Let's say you have a good enough credit rating and your co-signer's rating is higher than yours, do you think that's already a guarantee that you can get a bank loan? No sir! For businesses which are fairly new (about a year or younger in operation), banks are a bit on the conservative side in lending the amount of money you are asking for. I'm not saying that they will not grant you the loan. They might if your FICO score is high but it also depends on the loan amount you are asking for. Banks may grant you a loan but it could be at a smaller amount than what you had originally asked for.
You may already have started your own business but once you realize that you need an unsecured business line of credit, don't be surprised if you get a call from your bank saying that your application looks dim. This is the reason why entrepreneurs need to have a positive business credit profile.
Tips to Establish a Business Credit Profile:
- Register your company with all the business credit bureaus.
- Prepare a professional business plan.
- Check your profile and make sure that the payments you have made to vendors, suppliers and lending companies all reflect that you are a good and timely payer.
- Even though your business credit is separate from your personal credit, there are some lending institutions which checks your personal credit profile so you have to keep both in order.
You can also check out Dun & Bradstreet's steps to proactively improve your business credit profile.