If you are starting a new LLC (limited liability company), you might be wondering how to get business credit for your new venture. Business credit is the ability of your business to obtain financing from lenders, suppliers, and other creditors based on your business’s reputation and performance. Having good business credit can help you access more funding options, lower interest rates, better terms, and more opportunities for growth.
Get Business Credit for a New LLC
But how do you get business credit for a new LLC? Unlike personal credit, which is based on your individual history and identity, business credit is based on your business’s history and identity. This means that you need to establish a separate and distinct entity for your business, create a positive track record of paying your bills on time and in full, and build a strong profile with the major business credit bureaus.
In this blog post, we will walk you through the steps to get business credit for a new LLC, from setting up your business entity to applying for your first business credit card. We will also share some tips and best practices to improve your business credit score and maintain it over time. Let’s get started!
Step 1: Set Up Your Business Entity
The first step to get business credit for a new LLC is to set up your business entity properly. This means that you need to register your LLC with your state, obtain an EIN (employer identification number) from the IRS, open a dedicated business bank account, and get a business phone number and address.
These steps are essential to create a clear separation between your personal and business finances and to establish your business’s legitimacy and credibility. By doing so, you will also protect your personal assets from any liabilities or debts incurred by your business.
To register your LLC with your state, you will need to file the articles of organization (or a similar document) with the secretary of state or the appropriate agency in your state. You will also need to pay a filing fee and choose a registered agent who can receive legal notices on behalf of your LLC. You can find more information about how to form an LLC in your state here.To obtain an EIN from the IRS, you will need to fill out an online application form or mail or fax a paper form. You will need to provide some basic information about your LLC, such as its name, address, date of formation, number of members, and purpose. You can find more information about how to apply for an EIN here.
To open a dedicated business bank account, you will need to provide some documents and information to the bank, such as your EIN, articles of organization, operating agreement (if applicable), and personal identification. You will also need to make an initial deposit and pay any fees associated with the account. You should choose a bank that offers the features and services that suit your business needs, such as online banking, mobile deposits, bill pay, wire transfers, etc. You can find more information about how to open a business bank account here.
To get a business phone number and address, you have several options. You can use your existing phone number and address if they are not associated with your personal credit profile. You can also use a virtual phone service that provides you with a toll-free or local number that forwards calls to your cell phone or landline. Alternatively, you can use a virtual office service that provides you with a professional mailing address that forwards mail to your home or office. You can find more information about how to get a business phone number and address here.
Step 2: Establish Your Business Credit Profile
The next step to get business credit for a new LLC is to establish your business credit profile with the major business credit bureaus: Dun & Bradstreet (D&B), Experian Business, and Equifax Business. These bureaus collect and report information about your business’s credit history, such as payment behavior, outstanding debts, available credit, public records, etc. They also assign your business a credit score based on various factors that reflect your business’s creditworthiness.
To establish your business credit profile with these bureaus, you need to do two things: apply for a DUNS number from D&B and get listed in their databases. A DUNS number is a unique nine-digit identifier that D&B assigns to each business entity in its system. It is used by lenders, suppliers, and other creditors to verify and track your business’s credit activity. You can apply for a DUNS number for free here.
To get listed in the databases of Experian Business and Equifax Business, you need to have at least one trade line (a credit account) that reports to them. This can be a vendor account, a supplier account, or any other type of account that extends credit terms to your business. You can find more information about how to get listed in these databases here.
Step 3: Build Your Business Credit History
The third step to get business credit for a new LLC is to build your business credit history by using and paying off your trade lines on time and in full. This will demonstrate to potential creditors that you are responsible and reliable with your finances and that you can handle more credit in the future.
To build your business credit history effectively, you should follow these tips:
1. Choose trade lines that report to all three major business credit bureaus or at least two of them.
2. Choose trade lines that offer favorable terms and conditions for your business needs.
3. Choose trade lines that match or exceed your expected revenue and expenses.
4. Use only as much credit as you need and avoid maxing out your accounts.
5. Pay off your balances in full every month or at least make the minimum payments on time.
6. Monitor your business credit reports regularly and dispute any errors or inaccuracies.
7. Avoid applying for too many trade lines at once or within a short period of time.
Some examples of trade lines that you can use to build your business credit history are:
Vendor accounts
These are accounts that allow you to purchase goods or services from vendors or suppliers on net terms (such as net 30 or net 60 days). This means that you can pay for the goods or services after receiving them instead of paying upfront. Some vendors or suppliers that offer vendor accounts that report to the business credit bureaus are Uline, Quill.com , Grainger , etc.
