Building Business Credit: How to start funding with an EIN

A few years ago I had finally registered my business. Yay, me!

Yeah, well, a year later, I was stuck. I still had a ton of ideas but no funds. I mean, yes, I had a job. But that just barely kept me afloat. And my personal credit was not equipped to take on the kind of investments needed. But I had an EIN, so I went wild one night with million tabs opened comparing credit card offers and benefits. By the time the sun was coming out to play, I had narrowed it down to two and decided to apply.

I was breezing through the first application when I got to the box asking for my SS. I thought I had clicked a wrong button at some point, so I closed the page and started again. The result was the same.

Apparently, I had some things to learn about this whole EIN credit thing.

Later that day I got lost down the Google hole and figured out personal credit is a deciding factor when first applying for a business credit line.

That’s right. I had to apply using my business’s tax identification AND my personal social security number. Turns out lenders need a personal guarantee when you’re first starting out. *nervous laugh*

So how exactly did I start funding my business? Short story; I didn’t. Not right away at least.

I needed to plant roots. I started by opening a bank account with my legal business name. Then, I established a business phone line and registered my business location. Depending on your line of business, you may plant different roots. These things worked on my budget, but I did wait about nine months before attempting to apply for a credit card again.

Since the line of credit impacts my personal credit here are two things I wish I’d kept in mind before I got the card:

When dealing with vendors, be sure to confirm that they report payments to at least one of the three major credit bureaus.

Each application is a hard inquiry, too many could serve as a disservice when later applying for a loan.

Always make payments before time.  If you can afford to double up on payments, DO.

Plan before spending. Do thorough research to be sure borrowed funds yield profit.

Again, this is just a start to funding your business through your EIN. It was two years before a lender was inclined to take on my business on its own. It’s a sure and easy way to continue to build your business credit as you grow, borrow, and pay.

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