August 30, 2021

American Startups: Building Up Business Credit After The Pandemic

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The coronavirus pandemic has affected the lives and livelihoods of people across the globe since the start of 2020. It has caused economies, regional and global, to close for weeks and months at a time. In America, the pandemic has caused massive unemployment and the Federal Reserve has estimated that pandemic-related loan losses for big US banks could reach $700 billion. Changes in credit is expected to, but this article aims to help businesses maintain and build up good credit after the pandemic.

What is Business Credit?

In the same way personal credit scores operate, a business is assigned a score which represents their creditworthiness. Business credit allows a business the opportunity to loan money. A higher score allows more favourable conditions for a loan to be approved due to the business’ stronger financial responsibility. A lower score, contrastingly, provides less favourable conditions for a loan to be approved. The loaned money, used to grow and/or expand their business and to pay for purchases, has to be paid back with interest. Although some businesses are able to maintain their working operations solely off profits, most businesses need a constant cash flow to maintain working operations. A good business credit allows this, and to gain a good business credit, you need to build it.

Net-30 Accounts

Businesses are able to build business credit with a net-30 account. These accounts allow a business to purchase an item and pay later. After purchasing a product/products, the net-30 account will extend the business 30 days to pay the balance. This is known as vendor credit. By using a net-30 vendor, they report the payments to commercial credit agencies, and this assists in proving strong financial responsibility, which in turn builds a stronger credit score. Business owners interested in using a net-30 account need to keep in mind that vendors do not generally monitor the business owner’s personal credit reports, but they may. These checks may cause “soft inquiries” which don’t affect personal credit scores, but this is not guaranteed. Vendors also may require an initial purchase made by the buyer. Once this is done, the net-30 terms will be extended.

Companies that help build business credit

Three major business credit bureaus are Dun & Bradstreet, Experian Business and Equifax Small Business.

Dun & Bradstreet

Dun & Bradstreet is one of the most important business credit bureau’s when establishing and building business credit. The net-30 vendors that report to Dun & Bradstreet are Uline, Quill, Office Depot/OfficeMax, Grainger, HD Supply, Shirtsy, Summa Office Supplies and Wise Business Plans:

Uline, who offers world-class customer service, have many helpful products to help businesses and report to Dun & Bradstreet on the first of each month.
Quill.com sells office supplies, cleaning agents, health care and safety supplies, as well as tools and breakroom supplies. To have a net-30 account approved, a business would have to build their credit with Quill first.
Grainger offers over 1.5 million products, specializing in industrial solutions. They sell abrasives, HVAC and refrigeration components, motors, lighting, furniture, fasteners, office supplies, outdoor equipment, and much more. Grainger offers small businesses net-30 accounts to pay for their products and regularly reports to Dun & Bradstreet.
HD Supply sells appliances, fitness and exercise equipment, healthcare supplies, janitorial, linens, paint and supplies, office supplies, food service equipment, HVAC, window coverings, etc. This company offers net-30 terms, reports to Dun and Bradstreet, and has products that fit nearly any business’s needs.
Shirtsy allows businesses to start building their business credit score as soon as they sign up. Shirtsy helps clients find and buy shirts from a trusted source.
Summa Office Supplies sells general office supplies and stationery. Their net-30 accounts are for small businesses, even new and unestablished businesses.
Wise Business Plans help businesses to start, grow and expand to consistently make money. They offer flexible net-30 accounts for startups and established businesses wanting to build business credit.

Experian Business

Experian Business, another important business credit bureau that is often reported to, is often used by creditors to pull your credit report when determining your creditworthiness. The net-30 vendors that report to Experian Business are Uline, Shirtsy, Strategic Network Solutions, Crown Office Supplies and Wise Business Plans:

Strategic Network Solutions, a supplier for Dell Computers, AVG, various hardware and software companies provides information technology services solutions globally. They report to Experian Business and CreditSafe on the last day of every month.
Crown Office Supplies sells office supplies and school supplies along with mobile accessories and sanitation supplies. They offer net-30 credit accounts and report to all the major credit bureaus.

Equifax Small Business

Equifax Small Business, which is less reported to than Dun & Bradstreet and Experian Business, is still important because some companies will check your Equifax Small Business report to determine creditworthiness. The net-30 vendors that report to Equifax Small Business are Crown Office Supplies, Shirtsy, Summa Office Supplies and Wise Business Plans.

The prequalification requirements for opening a net-30 account

Before opening a net-30 account with any of the mentioned vendors, the business needs to qualify for it. The most common requirements are that the business has a business bank account, is a legal entity and has some business credit history. The business also needs to have trade lines with credit reporting agencies, they need an established credit history and be able to pass a personal credit check and they need to have other accounts where you buy now and pay later.

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