Author: Patrick Aloisio

Building business credit is an essential part of establishing a small business. By building strong credit, you can qualify for loans, lower interest rates, and improve your company’s financial standing. However, many business owners may not know how to begin building business credit or why it is essential. This article will explore the steps to take to build business credit and how it can help you qualify for a small business loan.

 

Step 1: Establish Your Business as a Separate Entity

 

The first step in building business credit is to separate your business from your personal finances. This means creating a separate business entity, such as an LLC or corporation. By doing this, you are creating a distinct legal and financial identity for your business that can help protect your personal assets in the event of legal action or bankruptcy.

 

Step 2: Obtain a Federal Tax Identification Number

 

The next step is to obtain a federal tax identification number (TIN) from the Internal Revenue Service (IRS). This number is also known as an Employer Identification Number (EIN) and is used to identify your business for tax purposes. You will need to provide this number when opening bank accounts or applying for loans.

 

Step 3: Open a Business Bank Account

 

Opening a business bank account is crucial for establishing business credit. Having a separate account for your business transactions helps keep your finances organized and shows lenders that you are serious about your business’s financial standing. Be sure to choose a bank that reports to business credit bureaus to help establish your credit.

 

Step 4: Establish Trade Credit

 

Trade credit is when a supplier allows you to purchase goods or services on credit and pay them back at a later date. By establishing trade credit, you can build a positive payment history and show lenders that you can manage credit responsibly. Be sure to choose suppliers that report to business credit bureaus to ensure that your good payment history is being reported.

 

Step 5: Apply for a Business Credit Card

 

A business credit card is an excellent tool for building business credit. Similar to a personal credit card, a business credit card allows you to make purchases on credit and pay them back at a later date. By using a business credit card responsibly and paying on time, you can establish a positive payment history and improve your credit score.

 

Step 6: Monitor Your Credit Report

 

Just like personal credit, it is important to monitor your business credit report regularly. By doing so, you can catch errors or inaccuracies and correct them before they affect your credit score. Additionally, monitoring your credit report can help you stay on top of your credit utilization and payment history.

 

Conclusion

 

Building business credit takes time and effort, but it is an essential part of establishing a small business. By following the steps above and staying on top of your credit, you can improve your chances of qualifying for a small business loan and secure the financing you need to grow your business. Remember to be patient and consistent, and your efforts will pay off in the long run.

 

Moby Capital has been helping thousands of businesses just like yours to secure small business loans for over 10 years. We have sourced over $1 Billion in funding for small businesses and we have the expertise to make the loan process as fast and easy as possible. Contact us today to learn how we can help get money in your pocket.

 

*MobyCap specializes in both loans and alternative financing options. Please see our website for our full suite of services and offerings.

Running a small business can be an exciting venture, but it often requires a significant amount of capital to get off the ground, or occasional capital injections to help working capital needs. One way to secure the funding you need is to apply for a small business loan. However, getting approved for a loan can be a challenging process. Here are 9 essential tips for securing a small business loan.

1. Start by Understanding Your Needs – Before applying for a loan, it’s important to understand how much money you need and what you will use it for. This will help you determine the type of loan you need and the terms that will work best for you. Take time to create a detailed business plan and financial projections to ensure you have a clear understanding of your financial needs.

 

2. Check Your Credit Score – Your credit score is a significant factor in determining whether you qualify for a small business loan. Check your credit score before applying for a loan to ensure it’s accurate and up-to-date. If your score is low, take steps to improve it before applying.

 

3. Research Your Options – There are many different types of small business loans available, including traditional bank loans, SBA loans, and online lenders. Research your options to find the best fit for your needs and make sure you understand the requirements and qualifications for each type of loan.

 

4. Prepare Your Documents – When applying for a small business loan, you will need to provide several documents, including financial statements, tax returns, and business plans. Make sure you have all of these documents ready and organized before applying to streamline the application process.

