Although it’s tempting to go out and get credit for your business right away, the preparation of your business’ compliance is probably the most important piece of the business credit building process. When you start working with cash lenders, unsecured credit providers and banks, your business records and organization should be in perfect health. Skipping the credit compliance steps, or what we call the business credit building blocks, could leave you performing these tasks after the fact, which will likely be even more inconvenient. We break down the building blocks in groups and explain the importance of building business credit the right way from the beginning.
Like mom would say, “Don’t forget to eat your vegetables” the proud parent of a complete line of business credit building products, Companies Incorporated, says “Don’t skip your business compliance”. Simple formalities and measures that are taken to prepare your business for the credit building process. What we are educating our clients to do is essentially laying the foundation for the corporate credit journey.
Why is compliance important to building business credit?
Creditors and Lenders are assessing your business for its credit worthiness. Naturally, if you’re in the business credit building, or establishing, phase, you probably have little or no credit for your corporate organization. So what else is there to evaluate? Your company’s organization and presence will be looked at by anyone who is considering extending you credit. Banks will likely require a complete business plan, tax returns and proof of debt service before granting unsecured lines of cash to a business, so as you build your business credit profile, you should take several days to prepare your business for the credit process. Simple formalities and proactive measures that will prevent you from having to start over, getting labeled high-risk or tagged with no credit status. These are as simple as they are important, that’s the good news.
Legal Business Name
If you haven’t incorporated or are incorporated, you still want to make sure that there aren’t any more companies with the same name that have credit profiles with the major bureaus. If you share the same name with another business, say in a different state, that has credit activity, this could cause some companies to confuse your business with the other, or vice versa. This could complicate application processes and leave you having to send additional documentation. There are tools you can use for your entity name verification nationwide so that you know you are void of any confusion based on your legal entity name during the business credit profile building process.
You will have to demonstrate that your business is legitimate and here to stay. Having a physical business location is a part of that, which means that your legal business address is important. PO Boxes, residential addresses and Mail Stops are not considered authoritative legal business addresses. Especially a business that is seeking a financial relationship with a lender.