How to Get Small-Business Credit

Applying for new credit is not easy if the business hasn't established a credit file.

Establishing new credit for a small business can be a difficult task. As of September 2010, lenders are still not offering credit as freely as in years past, which means a small business must take extra steps to prove it is capable of handling a line of credit. The process of establishing credit may seem daunting, but you must start somewhere. Within a year, your small business will be ready to qualify for larger-limit loans and credit cards.

Instructions

1. Have your business phone line published. If you do not have one, get it as soon as possible. Many lenders check for a business phone line before offering credit. The published phone number is seen as a sign that the business is legitimate.

2. Use your employer identification number (EIN) to establish new credit for the small business. Register for an EIN at the Internal Revenue Service's website, irs.gov, if you do not already have one.

3. Register your small business with Dun & Bradstreet (D&B). D&B does credit reporting for businesses. Potential lenders will check to see if you have a file with D&B and can report your account to D&B once you have credit established. (See Resources.)

4. Apply for a credit account with a business supply store. Staples is known for opening accounts for small businesses that do not have any established credit. The store will ask for a personal guarantee if a phone line in the business name is not published.

5. Pay on the business supply store credit account, on time, each month. After the account has reported to D&B for a few months, you will establish a business credit score.

6. Apply with an additional lender --- credit card or business loan --- six months after opening the initial credit account. Handle this account responsibly by not charging the account to the maximum limit and paying on time. Keep this account for an additional six months before applying for any additional credit. Applying for too many accounts at once can lower your credit score.

Tips & Warnings

• Using your personal Social Security number to guarantee the loan or credit line can make it easier to get your first line of small-business credit, but this is a personal choice depending on the person and business.

References

• Business Finance: How to Establish Business Credit
• Dun & Bradstreet: Establish Credit

Resources

• Internal Revenue Service: Employer ID Numbers (EINs)
• Dun & Bradstreet