FINANCE
4 . Support business growth
Any business can check your business credit profile . When you are bidding on a commercial job or government contract , a credit check may be part of the screening process , even if you aren ’ t aware of it . What you don ’ t know can hurt you ; if your business credit reports have mistakes or offer little information about on-time payments , your business may lose opportunities .
Expanding your facility is another scenario where business credit can be helpful . Whether you ’ re adding service bays , expanding showroom space , or opening additional locations , lenders may review your business credit profile when considering loan applications .
5 . Protect your personal finances
Many OPE dealers and landscape business owners rely heavily on personal credit for business needs , a practice that can create significant financial vulnerability . Industry surveys indicate that more than 70 % of landscaping businesses have 1-4 employees , and many of these small operations blur the lines between business and personal finances .
Building separate business credit creates a crucial financial firewall that protects both your personal assets and your business ’ s future growth potential . Separating business and personal finances through dedicated business credit accounts does more than just organize your books . It also establishes your operation as a more legitimate business in the eyes of suppliers , lenders , and potential business partners . This separation becomes particularly important as your business grows beyond basic equipment purchases to larger investments in new technology .
Simply using a personal credit card to pay for online ads can lead to a balance that hurts your personal credit scores . By building separate business credit , you preserve your personal credit capacity for important personal financial goals like home ownership or personal investments .
Taking action
Building business credit requires a systematic approach , starting with foundational steps to make sure your business is set up properly : Form a business entity like an LLC or corporation Get an Employer Identification Number ( EIN ) from the IRS Get a D-U-N-S Number from Dun & Bradstreet Obtain business licenses
Once you ’ ve set your foundation , you ’ ll need to get accounts from companies that report payments to business credit bureaus ( in industry parlance , they are called “ tradelines ”). These
A $ 60,000 loader can help you grow your business . Good credit can help you afford it .
can include your existing suppliers if they will extend credit . If not , a number of net-30 vendors offer everything from industrial supplies to website design and marketing support . Establish accounts and pay on time to help build your business credit history .
Paying on time is key . Business credit reports usually report payments using a measure called Days Beyond Terms . If your supplier offers net-30 terms , for example , and you pay on day 33 , your account may be reported as 3DBT .
Timely payments are especially important during the creditbuilding stage . Setting up automatic payments can help . Then monitor your business credit to see which accounts are reporting and to make sure information is correct . Simple mix-ups between businesses with similar names aren ’ t uncommon . Business identity theft is a growing problem , too . Monitoring your credit can help you catch suspicious activity early on .
Finally , review any Uniform Commercial Code ( UCC ) filings listed on your credit reports to make sure they are accurate . UCC liens are filed if you use business equipment or other assets as collateral for financing . However , the UCC release isn ’ t always filed when financing is repaid , which may make your business appear overleveraged .
Building strong business credit isn ’ t just about securing better financing , this strategic move can help your business grow , navigate seasonal challenges , and protect your personal finances . But it takes time ; the sooner you start , the sooner you ’ ll see results .
Gerri Detweiler has several decades of experience guiding individuals through the confusing world of credit , and has earned a reputation as a reliable and independent source on personal and small business credit . Today , Gerri serves as education consultant for Nav , a financial health platform for small businesses owners to build and manage their business and personal credit .
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