Have You Been Denied a Loan? Learn How to Build Business Credit

It’s a real bombshell to be denied a loan and not having an idea as to why. You’re more than surprised; you’re shocked. After all, your personal finances are in tip-top shape and you see no reason why a lender wouldn’t approve your loan request.

Did you know a lot of business owners aren’t aware that they need to build business credit in addition to having a personal credit history?

In learning how to build business credit, you should know that doing so isn’t complicated. In just a few days, you can complete steps to create a solid business credit score.

Some Easy Steps to Build a Strong Business Credit

Building business credit might sound like something hard or something that would take you several months of hard work to achieve. But nothing’s farthest from the truth. Strong business credit is easy to achieve.

Here are some steps you can take:

  • Meet with an accountant to incorporate your business.
  • Use an EIN instead of your Social Security number
  • Open a business bank account
  • Get a post office mailbox for your business mail
  • Get a business credit card to use exclusively for business transactions

And that’s it! Nothing out of the ordinary.

Remember, creditworthiness helps business owners succeed.

But how would this actually work in real life? Here’s how an entrepreneur built a business credit history and obtained tangible benefits.

Jimena Learns How to Build Business Credit

As a hair salon specialist, Jimena takes pride in helping people look their best.

For the last few years, she has worked from her home. But then Jimena decided that a mobile hair salon would be better, as it would enable her to travel to people’s homes and businesses. She can provide services for the elderly, busy professionals on the go, and her existing clientele.

Jimena applies for a business loan and the bank rejects her application.

Because she has an excellent personal credit score, she’s confused. She meets with her banker and he explains it’s because she doesn’t have a business credit history. He explains that a lender considers both personal and business credit histories to determine if a person is a low or high-risk borrower.

By establishing a business credit history, Jimena can qualify for loans with lower rates and terms. Hair salon suppliers may also offer other payment options besides cash. By having business credit, Jimena can qualify for funding to grow her business.

Rather than give up on getting a mobile hair salon, she decides to work with the lender to learn how to build business credit.

She implements the tips the lender gives her and orders a free credit report to verify there aren’t any errors. Her banker encourages her to wait a few months and reapply for the loan. Jimena marks her calendar and sets up an alert on her smartphone to meet with the banker.

This time, when she applies, the banker approves her loan. She had no idea that what seemed so difficult and scary could be so easy.

She purchases a used hair salon truck and adds a few upgrades and her own flair. She has the working capital to spend on advertising and ongoing expenses. Because she already has a client base, her customers provide referrals of friends and family members she can contact. Likewise, two local nursing homes contract her services for their assisted-living residents.

Jimena separated her personal and business life by purchasing a mobile hair salon instead of working from her home. Her life feels more balanced.

Now, Jimena walks into her home after a long day and does nothing but relax.

Build Business Credit Quickly and Reap the Benefits

The takeaway about Jimena’s story is that building business credit is not rocket science or brain surgery. In simple, straightforward steps you can boost your FICO credit score in very little time. That’s what Jimena did, and it paid off handsomely for her. 

How about you?

Are you ready to ensure that your business credit is just as impressive as your personal credit history?

Let us know in the comments below.

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About Dequiana Jackson

Dequiana Jackson, CEO of Inspired Marketing, Inc., is a small business marketing coach who teaches women entrepreneurs how to monetize their message so they can make more money from their expertise. Dequiana is the author of Know Your Business: How to Attract Ideal Clients & Sell More and runs the award-winning blog, Entrepreneur-Resources.net.

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