• Eric McLoyd

Leveraging Other People's Money (10 Steps to Establish Business Credit)

At Hubris, we specialize in partnering with the owners of emerging businesses. We make sure that you are operating from a strong foundation and that ultimately your business will last for generations. One of the strongest areas of the business development process is establishing business lines of credit.

Since leveraging OPM (Other People’s Money) is essential to the wealth building process, business credit is a very important area to master. Before starting the steps below, check to see if your business already has a credit profile/score.

A business credit score is on a 1–100 scale and like a personal credit score, it is designed to predict derogatory payment behavior. The algorithm is based on credit history, utilization, balances, trends, public records and demographic information.

A score of 1–10 means you are considered a high risk to lenders, a score of 11–25 means you’re medium to high, a score of 26–50 means you’re medium, a score of 51–75 means you’re low to medium, and a score of 76–100 means you’re a low risk to lenders.

How to Establish Business Credit in 10 Steps:

  1. Establish your business legal structure (C corp, S corp, LLC, etc.).

  2. Obtain a Federal Tax Id number for your business.

  3. Open a business banking account.

  4. Establish a business address and phone number.

  5. Apply for a business DUNS number.

  6. Open trade lines with your vendors and suppliers.

  7. Get a business credit card or business line of credit.

  8. Borrow from lenders who report to credit bureaus.

  9. Keep your business information current with the bureaus.

  10. Pay all of your business bills and loans back on time.

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