There comes a time in every entrepreneur’s business journey when they can significantly benefit from the power of business credit. Are you one of those entrepreneurs right now too?
As much as many business owners feel that they need business credit in order to expand their business, many are often unaware of the specific benefits that come with business credit.
- Business credit allows you to buy equipment and inventory
- Business credit allows you to cover unexpected expenses
- Business credit allows you to qualify for loans when needed
Those are just a few of the benefits of having business credit. Keep reading to discover what business credit is (and isn’t), and the three steps it takes to use it effectively.
In a nutshell, business credit is your company’s ability to purchase goods and services with the promise to a creditor to pay it in full in the future.
On the surface, business credit operates just like personal credit, however, business credit is established and maintained as its own separate entity and has different requirements for securing. For instance, to obtain business you need these three tasks crossed off of your business list; a fully registered business (a DBA “Doing Business As” or LLC “Limited Liability Company” will do), an EIN (employer identification number) from the IRS, and a business bank account.
Your personal credit is never impacted by your business credit because business credit applications don’t require your social security number as personal credit cards go.
To take full advantage of the power that business credit has to offer, follow these three steps for long-term success:
- Only purchase what you can comfortably afford to pay off
- Make every payment on time every month (this is an absolute must)
- Sign up for business credit monitoring
In the world of business credit, vendor accounts are most commonly used by new businesses.
Vendor accounts provide revolving credit (just like traditional personal credit) to businesses that need key items to operate their business. Most vendor business credit accounts have a net-30 payment cycle (your bill is due every 30 days).
At Synture, we can partner with you to obtain a vendor business credit account, as well as our credit monitoring service to protect your business credit. In addition to that, our extensive content library, free webinars, and online academy, all work to help you establish business credit.
All in all, business credit can serve as your lifeline for growing your business, especially with vendors if you are a newer business. It can also position you to obtain a business loan when the time comes.
The journey to getting business credit is easy, it just takes careful planning and execution for establishing a registered business.
We hope this article has helped shed light on what business credit is and how to use it effectively as an entrepreneur.
Ready to dive into our affordable monthly membership program that offers credit monitoring, access to capital, and an online business academy?