Supplier accounts
These are accounts that allow you to purchase raw materials or inventory from suppliers on net terms (such as net 30 or net 60 days). This means that you can pay for the materials or inventory after receiving them instead of paying upfront. Some suppliers that offer supplier accounts that report to the business credit bureaus are Crown Office Supplies, Summa Office Supplies, Wise Business Plans, etc.
Business credit cards
These are cards that allow you to make purchases using revolving credit (meaning that you can borrow up to a certain limit and pay it back over time). Unlike personal credit cards, which are based on your personal credit history and score, business credit cards are based on your business’s credit history and score. Some examples of business credit cards that report to the business credit bureaus are Capital One Spark Classic, Wells Fargo Business Secured, American Express Blue Business Plus, etc.
Step 4: Apply for Your First Business Credit Card
The fourth step to get business credit for a new LLC is to apply for your first business credit card. A business credit card is a great way to access more funding options, earn rewards, manage cash flow, track expenses, etc. However, not all business credit cards are created equal. Some may have higher interest rates, fees, requirements, etc. than others. Therefore, you should do some research before applying for one.
To apply for your first business credit card , you should follow these tips:
1. Check your personal and business credit scores.
Your personal credit score may affect your eligibility and terms for some business credit cards, especially if your business is new or has no or little credit history. Your business credit score may affect your eligibility and terms for other business credit cards, especially if your business has established a solid credit history. You can check your personal credit score for free here. You can check your business credit score for free here.
2. Compare different business credit cards.
You should compare different business credit cards based on their features, benefits, costs, requirements, etc. You should look for a card that suits your business needs, goals, and budget. You should also look for a card that reports to all three major business credit bureaus or at least two of them. You can find some examples of different business credit cards here.
3. Prepare the necessary documents and information.
You will need to provide some documents and information when applying for a business credit card, such as:
Your EIN
Your DUNS number
Your articles of organization
Your operating agreement (if applicable)Your personal identification
Your personal income
Your personal tax returns
Your personal bank statements
Your business income
Your business tax returns
Your business bank statements
Your business financial statements
Your business plan (if applicable)
Your business license (if applicable)
Any other relevant documents or information.
You can find more information about how to prepare for a business credit card application here.
4. Apply online or in person.
You can apply for a business credit card online or in person, depending on the card issuer and your preference. You will need to fill out an application form and submit the required documents and information. You will also need to agree to the terms and conditions of the card. You can find more information about how to apply for a business credit card here.
5. Wait for the approval decision.
After submitting your application, you will need to wait for the approval decision from the card issuer. This may take from a few minutes to a few weeks, depending on the card issuer and your credit profile. You will receive a notification via email, phone, mail, or online portal. You can find more information about how to check your business credit card application status here.
6. Activate and use your card.
Once you receive your card, you will need to activate it by following the instructions provided by the card issuer. You will also need to set up your online account and sign up for any features or services that you want to use. You can then start using your card for your business purchases and expenses. You should always pay off your balance in full every month or at least make the minimum payments on time. You should also monitor your card activity and statements regularly and report any errors or frauds immediately. You can find more information about how to use your business credit card wisely here.
Conclusion
Getting business credit for a new LLC is not as hard as it may seem. By following the steps outlined in this blog post, you can set up your business entity, establish your business credit profile, build your business credit history, and apply for your first business credit card. By doing so, you can access more funding options, lower interest rates, better terms, and more opportunities for growth.
However, getting business credit for a new LLC is not enough. You also need to maintain and improve your business credit over time. This means that you need to keep paying your bills on time and in full, keep using your trade lines and credit cards responsibly, keep monitoring your business credit reports and scores, and keep updating your business information with the credit bureaus. You can find more information about how to maintain and improve your business credit here.
If you need more help or guidance on how to get business credit for a new LLC, you can contact us at Tolbert Consulting Group. We are a professional service that specializes in helping businesses get credit and funding. We can help you with:
1. Setting up your business entity and obtaining an EIN and a DUNS number
2. Getting listed in the databases of the major business credit bureaus
3. Finding and applying for trade lines and credit cards that report to the business credit bureaus
4. Improving your business credit score and profile
5. Applying for loans, grants, and other funding sources that suit your business needs
We have helped thousands of businesses get credit and funding for their new or existing ventures. We have a team of experts who have years of experience and knowledge in the field of business credit and funding. We have a proven track record of success and satisfaction among our clients. We offer affordable rates and flexible plans that fit your budget and goals.
If you are interested in our services, you can visit our website at www.tolbertconsultinggroup.com or email us at [email protected]. You can also fill out our online form here and we will get back to you as soon as possible. We look forward to hearing from you and helping you get business credit for a new LLC!