Business credit has always been more difficult and expensive to obtain than personal credit. There are many companies on the market today that are in the business of building a corporate credit score for small business owners who need to access business loans. Most charge steep fees, often exceeding the $3,000 mark. Many companies took advantage of these services despite the price tag, as it allowed them to access significant cash inflows from corporate credit cards and business lines of credit. Today, when the economic downturn brings us lower interest rates and stricter underwriting criteria, commercial financing seems even more desirable but less achievable.
Most credit building services are expensive
Competition always serves the advantage of the consumer. The same services, previously performed in the thousands, can now be had for a few hundred with the proper research. The way most companies that provide business credit services work is that they develop a strong network of banks, vendors, and credit card companies that they use to obtain financing for their customers. Most of them are paid on a scale based on performance, which benefits business owners looking for financing: they only spend money if they get financing. While some corporate business agents are paid on commission, others are paid flat fees for establishing a business credit profile. In general, using the services of third-party trade credit officers is quite expensive compared to other alternatives. There are now platforms that essentially provide the same services for a fraction of a standard fee.
Trade credit is a path to higher profits
Unsecured business loans provide a great way to expand activities and earn more profit in a profitable way. They usually offer great rates and terms, customizable to your business needs. That’s why more and more small business owners are trying to understand how business credit is established and maintained. Previously a privilege of established companies, obtaining loans is now feasible for newly formed companies. Small businesses just starting out can now secure at least $50,000 within the first year of operation with minimal effort and nominal costs involved.
Doing it yourself is often the right approach.
However, before getting larger unsecured business loans, it is vital to build a successful repayment history with smaller amounts. Lines of credit opened by suppliers are the easiest and most effective tools for building business credit. Below are a few that can help you jump start your credit.
– Dell computers. Dell has its own financing division, which serves both individual customers and business customers. They open lines of credit, allowing you to buy computers and supplies on flexible terms and report them to credit bureaus, like Experian and D&B. A positive credit experience with Dell can help you qualify for credit cards and business loans more easily.
– Staples. Staples is great at building his business credit foundation. Buying supplies on account and making payments on time will look good on your business’s credit profile and open up more financing opportunities over time.
– Fleet One Gas Card. Fleet One is a way to get a free Dun & Bradstreet profile and Experian Intelliscore. Opening a profile with D&B would cost $329, however a Fleet One, which reports to all commercial credit bureaus, would lead to one being opened automatically and free of charge. It also reports like a credit card to Experian, showing potential lenders a history of handling unsecured credit. You use gasoline every day, so why not take advantage of Fleet One?
Business credit, which seems frighteningly difficult to obtain, can be built and maintained with minimal cost and effort, opening the door to greater financing opportunities as your business expands.