 

5. Build a Strong Relationship with Your Bank – If you plan to apply for a bank loan, it’s important to build a strong relationship with your bank beforehand. This can help increase your chances of approval and improve your overall borrowing experience.

 

6. Consider Collateral – Some loans may require collateral, such as property or equipment, to secure the loan. Consider whether you have assets to use as collateral and whether you’re comfortable putting them up to secure the loan.

 

7. Be Realistic About Your Ability to Repay – When applying for a loan, it’s important to be realistic about your ability to repay. Make sure you have a clear plan for generating revenue and paying back the loan, and be prepared to provide evidence of your ability to do so.

 

8. Be Prepared to Negotiate – Loan terms are negotiable, so be prepared to negotiate to obtain the best terms possible. This may include negotiating the interest rate, repayment schedule, or other terms of the loan.

 

9. Work with a Professional – Securing a small business loan can be a complex process. Consider working with a professional, such as a financial advisor or loan broker, to help guide you through the process and increase your chances of approval.

 

In conclusion, securing a small business loan requires careful planning, research, and preparation. By following these essential tips, you can increase your chances of getting approved for a loan and getting the funding you need to start or grow your small business.

 

Moby Capital has been helping thousands of businesses just like yours to secure small business loans for over 10 years. We have sourced over $1 Billion in funding for small businesses and we have the expertise to make the loan process as fast and easy as possible. Contact us today to learn how we can help put money in your pocket.

*MobyCap specializes in both loans and alternative financing options. Please see our website for our full suite of services and offerings.

It’s no small task to run a small business, and having to deal with financing on top of it is incredibly frustrating. Small business loans are a popular option for solid companies who need some capital to grow their businesses. However, with so many options available, it can be difficult to choose the right one. In this article, we’ll discuss how to choose the right small business loan for your business.

 

1. Determine your business needs – The first step in choosing the right small business loan is to determine your business needs. How much money do you need? What will the funds be used for? How long do you need the funds for? Understanding your business needs will help you narrow down your loan options.

 

2. Consider your credit score – Your credit score is an important factor in securing a small business loan. Lenders use your credit score to assess your creditworthiness and determine your interest rate. If you have a high credit score, you’ll have more loan options and lower interest rates. If you have a low credit score, you may have limited loan options and higher interest rates.

 

3. Research different loan options – There are many types of small business loans available, each with its own set of requirements and terms. Some common types of small business loans include:

 

• Traditional bank loans
• SBA loans
• Equipment financing
• Invoice financing
• Merchant cash advances

 

Research each loan option to determine which one is best for your business needs.

 

4. Compare interest rates and fees – Interest rates and fees vary depending on the lender and loan type. Compare interest rates and fees from different lenders to determine which loan offers the best value for your business. Keep in mind that a lower interest rate may not always be the best option if the fees are high.

 

5. Understand the repayment terms – It’s important to understand the repayment terms of the loan before you sign the agreement. How long do you have to repay the loan? What is the repayment schedule? Are there any prepayment penalties? Make sure you fully understand the repayment terms before agreeing to the loan.

 

6. Gather the necessary documents – Once you’ve chosen a small business loan, you’ll need to gather the necessary documents to apply. Common documents include:

 

• Plans for what the funding will be used for
• Financial statements
• Tax returns
• Bank statements
• Business licenses and permits

 

Gathering the necessary documents ahead of time can help speed up the loan application process.

 

In conclusion, choosing the right small business loan requires careful consideration of your business needs, credit score, loan options, interest rates and fees, repayment terms, and necessary documents. By taking the time to research and compare your options, you can choose the best small business loan for your business and set yourself up for success.

 

Moby Capital has been helping thousands of businesses just like yours to secure small business loans for over 10 years. We have sourced over $1 Billion in funding for small businesses and we have the expertise to make the loan process as fast and easy as possible. Contact us today to learn how we can help put money in your pocket.

*MobyCap specializes in both loans and alternative financing options. Please see our website for our full suite of services and offerings.