Like many other Baby Boomers you have or will retire only to find your new life of leisure to be unsatisfactory or even boring. Although you are retired you are not finished participating in and contributing to the world of business. You simply cannot let go - you have to do something!
Maybe you can, in some way, continue in the business you retired from or maybe you will start a totally new venture and build a small business from scratch.
If you choose to start a new business you are going to have to somehow finance it, whether it is by using your savings or through borrowing.
It is very important to build up your business credit rating to qualify for the financial loans you will need to fund your small business.
Building up your business credit rating takes a lot time and effort, and require a lot of paper work. Here are some suggestions on how to get started in giving your business credit rating a healthy boost:
Set a business identity first
The first step in improving your business credit is to get one in the first place. This can be done by registering your business as an LLC or a corporation. Next you need to provide all the necessary paper works required by lenders such as legal document like business permits and licenses, financial statements, references, contracts, and so on.
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You need to keep in mind that when you register your business as an independent entity, you need to have a fixed address of your business, as well as open lines of communication. (Note that P.O. Box is not acceptable as a business address)
You may also want to register your business with a credit agency so you can keep tabs on your credit ratings and scores. These organizations will act as reference when you apply for a financial loan that requires a valid credit report.
Building up your credit status will depend on the financial stability of your business as based on the financial books during its operation. Also, prompt payment of lenders and creditors is a major issue when it comes to raising your credit rating. If you fail to pay the lender on the date agreed; you get a negative score on your credit score if that happens.
You might also want to monitor your credit card reports. Check for transactions that you did, or did not, make. If you spot an error, report it immediately to the corresponding credit card company. This will help you get a higher credit rating.
Get a business loan ASAP
Before you can actually improve your credit rating, you need to have a credit rating to work with. Many small businesses are now opting for business credit cards to improve their ratings. One reason for this is that these plastics have reduced interest rates and APR, which is quite useful for making prompt and affordable payments.
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Also, since business credit cards have no principal amounts attached to them, you can easily control the interest expense you make every month. You can do some budget planning to minimize expenses and maximizing profit, without worrying about interests piling up.
Another way to improve your credit status is through a line of credit. Many financial institutions, like banks, are now offering short-term lines of credits (LOC) for small businesses, with easy payment terms.
Since interest expense on LOC is dependent on the principal amount, you can reduce interest by paying the original debt until it reaches zero. With this term in mind, you can easily make prompt payments according to the agreement between you and the lender.
The gist to build up your business credit is to make prompt payments on your debts. Whether you have multiple loans or tons of credit cards at your disposal, you need to make sure that you pay each one on its designated date. If done right, you are well on your way to improve your credit scores, which in turn, will improve the financial future of your business.
Excellent post! I looked around for this… I found your site!
I have a Political Humor site of my own at White Rabbit Cult… Otherwise would you mind if I posted a backlink from my web site to your blog site?
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Dan Skriver
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Good direct advise for a start-up business. I appreciate that you talked about credit and ways to handle it to the extent you did. In today’s environment, the more information that a Boomer gets, the better off we are.