Forming an LLC is a great way to separate your business from your personal finances and build a strong credit history. With an LLC, you can apply for loans and credit cards from banks and credit card companies, but you may need to meet certain requirements. To get the most out of your LLC, you should understand the basics of business credit and how to build it quickly. When you form an LLC, you will be assigned a DUNS number, which is used by lenders to identify your business.
This number is essential for applying for loans and credit cards, as it allows lenders to access your business credit report. Your business credit report takes into account several factors, such as payment frequency and the amount of debt you have. To build your business credit quickly, you should open new accounts with companies like Divvy that offer secured cards to startups. You should also make sure that you pay all of your bills on time and in full, as this will help to increase your payment frequency and improve your credit rating with the different business credit bureaus.
When applying for loans or credit cards, lenders may also ask for your business tax return or income statement as a way to further support your application. It's important to remember that building business credit is a time-consuming process, so it's important to be patient and consistent in order to see results.By understanding the basics of business credit and taking steps to build it quickly, you can ensure that your LLC has access to the best loan and credit card options available. With a strong business credit history, you can demonstrate your legitimacy and solid financial standing to potential customers.