For small businesses, having good credit can be very invaluable. It takes time to build, but when you have put in the work consistently, you can gain access to funds and loans more easily. Whether you are looking to expand your business or venture into another project, the guideline below can help you to improve the credit of you MSP company.
Steps to Better Credit
As already mentioned, building better credit is a journey. Business credit is similar to personal credit except that it falls under stricter controls and guidelines. The following steps can help get your MSP company to an improved credit score. You pick up one or two things depending on where you are currently:
- Getting established – To get business credit, a company must be legitimate in its operations and standing. It should run in a way that attracts business confidence. If you need to secure a loan from the bank, they want to see that you are in fact an operational and profitable business. You must have gone through the registration process to be recognized as a business entity. You can opt for either an LLC or an S corp. To become a taxable entity, you must also get an EIN. If you have bad credit already, there is an option to form a new business entity.
- Start tracking your business credit – Once you have an EIN, you can get a D&B number (also known as DUNS number). It is through this number that your business credit is measured.
- Seek professional credit coaching – To shorten the learning curve and save your business credit from any lapses in the decision-making process, it could be worth your while to bring in an expert. A business credit coach understands the terrain very well. They can work with your finance team to help you handle your payment and credit usage in a way that benefits your business the most. If you are looking to expand your business in the future using a line of credit, it pays to lay the groundwork for that loan with someone who has proven expertise and experience in business credit.
- Start building credit where you are – If you have just started on this journey of building business credit, you are probably thinking in terms of getting AMEX, MasterCard, or Visa. In business, you cannot just apply for these directly without taking it one step back and building credit through trade and vendor lines. Take advantage of the existing relationships you have with stores to prove your business to be a reliable debtor.
The more your MSP company pays credit on time, the better the credit score should be. Be sure to keep track of your progress and ensure that you have ongoing D&B reporting. When the time you need financing comes along, your business credit can come through for you.