in which you can build startup business credit is to open accounts with suppliers and vendors. As you buy inventory, supplies, or other items on credit, these payments and purchases are reported to business credit reporting agencies.

This activity serves to create a company’s business credit report and credit profile. After the company has various trade lines that are reporting, a business credit score (rating) is automatically generated.

You should make sure that you use suppliers and vendors that report to business credit reporting agencies. Each of these relationships will also serve as a trade reference that may then be used on other credit applications.

  1. Monitoring Your Business Credit Reports

As there are 3 major business credit reporting agencies, you should monitor each of these for your company’s credit files. As each agency uses different sources to collect data from, they may have different information about the company.

All the business credit agencies do however provide ways in which you can update your business’ basic information. If you find any incorrect or outdated information, you need to get in touch with the agency to make the changes.

Once your company has an established business credit report, you may be able to get better repayment terms and interest rates on lines of credit and loans, as well as higher credit approvals.

It is also important to open a variety of accounts with other kinds of business credit like business lines of credit. We hope these eight steps help you to start building startup business credit for your company.