How to Open a New Business Credit Account on Collateral & Bad Credit
Businesses may sometime need credit cards or other loans and financing to expand or grow their business. Unfortunately, if the business owner has bad credit she may find it difficult getting approved for credit accounts. Sometimes using collateral or other business assets from the business can assist with getting an approval. Credit accounts can be opened using collateral, but are not always possible.
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Instructions
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Obtain a tax ID number from the IRS. A tax ID number is a free, nine-digit number that is used to build business credit, open corporate checking accounts and hire employees. Obtain a tax ID number by going to the secretary of state's website or contacting an agent over the phone at 1-800-829-1040. Tax ID numbers are sometimes required by creditors before they open your account.
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Apply for a D-U-N-S number from Dun & Bradstreet. Dun & Bradstreet is a credit bureau for businesses. Dun & Bradstreet is responsible for providing information on a company, including the number of employees, revenue, address and how timely the business is in making payments to creditors. A D-U-N-S number can be received in as little as 30 days and there is no cost. Visit Dun & Bradstreet's website to apply for a D-U-N-S number.
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Apply at office supply companies that are willing to take chances on new businesses or owners with less than perfect credit. For example, office supply stores and shipping companies may be willing to extend credit to your business without requiring collateral. Once you have made timely payments on these accounts, you can start applying for larger accounts.
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Visit your local bank to apply for secured loans that may require collateral if you have bad credit. Credit unions are also a good place to apply for secured loans if you have bad credit and if you are a member of the credit union. Banks may also require your tax ID number to check the business' credit, which can lead to an approval.
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Go to sites like bankrate.com or creditcard.com to find secured business credit cards. Secured business credit cards require money to open a savings account ; the money you deposit becomes your credit limit. These credit cards can be established regardless of your personal credit and will build your business' credit.
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Hire an accountant to draft profit and loss statements or a balance sheet for your business. Sometimes the company with which you would like to open a business credit account may be willing to extend credit regardless of your credit score if it sees the business is operating with little debt or turning a high profit each month, which justifies the creditor taking a risk. You can hire a freelance accountant by going to sites like getafreelancer.com or guru.com. Also, templates are available online for you to draft your own profit and loss statements and balance sheets.
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