How to Establish Credit in My Business Name

Running a business is expensive, and some business owners need credit and loans to stay afloat. You can always apply for a loan in your personal name and use the money for business purposes. However, most business owners want to keep their personal and business finances separate. Thus, they're interested in ways to establish credit in their business name.

Instructions

1

Get a business license. Visit your local city hall and apply for a business license. The average cost is $50 a year, and you receive your license upon paying the fee. If you like, register your business name with the city.

2

Open a business bank account. Rather than combine your personal and business funds, visit your local bank or credit union and open a business bank account.

3

Apply for a tax ID number. To establish credit in your business name, you'll need to obtain an employer tax ID number. Apply for an ID number online by visiting the official website for the Internal Revenue Service (IRS).

4

Improve your personal credit score. Initially, lenders will use your personal credit score to determine whether you're eligible for business credit. Pay your personal credit accounts on time, and maintain a low debt-to-income ratio.

5

Get a secured business credit card. Talk to your bank about a secured business credit card. You'll apply for a credit card in your business name and pay a security deposit. The deposit functions as collateral.

6

Obtain a small business loan. After you've established a business relationship with your bank or credit union, apply for a small loan in your business name. You'll likely need collateral, such as an auto title. Pay off the loan within a couple of months to increase your business credit score.