Building business credit is an unexpected challenge when starting up. However, like personal credit, solid credit opens up more opportunities for your enterprise. Of course, it isn’t that easy and takes time. From building relationships to business registration, here are some tips.

Small Business Loans

It’s easy to assume that a big bank is the only option you have. However, although some offer small business financing, financial institutions generally favor larger businesses more. A good alternative is a smaller bank. Smaller banks and credit union services are more likely to offer favorable terms and products to micro businesses and SMEs. You will also benefit from lower interest rates and personalized lending options that larger banks simply don’t offer at all.

Strong Supplier Relationships

Almost every business relies on suppliers. Building good relationships with suppliers can be a powerful way to access more favorable terms that make it easier to get things done. Of course, supplier relationships rely on trust, and the best way to establish this is to pay suppliers on time. With prompt payment, they might be willing to offer more goods on credit for a longer term. But be aware that a supplier relationship can be sullied pretty quickly if you take advantage. 

Building Business Credit with Trade Accounts

There are many suppliers that will offer trade accounts. This can be a Godsend when starting a production-based business because, as you are probably aware, 90% of startups, no matter the size, fail within the first year. Favorable buy now and pay later accounts can be just what you need to get off to a great start. While you can source supplies without paying, you can also improve the relationship by repaying earlier, resulting in further discounts for supplies.

Register Your Business

It sounds obvious, but one of the more powerful ways of increasing your business’s credit score is by registering. In fact, you will need to do this in order to receive credit data concerning the company. In the US, an EIN number is needed, and the UK requires an HMRC UTR number. These track taxes for the business but also provide credit systems with the data they need. You can get these relatively easily by visiting your country’s official tax office website and applying.

Business Credit Cards

Businesses can obtain credit cards, just like people. These can be an excellent and quick way to boost your company’s credit score. However, you must be careful. Rather than making large purchases and paying over the long term, business credit cards are best used for smaller purchases and repaying quickly. Alongside some of the other methods mentioned, this is an ideal way to boost company credit. Just ensure you don’t make purchases you can’t repay.

Summary

Applying for small business loans through smaller institutions helps when building business credit. You can also take advantage of trade accounts offered by suppliers. However, a business credit card is also a powerful and fast method so long as you use the card wisely and repay it.