Establishing business credit can benefit your box truck business in numerous ways. It can make it more convenient (or less expensive) to obtain certain types of financing, business insurance, or payment terms with suppliers.
Note that your box truck business can have its own credit reports and scores. Anyone can check business credit, so it may be used by lenders, suppliers, or even companies deciding whether to do business with you.
Have it in mind that aside from helping you qualify for small business loans or financing, as well as helping you secure financing at more favorable terms, good business credit can even help your box truck business land lucrative business contracts.
Since there is no requirement that companies notify you when your business credit is reviewed, it entails that you may never know how your credit history has affected your business. Business credit is credit obtained in a business’s name.
Note that with business credit, the business establishes its own credit profile and credit score. With an established credit profile and score, the business can then qualify for credit. Since the business qualifies for credit, most often, there is little or no need for a personal credit check from the business owner.
The business can leverage its credit to qualify for store credit cards. Trucking and transportation businesses are considered some of the highest-risk businesses by lenders. Owing to that, it can be quite tasking for even well-established box truck companies to obtain credit lines and loans.
Note that establishing and maintaining good business credit, coupled with personal credit, enables trucking and transportation business owners to secure credit lines and loans with the lowest possible rates and payments.
8 Ways to Establish Business Credit for your Box Truck Business
Although it takes time to get business credit, note that the key to establishing good business credit scores is to do business with companies that report payment history, and then pay on time and keep debt levels low. However, if you are looking to establish and sustain business credit for your box truck business, here are tried and trusted methods you can use.
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Register Your Business
Ideally, businesses are always expected to be officially registered with their state. If you have already registered a business entity in your state, then you must have fulfilled this step especially since annual filings will be mandatory. If you registered your box truck business in another state, you may also need to register your business in the state in which you do business.
Build Your Foundation
Note that to establish business credit for your box truck business, it is recommended you properly establish your business. If your business is new, then invest in setting it up so it appears professional to both clients and lenders. For one, obtain a business phone number and, if possible, ensure it gets listed in directory assistance.
Also, consider getting a professional email address. Ensure to pick and steadily use a business address, which can be P.O. Box or even your home address if you are just getting started.
Get a D-U-N-S Number
A DUNS number is more or less your business identifier with the credit reporting agency Dun and Bradstreet. When it comes to business credit bureaus, Dun & Bradstreet is genuinely rated as the most well-known. According to experts, their Paydex score is the business credit score most often used by suppliers and creditors. Therefore, if you intend to establish business credit, it’s a good idea to open a credit file with this agency.
The process is entirely free and can be carried out easily on the Dun & Bradstreet website, but it takes up to 30 days to receive your DUNS number. Indeed obtaining a DUNS isn’t a requirement for businesses, unless you intend to apply for a federal government contract, grant, or SBA loan, and it is not a system that is managed by the government.
Always Pay On Time
You need to understand that payment history remains one of the most notable factors for any type of credit score, especially for business credit. According to reports, business credit reports use a term called, “Days Beyond Terms” (DBT) that explains the number of days beyond the due date a payment was made.
For instance, if your agreement with a vendor is “net-30,” and you pay on day 32, the account will be reported as 2 DBT. Have in mind that this means that your business credit score can be negatively affected if you pay just a day or two late.
Owing to that, it is recommended you always pay on time or early if you can, and you may build your business credit score more quickly. Just as was noted above, payment history remains the single most important factor for establishing and growing positive business credit.
Open a Business Credit Card
Opening a business credit card that reports to the major commercial credit reporting agencies is another viable way to establish business credit for your box truck business. Have it in mind that you can benefit from certain advantages such as cash back or travel rewards, but you can also leverage one of these cards to establish and build credit.
However, note that a good number of small business credit cards will use the owner’s personal credit scores and income from all sources to evaluate if you qualify. It is recommended you have at least one open business card if you qualify, but more than one can also help.
Howbeit, just make sure to be careful and avoid getting overextended as that can negatively affect your business credit scores. But if you don’t qualify for a business credit card, you can skip this step but come back to it in the future when your personal credit history has improved.
Establish Credit With Vendors/Suppliers Who Report
Another convenient way to establish business credit for your box truck business is to apply for net terms with vendors and suppliers. Note that as you purchase supplies, inventory, or other materials on credit, those purchases and payments get reported to business credit reporting agencies.
According to experts, this activity establishes your box truck business credit profile and business credit report. After your company has several trade lines reporting, a business credit rating (score) is generated. However, it’s pertinent to only work with vendors and suppliers that report to a business credit reporting agency.
Monitor Your Business Credit Reports
There are three well-known business credit reporting agencies so it’s pertinent to monitor each of your company credit files. Have it in mind that each agency collects data from numerous sources and may also have varying information about your company.
However, the good news is each of the business credit agencies makes available a way for you to update basic information about your business. If you find any outdated or incorrect information, it is recommended you reach out to the agency to make the required change.
Get an Employer Identification Number (EIN)
This is another very viable way to establish and build business credit. The IRS leverages an employer identification number (EIN) to track businesses for tax purposes. Note that the same way your social security number serves as your identification number for personal taxes, your EIN carries out the same purpose for your business, and it ensures your business is visible to D&B.
Note that sole proprietorships, partnerships, and single-owner LLCs are allowed to use the owner’s social security number for tax purposes (as long as they don’t have any employees). Most businesses, howbeit, need an EIN.
However, even if you’re not mandated to, it’s recommended you get an EIN anyway. One of the most notable benefits of an EIN is that it can help you establish business credit and it is free and easy to apply for on the IRS’s website.
Indeed you could get by with just your personal credit, but it is not the ideal practice for your box truck business. You should see your box truck business credit as a very vital aspect of your business. While building business credit may not have an impact on your personal life, it can genuinely make or break your box truck business.