Building significant corporate or business credit fast without personal guarantees is difficult. Banks, credit unions and other lenders guard against people wanting to borrow money for their businesses while assuming no personal responsibility for the debt. Usually, banks lending to companies insist on a personal guarantee from the owner, or in some cases request formal collateral such as real estate. There are ways to get around this, but your expectations must be reasonable. For example, no bank is going to offer say, a $50,000 line of credit to a small business without collateral. However, you can build business credit fast in much smaller amounts.
Establish your business as a legal entity separate from your personal finances. Ask your accountant for help creating the company as a limited liability company, corporation or partnership responsible for its own income and expenses. During the process obtain a Federal Tax Identification number, also known as an Employer Identification number, from the Internal Revenue Service. This number is used to build your business credit file in much the same way your Social Security number is used to track your personal credit.
Apply for credit using your employer ID number. Start with several specialty stores that may have flexible lending guidelines, such as gas stations, home improvement stores, cell phone companies, office supply stores and department stores. Initial credit lines could be as little as a few hundred dollars, but it's a start. Always apply in your company's name and never include your Social Security number on the application. This helps establish that the account is a business account and not a personal account.
Make small charges on the accounts each month and pay them in full within 30 days. Never miss a payment.
Apply for a secured bank credit card in your company's name. Take money from your business and deposit it into a bank account to be held as collateral. Consider this as a business investment to build your company's credit. Generally, the amount on deposit becomes your credit limit. Check with your bank or credit union for secured cards, or visit the websites of other banks. It isn't necessary for the cards to be marketed as business credit cards. Any Visa or MasterCard can build business credit. Pay off all charges each month.
Acquire a secured installment loan. Place money into a bank account in the company's name and secure a loan for the same amount. Place the loan proceedings into a dedicated savings account and have the bank draft from the account each month for payments.
Apply for larger, unsecured business credit after about a year. Try for unsecured business lines of credit at $5,000 and up. Also apply for unsecured MasterCard and Visa accounts in the company's name, using your company's Employer Identification number only.
Robert Lee has been an entrepreneur and writer with a background in starting small businesses since 1974. He has written for various websites and for several daily and community newspapers on a wide variety of topics, including business, the Internet economy and more. He studied English in college and earned a Bachelor of Arts in liberal arts from Governor's State University.