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Jackson Business Credit Attorney

Get the Credit that You Need to Grow

When you are growing a business from the ground up, you may not necessarily be thinking about qualifying for a loan. Eventually, however, most companies will need additional financing in order to effectively expand. You can save potentially years of time and open doors to new opportunities faster by taking proactive steps to establish a robust business credit profile.

Our Jackson business credit lawyer at Irvin Law, PLLC can give you the tools and guidance that will set your venture up for long-term success. We understand the importance of access to business financing and are familiar with the ins and outs of business law. Our team can work with new or existing business owners to explore effective and efficient means of building and maintaining the credit you need now or in the future.

If your new or existing business needs assistance with building credit, do not wait to call (601) 300-6679 or contact us online.

What Is Business Credit?

You are likely already familiar with individual credit scores. Each person has a score associated with their creditworthiness that is regularly reviewed and updated by the major credit bureaus. These scores can have a significant impact for the lending you as an individual qualify for as well as the favorability of lending terms.

Businesses also have scores associated with them that are used to evaluate creditworthiness. In principle, these two systems work similarly: Equifax, Experian, and Dun & Bradsheet, the three major credit bureaus, track debts and credit transactions of registered business entities.

Whether you realize it or not, your business likely has a credit report associated with it. The quality of your credit may influence the financing you can access and the entities you can do business with.

Why Do I Need Good Business Credit?

There inevitably comes a point where your business will need access to outside financing in order to expand, access new opportunities, or fund new ideas. Any legitimate institution will evaluate your business credit score to evaluate the risk in lending to your entity.

If you have a poor business credit score, your loan requests are more likely to be denied. Banks and other sources of mainstream financing want to be confident in their lending, and if your business does not have a clear track record, there is a good chance they will choose to steer clear.

A strong business score will also enable you to procure better terms for the loans that you are granted. Good credit can lead to lower interest rates, smaller deposits, and less restrictive or punitive terms.

Business credit does not exclusively impact lending. Having a strong credit score can also open doors to new suppliers, vendors, other entities that can help grow your business. Like with lending institutions, other companies want to work with businesses they see as reliable. Credit can be a determining factor in making that evaluation, and many types of entities will be able to access and review your business’s report.

Having good business credit can help business owners avoid personal guarantees. In situations where a lending institution is not fully confident in granting a loan to a business, they may require a “personal guarantee” from the business owner. This means that the business owner is pledging to cover any debts that the business entity cannot cover by itself. Many entrepreneurs accept these terms for lack of better options, but doing so exposes you to tremendous personal liability. Building and maintaining good business credit will keep you from having to consider agreeing to a personal guarantee in the first place.

Establishing Business Credit

You will need to take proactive and decisive steps to establish credit for your business. The sooner you start, the better, since just like with individuals, credit takes time to generate.

Our Jackson business credit attorney can guide your company through the following steps:

  • Establishing a business entity. Some small operations may choose to operate without the protections of a legal business entity. These can include sole proprietorships and limited partnerships, and while they may be the right choice in some situations, they will not be effective in building business credit, as your personal and business credit files will be intertwined. We can assess your operations as well as your short- and long-term goals to advise on what type of business entity best suits your company. You will need this entity to be viewed as legitimate in the eyes of the credit bureaus and lending institutions.
  • Obtaining an Employer Identification Number. Think of your Federal Tax Identification Number, or EIN, as a Social Security number for your business entity. You will need one by default if you are forming a corporation or wish to convert another type of entity into a corporation. In many cases, you will need an EIN to open business accounts with major banks and successfully apply for business-oriented credit cards. We can help you navigate the paperwork of applying for and procuring an EIN from the IRS.
  • Establishing a business address, phone number, and website. Public-facing means of communication lend additional legitimacy to your business. This means establishing a website that clearly outlines your business’s products and services as well as means to get in touch, a phone number that is exclusively dedicated to your business (not a personal number), and an address that is distinct from your residential address. We can help you establish each of these items, including “virtual” offices and phone numbers, where necessary.
  • Opening business accounts and credit cards. Once you are incorporated and have an EIN, major banks will likely be willing to work with you. You should promptly open at least one account as well as a business credit card. Our team can advise what banking institutions and credit cards will be most conducive to your goals.
  • Contacting credit bureaus and opening credit files. The credit bureaus will not automatically begin to track every entity that gets incorporated. You may need to proactively contact each of the major bureaus to alert them to your business and request the opening of a file. It is important to understand that the business-oriented credit bureaus do slightly differ from consumer-oriented bureaus. We can assist in communicating with Equifax, Expirian, and Dun & Bradstreet on your behalf.

Building Strong Business Credit

Once you have established business credit, you will need to work to build and maintain it. Like with consumer credit reports, your score can fluctuate, but our team can keep you on track and advise on reliable means of growing it.

We can help you build strong business credit through the implementation of many strategies, including:

  • Keeping personal and business accounts separate. A common mistake for many young entrepreneurs is to mix business and personal assets and expenses. This can make building credit difficult and messy, as your personal accounts will begin to merge with your business-oriented ones. By keeping your personal and business interests discrete, you will more effectively silo your credit scores as well as having an easier time filing taxes.
  • Monitoring credit for discrepancies and errors. Like with individual credit reports, mistakes based on misreported information happen more often than you think and can cause real damage to your business’s score. Our firm can regularly monitor your credit report, flag potential issues, perform investigations, and file the necessary objections and appeals with creditors and credit bureaus.
  • Securing and maintaining consistent vendor relationships. Credit bureaus love reliability and stability. In establishing a continuing relationship with a supplier or vendor, your business demonstrates both, especially if the partner is an industry-recognized entity. Once you have these vendor and supplier relationships, we can help request that they report your relationship to the bureaus, potentially boosting your overall business credit.
  • Identifying opportunities to pay early. As with consumer credit reports, missing payments will ding your score. Paying on-time over time will help you steadily build credit, but paying early is even better. We can help assess situations where smart management of company resources can allow you to pay obligations ahead of their due date, helping you build positive credit faster.
  • Optimizing credit utilization. Just because you have credit available does not mean you should use it all at once. Lending institutions want to see that companies are responsible in the management of their lines of credit, which in many cases keeping overall utilization below 30%. Keeping your utilization below this level will assist you when you need to request additional credit or pursue other means of financing.

Taking Your Business to the Next Level

Businesses are not faceless entities: They are made up of driven individuals whose passion fuel their success. Behind every venture is a person or group of people who sincerely believe in their ideas. Access to financing is what can make those ideas a reality. Our Jackson business credit lawyer at Irvin Law, PLLC can give you and your partners the means and tools to grow your credit and expand your venture. We can work closely with you to develop a strategy that will establish your business credit and build it as efficiently and effectively as possible.

Schedule a free initial consultation with our team to learn more about how we can help your business get the credit it needs to succeed. Call (601) 300-6679 or contact us online today.

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