credit cards credit history

Growing your business might mean growing your debt

Falling credit cards - debt conceptby Hispanic Chamber of E-Commerce Team

Over time, your business will—hopefully—grow, seizing new opportunities to expand and to flourish. As these opportunities present themselves, you may face the question of how you’ll pay for them on the front-end—how you’ll afford a new building, for instance, with larger office space, or how you’ll get additional inventory.

In these cases, you may find that you need to borrow money—which of course requires you to have some decent business credit. Building credit is as important for corporations as it is for individuals—and it can be just as difficult.

There are a few tips you can keep in mind to make the process a bit smoother, though—including the following:

  1. Start by acknowledging that it’s not entirely about the business credit; your personal credit is also going to be scrutinized, as likely as not. Because most new businesses don’t really have a credit history to speak of, lenders will look at the personal credit of the business owner. Your personal financial habits, then, could very directly impact your business’ long-term financial options.
  2. At the same time, it is important to maintain a separation between the company’s finances and your own personal finances. You shouldn’t be putting business expenses on your personal credit card, and you definitely shouldn’t be putting personal expenses on the business card. Either scenario could come back to haunt you.
  3. Apply for credit early—before you really need it, even. If you have no credit history to speak of then it could take months, even years for you to get approved. If you open up a business credit card or take out a very small loan early on, it gives lenders something to appraise—and could reduce your wait time when you need to take out a much larger loan.
  4. Keep an eye on your credit cards and loan payments—and pay them on time. This is obvious yet it cannot be emphasized enough: The better relationship you can maintain with your lender, the more likely you’ll be to get a more sizable loan down the road.

Building business credit takes time, and it takes a sense of direction—so start now. Remember, as you do, why you’re doing it, and how it might ultimately serve your business down the road.

About Susana G Baumann

Award-winning journalist, author, multicultural expert, public speaker, small business advocate and the Editor-in-Chief of LatinasinBusiness.us. Susana is an Argentinean immigrant who started her own small business over 20 years ago. Now, through her new digital platform and social media channels, she advocates for the economic empowerment of Latinas in the United States.
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