By Rich Best

Nothing will kill your growing business faster than a lack of capital. You’ve used your sweat equity, precious savings and personal credit cards to nurture your small business from a cash-bleeding start-up to a profitable enterprise. Suddenly, orders are increasing, your payroll is expanding, and your competition is forcing you to spend money on advertising. You’re at the unavoidable fork in the road where, in order to keep your business growing, you need to give it some credit. Here are the key steps to getting credit for your business:

Build a Business Plan

Small business lending is beginning to loosen up, but the loans will be going to those businesses that demonstrate competence and the ability to repay. A solid, well thought-out business plan will convey seriousness and legitimacy. It needs to include your vision, a mission statement and core values. The longer the financial history of the business the better and it should include forecasts for growth and profits. A marketing plan with specific strategies for gaining market share and acquiring new customers is essential. It may be worth it to hire a business plan writer to do the job.

Separate Your Financial Lives

Obtaining and managing credit will require that business records are kept separate from your personal records. By now you should have a separate business checking account. If not, you need to get one immediately, as much for keeping the IRS happy as for establishing legitimacy for your business. It’s also advisable that you organize your business as a separate entity – a sole proprietorship, a Sub Chapter S-Corp, or an LLC.

Build Your Business Credit History

You remember what it was like when you tried to get your first personal loan or credit card. No credit history, no credit. It’s no different for your business. Although your personal credit history is an important consideration in granting credit to your business, lenders want to see how your business manages credit. The first place to start is with small lines of credit or credit cards issued by your vendors and suppliers. Suppliers such as OfficeMax® and Home Depot® are fairly liberal in their issuance of credit cards. Your vendors, with whom you have done business for a while, might extend a small line of credit or a trade credit account. Gas cards are fairly easy to obtain in your business’ name.

Get a Co-signer

Lenders typically require loans to small businesses to be co-signed by a creditworthy individual or entity. If your credit is not excellent, or you have few assets to collateralize, then you can try to find a person or business that would co-sign. Of course, any co-signer will be liable for repayment of the loan, so only those who completely trust your competence and character would consider it. It’s not uncommon to find a loyal client or customer who knows the potential of your business to be a co-signer.

If your business is entering its growth stage, the last thing you want is to slow its momentum due to a lack of cash. Your personal credit was sufficient to help you muddle through the start-up phase, but, in order to break through the critical growth stage barriers, you will need to have cash on hand when it is needed. Credit for business is loosening, and loans or lines of credit are becoming available again, but only those who are best prepared will get serious consideration.

Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.  Any views expressed in this article may not necessarily be those of Nevada State Bank.