Small businesses face challenges every day – making payroll, keeping the lights on, paying vendors, advertising, and so forth. While health cash flows are usually enough to cover the bases, sometimes an unexpected expense arises. At times like these, a normal expense can assume the size of a major catastrophe.
If you have just opened a small business, it is likely you have not been in business long enough to qualify for a traditional bank-backed small business loan
In fact, when you apply for a small business loan from a bank, you will probably be required to reveal your company’s credit record from five vendors that report to business credit-rating agencies. Of the more than 500,000 vendors extending credit to U.S. businesses, only about 6,000 of them report to Dun and Bradstreet, Experian Smart Business Reports, and Equifax Small Business Financial Exchange.
While you are working toward establishing the relationship with those five vendors, you will need to have some liquidity. That is where the credit cards for new small business come into play. Try to open three small-business credit cards and always keep their payment up to date. Not only will they provide a short-term cash flow solution. They will also provide one of the three legs found on the small-business “stool:” bank financing, vendor credit, business credit cards. Credit cards for new small business carry more weight than does vendor credit when banks determine creditworthiness.
Our Business Credit Building System will walk your new small business through the steps needed to take to not only obtain credit cards, but to build strong credit
Establishing a small business credit separate from your personal credit is wise. Most small-business consultants advise keeping your personal credit apart from your business’ credit. For the same reason, your business should be incorporated as a separate entity responsible for its own continuity. This separation keeps your personal assets safe in case the business ceases operation for some reason. In the same vein, establishing credit for your business in its own right means that it will qualify for a bank loan that much more quickly without relying on your personal credit.
Getting your new business on its own feet involves several steps. One of the best things you can do is to make sure your company qualifies for three separate credit cards.
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