A Few Ways To Secure Credit When You’re Getting Your Business Off The Ground

Almost every business needs credit at some stage – even the very biggest ones.

It helps your company to get the raw materials it needs to get off the ground, making it a vital part of any sensible business plan.

But while securing credit can feel like a difficult task for new business, it’s really a lot simpler than you think.

From getting your personal credit profile in check to choosing the simple credit options at first, this is how you can get the lending you need to get your business off the ground.

Recommended reading: Looking at Starting your Own Business?

Pre-empt by boosting your personal credit rating

I’ll start by saying this – your business credit rating doesn’t depend on your personal credit rating. However, the crucial thing to know is that your personal credit rating does influence your business credit rating.

The reason your personal credit rating influences your business credit rating is that scoring systems draw their information from a wide range of sources. And these can include things on your own credit file.

This means it’s a no-brainer that you should boost your personal credit rating to help secure credit for your business.

The quickest way to boost your personal credit rating is to get a credit card, spend the limit, then repay the balance in full. Do this for a few months and your rating will shoot up.

Take the right steps to establish your credit profile

Boosting your personal rating is the first step in securing credit for your business. But it’s important to keep in mind that we’re talking about your business, and that means you need to take business-credit-specific steps to secure the finance you need.

The steps you need to take to establish your business credit profile include:

  • Incorporating your business: registering it with the appropriate national authorities
  • Establishing your business: having a physical location and address for it
  • Open a business bank account: with a respected financial institution
  • Set up a business landline & website: so it can be found by lenders
  • Start your business credit file: register with Experian, Equifax & TransUnion

Go for the simple credit options at first

Once the preliminary work and foundations have been put in place to secure a business credit rating, you can then secure credit for your business.

My recommendation is that you begin with the simple lending options first. Why? Because you’re more likely to get approved. You can then use this lending to enhance your credit profile, making you more likely to be successful when applying for larger borrowing.

Some of the best examples of simple credit include:

Store cards

These are useful for many businesses, as they allow you to buy lots of different essentials that are needed for companies to operate.

While there are plenty of great options, I recommend opting for the Amazon Platinum Mastercard. It gives you 5% unlimited rewards points for your purchases and gives you access to an enormous amount of goods.

Trade accounts

Beneficial primarily for businesses that specialise in labouring (and associated industries), trade accounts let you order goods now and pay for them later – often by submitting an invoice.

Having some experience working in with trade accounts, you’ll often find that large ecommerce sites within the industry will offer this. I recommend doing a little research, finding a site that’s based close to you, and then checking to see if it offers a trade account.

Fuel cards

Incredibly handy for any business which uses transport (of which there are many), fuel cards allow you to get for your petrol and diesel on credit – they’re like a credit card for fuel, but they also give you access to fuel-specific discounts.

The best way to find the right fuel card for your business is to use an aggregator site, such as iCompario. This is because you can enter your specific requirements and then use the site’s software to guide you to the fuel card that best matches the needs of your business.

Government borrowing

Government borrowing is probably the best (in this writer’s opinion) form of simple borrowing you can get – if you can secure it.

The reason for this is pretty straightforward – governments are unlikely to go bust and have a vested interest in giving favourable terms to new businesses. Why? Because by helping new businesses to grow the governments then help their economies to flourish.

The type of government borrowing you’re able to get depends entirely on where you’re based. As an example, the UK government offers a Start Up Loan of between £500 and £25,000 for new businesses.

These tips can improve & preserve your business credit rating

Once you’ve got your simple credit you can then improve and preserve your profile – making you a safer and more appealing prospect to financial institutions, and increasing your chances of getting larger borrowing in the future.

There are a few great tips you can use to improve your business credit rating:

  • Pay all your bills on time: it’s a no-brainer and needs no explanation
  • File your accounts on time: late account submissions will be held against you
  • Keep all your details up-to-date: out of date address and location looks unreliable
  • Don’t overdo it with credit applications: every application is recorded on your file
  • Monitor your clients’ credit profiles: if they’re in risk of going under they could default on their debts to your business – meaning your company could also default

This isn’t an exhaustive list of all the ways you can get credit for your business, but it does cover all the essentials. So, begin by getting your personal credit rating in order and take it from there. 

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