Should you establish business credit?

A client, whom I have worked with for many years, recently expressed their frustration with their business credit. The frustration was understandable as they had NO business credit. While the principals have an excellent personal credit rating, they never took the time to establish lines of credit for their business. This oversight results in the principals signing as personal guarantors for loans and other business financial obligations. My client's situation is not unique to small business owners. Most people believe if you work hard and obtain a "healthy" bottom line, banks and other investors will line up to help you expand or grow your business. Unfortunately, this not the case. As I advised my client and many others, I believe you should start early establishing business credit. There are many ways for a small business to establish and maintain credit lines.

1. Open lines of credit with suppliers, you expect to use on a consistent basis. You may start off with a small line of credit and build upon on that relationship with regular, on-time payments. You may want to pay in full within 15 days to establish your company as a valued customer. You should re-visit your credit limit every year to make sure it is on target with your company's production goals that year.

2. Get a DUNS Number. Dun and BradStreet allows business owners to review and update the information reported about their business. Most people would think it is irresponsible if an individual did not review their personal credit report and update false information reported. Why would it be any different for a small business owner? Start today. http://www.dnb.com/

3. Establish credit lines. A new business usually needs at least 3 lines of credit to secure larger commitments. There are many ways to go about establishing those credit lines, but one of the best ways is to obtain a secured credit card. Here are some of the best secured business credit cards:Wells Fargo Business Secured Credit CardBBVA Compass Business Secured Credit CardCapital One® Secured Mastercard®OpenSky® Secured Visa® Credit Cardlines. Once you maintain these cards for a period of time, you may upgrade to an unsecured card with the same company.

In today's financial climate, many people like the idea of pay as they go. There is nothing wrong with that philosophy. However, if you have a goal to grow beyond your current circumstances and resources; change your mind about establishing business credit.