Take Steps Toward Establishing Strong Business Credit

Online, March 3, 2011 (Newswire.com) - When you're starting your own business, it's easy to lean on your personal credit history. But this isn't the best thing for you or your business. But what are the best reasons to build business credit with no personal guarantee?

First of all, you won't be putting your personal credit and assets at risk when securing the financing you need for your business. And second, you can expect to qualify for much larger amounts of financing, since businesses have 10 to 100 times greater credit capacity than individuals.

There are 10 steps to qualifying for business credit with no personal guarantee.

1. Select a business name. Avoid a name that would reflect your business as being a high-risk industry. For example, John Do Business Development LLC is better than John Doe Real Estate Investing LLC.

2. Incorporate your business and obtain an employer identification number. Be sure to select the proper entity structure, because this will impact critical areas like taxes and asset protection.

3. Obtain your business license. Verify what license is required in order for your business to operate legally in your city, county and state.

4. Select the appropriate business SIC and NAICS codes, which are classification codes that identify the type of industry you are in.

5. Establish a real business setup. This means your address, licensing, a 411 listing, dedicated e-mail and a company Web site, among other things.

6. Set up a business bank account. This will always play a part in determining the creditworthiness of your company. Maintain a healthy balance.

7. Get a Dun and Bradstreet number that will be your company's identifying number. You'll use this when applying for business credit with no personal guarantee.

8. Develop your company profile. Register with iUpdate to complete your registration after you get your Dun and Bradstreet number.

9. Establish a business credit score.

10. Start applying for business credit with no personal guarantee.

As you work to build solid bank and business credit ratings, you can eventually qualify for business credit cards with no personal guarantee.

But remember, a personal guarantee obligates you to personal repay a debt your company defaults on. The stronger you establish your company's creditworthiness, the less importance your personal credit will play in the role of your business.