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Many new business owners use personal lines of credit in order to finance their companies when starting out. However, once the business has made it through the initial growth phase, it is advantageous to apply for a business line of credit. Such commercial lines of credit take the business owner out of the equation so that his or her personal credit rating is no longer affected by business transactions, nor is he or she putting up personal assets as collateral. By forming a Limited Liability Company (LLC) and having an Employer ID Number (EIN), you can use company assets as collateral to open a business line of credit and separate your personal credit rating from that of your business.

While business lines of credit are often more difficult to obtain than personal lines of credit, once you have one, you will leverage your buying and borrowing power. The key is to first build a strong business credit report. To do so, you need to first register your company with the business credit bureaus and make sure to follow their requirements closely. It is also imperative that all licenses, permits, and other such state and/or federal requirements are met. Next, you want to establish credit with companies that you do business with. Once you establish credit with your suppliers, you must pay bills in full and on time. By not involving yourself personally in any such transactions, your business will build a separate credit status. Such trade credit then needs to be reported to the business credit bureaus, which include D&B, Business Credit USA, and the business divisions of Experian and Equifax. EEC can help get you started.