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Developing a business credit line can be a lengthy process. Because businesses are legal entities that exist independently of the owners, they require a lengthy creation process, and follow a different set of rules than personal credit lines.

In order to create a business credit line, you must first register your business as a corporation or LLC. You must then register the business with the IRS and get a Federal Employer Identification Number (EIN). An EIN is the business equivalent of a social security number, and it is what you will use to identify your business when you do your taxes. You must then get a bank account and a telephone line in the name of your business, fill out all the necessary state and federal forms and pay all the applicable fees. Once this is complete, the business can now be registered with Dun & Bradstreet, Experian, Equifax, or Business Credit USA so that your business can begin working within the credit system. With these steps complete, the business’s credit file is now separate from your personal credit file. Now you can start some trade lines and begin building business credit.

Your first business credit line will be the most challenging. It requires getting a loan without having established business credit, and without factoring into account your personal credit. Of the 500 existing business credit cards, only about 60 are willing to grant credit lines to new businesses. The process will typically take three to four months. However, once it is complete, the business will now be eligible for all kinds of business credit lines, including loans, revolving lines of credit, and credit cards.

Another credit line that many people do not think of is a merchant cash advance. Merchant cash advances are flexible loans that are based on credit card sales. Depending on the number of credit card sales your business is putting forth, you may be eligible for a cash advance from the merchants that you are doing business with. Cash advances are not based on credit, so even with bad credit, you can still find useful sources of credit if needs be.

This Business article was written by Mark Karavan on 11/11/2009