THE BASICS OF ESTABLISHING FUNDABILITY FOR YOUR BUSINESS
THE BASICS OF ESTABLISHING FUNDABILITY FOR YOUR BUSINESS TO BUILD BUSINESS CREDIT
change the business name
establish a business entity
Setting up your business
Setting up your business with the business credit reporting agencies is a must. The biggest credit reporting agency is Dun & Bradstreet, so it is prudent to start there by getting a DUNS number from their site. While a DUNS number is not necessary, it can increase fundability. Begin building business credit by opening accounts with vendors, then retail store credit, then fleet credit cards, and finally cash credit cards like Visa and Mastercard. This will maximize fundability.
EIN (Federal Tax Number)
The business must also have an EIN (Federal Tax Number), which identifies your business much like a social security number identifies an individual. The EIN is used to open a business bank account and build a business credit profile. Make sure all vendors, banks, and agencies have the correct EIN for your business.
business telephone number and email
The business telephone number must be toll-free and listed with 411 in order to ensure credit approvals from most lenders. If you use a personal home or cell line, it could cause your business to be flagged as unestablished. Do an inquiry to see if you are listed, and ensure the information is correct. If there is no record, you can get listed on ListYourself.net. This will cost around $30/month.
Your business must have a website and email address on the same domain as the website. To maximize fundability, use a professional email address in the format of firstname.lastname@example.org which usually comes with a website domain provider like GoDaddy. Not only does it look professional, but it also adds to your chances of obtaining credit approval. DO NOT use Yahoo, AOL, Gmail, or Hotmail for the email address. Your website should include your contact and ownership information, a list of the products and/or services offered by your business, and prices (or links to pricing information).
business license and records
A proper business license is crucial for your corporation. The license address should match everything else. Contact state, county, and city government offices to determine if there are any required licenses/permits for your business type. Having a business license builds business credibility, resulting in more customers, and consequently, more revenue.
Keeping all records, including those online, consistent will also increase fundability for your business. Lenders, credit issuers, and business credit reporting agencies want to see matching records. Inaccuracies in your data will cause creditors to assume the application is fraudulent. This not only leads to credit denials, but also fraud investigations. Your data should be the same on all of these: your website, Yelp, etc.; IRS records; business records with Dun & Bradstreet, Experian, and Equifax; business licenses; and incorporation documents. Keep track of data consistency by making a list of each place your business has a listing and establishing a reminder to check the data at least once every 90 days to ensure consistency. This can also be accomplished by utilizing data management tools like Yext.com and ChatMeter.com. It is also helpful to maintain a list in Excel of all of the applications you submit, regardless of outcome.
Credit providers and lenders
Credit providers and lenders take several things into consideration when they look at a business credit application. They want proof of ability to pay, such as assets (i.e., collateral, inventory) or predictable future assets (i.e., receivables). If you cannot prove this, they will rely on your personal credit scores. Your business plan will enable credit providers/lenders to determine if you take your business seriously and if you intend to be in business for the long run. Your application must contain no inaccuracies or fraudulent information, and business info must match that on the secretary of state, etc. If fraud is suspected, they will investigate, which will delay or destroy your chances of approval.