The author is a freelance journalist and Google News PR specialist. He can be reached at contact@sitetrail.com. -- Ed.
Small businesses are the backbone of the American economy, accounting for 46.8 percent of its economic activity. The U.S. Small Business Administration showed in their report that 32.5 million small businesses in the U.S. employ 46.8 percent of the workforce. Regardless of industry, findings by the Bureau of Labor Statistics show that two-thirds of these survive up to two years and only one-third survive after ten years.
Unfortunately, one of the biggest reasons for failure for 82 percent of businesses is cash flow problems. Credit scores are vital for a business looking for funding and play a significant role in credit application approvals.
The faster you can build business credit for your business, the quicker you can get a loan from lenders and establish a cash flow.
Online Resources To Help Build Business Credit
There are several steps to building business credit. Learn how to build business credit by using all the invaluable online resources available to you.
1. Naming Your Business
Your business name is vital for your creditors and the credit bureaus. Choosing an appropriate business name will make it easier to market, garnering recognition from your clients. You will also use the name to register your legal entity and apply for an EIN and bank account.
Choosing a business name is far easier when using a name generator. You can do an online business name search to ensure it is unique and not used by any other business.
Once you decide on the name for your business, do an online check for the availability of the domain name.
2. Forming A Legal Entity
Legal entities are more likely to get a loan from a bank because business assets are protected. Whether you opt to form an LLC or Corporation, your business will have limited liability protection that protects the lender's risk from any defaults or lawsuits it may face.
Several online resources make forming an LLC easy and affordable. There are just six steps to filing your business with the state. An LLC formation service can also help you file your legal business entity online.
3. EIN and Your Business Bank Account
Your business Employer Identification Number or EIN is vital to your credit score. The EIN of your business is equivalent to a social security number and appears on all credit profiles. Lenders use your EIN to check your creditworthiness. You also need the number to apply for a business bank account and credit card.
You can get an EIN online from the IRS website, but you need to form your business first before applying for one.
Once you receive the EIN, get a business bank account and business credit card. Credit bureaus always check credit eligibility through banks, and some credit cards report to them. Online banking services make it easier to ensure you never miss any payments, maintaining your good credit rating.
4. Creating a Business Website
Your business website is one of the places lenders will visit when you apply for a line of credit. They are interested to see what your business does, its location, and your customer profile.
Therefore, a good website will definitely give your business more credibility. Building a professional website that is easy to navigate does not necessarily need to cost you a fortune. Online website builders like GoDaddy and HostGator make it easier for you to build a scalable website that can grow with your business.
5. Net-30 Vendor Accounts and Their Connection to Business Credit Bureaus
Net 30 vendor accounts allow you to make purchases for your business on credit. These are easy to set up and order online, ensuring you have more time to grow your business. They have a 30-day payment from the date of the invoice, and they report your payments to business credit bureaus. As long as you pay before or on the date payment is due, you are helping to build business credit
Once your business pays these regularly, you can even request higher credit lines. The more Net-30 vendors your business has, the better since these report to credit bureaus like Dun & Bradstreet, Equifax Small Business, Creditsafe, and SBFE.
Final Take
Online resources are everywhere today, helping you ensure your business success and build your business credit. TRUiC offers several online resources to assist you at every step of the way. Remember, it is also essential to keep track of your credit scores, so make a point of knowing your credit history by pulling online business credit reports from credit bureaus every six months.