How Many Lines of Credit Should My Business Have?

A question many new business owners as is how many business credit cards, vendor accounts and other forms of credit should my business have. The answer depends a lot on the needs of the business, but from the standpoint of good business fundability there is a definitive answer. Banks have a minimum that they look for when considering any business for a traditional loan. They want to see at least 3 vendor accounts and 4 to 5 credit card accounts in the business' name.

What's in a Name on a Credit Card?

A bank may use your personal credit to provide backing for a business loan if you chose to go that route. It is not advisable to use your personal credit, however, even if it is in good shape. There's too much at risk. Even if your business continues to do well and you can make all the loan payments on time you still lower your own personal available credit. If you need something important for yourself or your family you may not be able to get a loan because you have too much personal debt from a business loan.

In order to establish business fundability you need to have credit accounts in the name of your business, not your own name.

The Difference Between Vendor Accounts and Credit Cards

There may not seem to be much difference on the surface. Both vendor accounts and credit card accounts give you a stipulated amount of credit to spend. You can use them to get supplies for your business, and also build your company's credit score. Both report to the various business credit reporting agencies. Vendor accounts are different from credit cards, because they can only be used at the particular store/company. A credit card can be used at any location that accepts that form of credit.

Credit cards are more powerful in general, and often offer perks on top of the ability to buy items or services. They are also more difficult to obtain, though, and like a bank loan will usually require the business to already have a decent credit score. That's one reason vendor accounts are so helpful in building corporate credit and improving business fundability.

Small Business Loans - Initiates a Good Start For Your Business

To be a successful entrepreneur, it is a must to have the requisite support of money. It is not a matter of concern what is the size and nature of business you are dealing. Finance plays a very important role as it assists you to accomplish your goals. Whenever starting a new business or refinancing the existing one, it is the flow of finance which determines the success of business. In this regard, you can consider small business loans which provide the necessary monetary assistance. These loans are very easily accessible and can be used for a number of purposes.

With these loans, you have the finances which enable you to take care of the various demands. You can utilize the amount for installing machinery and tools, purchasing raw materials, arranging transportation of finished products, paying wages and salary, purchasing plot, clearing unpaid debts and so on.

These loans can be availed in two forms of secured and unsecured. Secured form of the loans offers a bigger amount at comparatively low interest rate. But to avail this loan option, you have to pledge one of your valuable assets as collateral. It is the equity value present in the collateral which helps you access a bigger amount

On the other hand, unsecured form of the loans can be obtained without pledging any collateral. This loan option is totally risk free and is beneficial to meet small needs. The amount offered is limited and is offered with a high rate of interest. Those with imperfect credit history such as CCJs, IVA, arrears, defaults, non repayment etc can also avail these loans. However the interest rates levied will be slightly higher.

Before availing the loans, you must prepare a loan proposal which clearly outlines where and how the amount will be utilized and repaid. A good business plan will help you obtain the loans instantly. You should also provide the business related documents with the loan proposal.

Small business loans are offered by most of the lenders based in the financial market. However to get the best deals, you should prefer applying online. By collating and comparing the rate quotes of various lenders, you can select a suitable deal. Thus with these loans, you are not required to worry about arranging finances to take care of your business needs

Beginning Steps of Business Credit Building

Building credit for your business can be daunting if you are unfamiliar with the process. The absolute first thing you'll have to do is have a business. A corporation or LLC should be fine to start building business credit. The state where you incorporate is not very important for the credit side of things.

Once your business is setup you will need to make sure it is listed in 411. When you submit applications for credit many companies will search for your business in a 411 listing to verify the phone number on your application. Some companies use Google Voice and submit the number to several 411 services themselves.

Business credit bureaus collect information and report it to businesses that subscribe to their service. There are 3 major business credit bureaus: Experian, Equifax, and Dun & Bradstreet. Some creditors report to Experian only, some report to D&B only, but the ones that help you the most will report to Equifax, Experian, AND D&B, giving you a tradelines on all the major business credit bureaus.

Net 30 accounts mean you have 30 days to pay the invoice after purchase. A few of the net30 credit companies might require you to place 1-2 orders where you pay-in-full upfront before they will give you net30 billing. Net30 creditors include phone companies, gas cards, and office supply stores.

Your business will need 4-5 tradelines reporting in your credit file to start applying for the next level of non-PG credit - retail revolving credit accounts. Wait a month or two after paying before you can expect the net30′s to report. Even if you get in on net30 terms pay before the due date. This will be a positive factor for your business.

Some net30 accounts are easier than others but once you get that first one reporting things should fall in line. If you need business cell phones this can be an easy way of getting net30 tradelines reporting. The higher the balance of your net30 order the better. When ordering you can ask if there a minimum dollar amount before they will report to credit bureaus. Your high balance is usually reported and creditors like to see high paid balances if they are going to offer you a high credit limit.

Now you need to spend some time building your credit file and get those net30 accounts reporting. It may take a few months to get but once that happens a lot of the hard work is over.