How to Build Your Restaurant’s Business Credit

How to Build Business Credit

Most restaurant owners are so busy running their business they often forget the importance of maintaining their personal and/or business credit. You cannot underestimate the importance of finance when running a restaurant, or any other business for that matter.

Building your credit profile is a major step towards enhancing its financial health. As a restaurant owner, you should be well-versed with the differences between personal and business credit.  Potential buyers, suppliers, and lenders prefer doing business with restaurants that have a solid credit profile so how to build business credit is critical for every business owner.

You also have to keep your personal credit in mind when working towards building your restaurant’s credit. Making payments on time is a good way to maintain your status as a reliable borrower. That said, you will receive a score on your business credit.

Luckily there are some simple ways to build both your personal as well as your restaurant’s credit. Here are some methods you can try:

Personal Credit Protection

Your personal credit can affect your restaurant’s financial health if you set up your business using your personal credit. Often, in the absence of a business loan, individuals use personal finances for starting a restaurant. However, there is always the risk that you are unable to make a full transition from your personal credit to your business’ credit.

You get busy and things often disappear in the shuffle and your personal credit score suffers greatly because of this. There should come a point when you are easily able to pay the bills through your business instead of jeopardizing your personal credit. You will be happy to learn that businesses can get affordable financing with rates and terms that are much more favorable than a personal loan.

Follow these simple steps to build your restaurant’s credit profile:

• Seek your suppliers’ assistance to apply for trade credit. Once this happens, submit reports of your trade history to business credit bureaus.
• Instead of applying for business credit cards tied to you personally, tie them with your company. In case you do not have a credit profile, start with a gas card, hardware store, or office supply company.

Establish Your Business

Stick to a strict budget when managing your restaurant. Lenders examine your spending habits, and if you are wasting money on ancillary items or services, they will not deem you creditworthy. Creditors will feel more at ease when lending you money when your cash flow stays strong – a good indicator that you will likely pay them back on time.

Pay on Time and Don’t Ignore Your Personal Credit

Timely repayment with vendors, landlords and other creditors will earn you favor with most lenders. Even though personal credit and business credit are viewed separately, it is important to be diligent with both to maintain a healthy score. Your personal credit can indirectly impact your ability to secure funding for your business. It will also impact your interest rate.

Bottom Line

Building business credit is not as difficult as it seems. All it takes is some budget planning, discipline, honesty, and most importantly, punctuality. If you are finding it difficult to secure funding for your restaurant, contact ARF Financial. Our loan process is simple and approvals can occur in as little as 24 hours. Repayment terms are flexible ranging from 12 to 36 months, with fundings in under a week. The payments you make are fixed. We can approve you in 24 to 48 hours and your credit will not be impacted by this application! APPLY NOW.