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There are many people around the world who have great business ideas for potentially life changing innovations across several sectors. Unfortunately, there is a portion of these individuals who feel they are unable to do anything with their inspirational ideas owing to their own level of poor personal credit.

Thankfully, there are a number of steps that can be taken by people with a poor credit record in order to build their business credit as a separate entity. Taking these steps may mean that an individual can again aspire to achieve their business dreams, and gain the funding they need whether it be via a bank loan, venture capital funding, or another avenue.

Dealing With Personal Credit

If you have poor personal credit then the first thing you should do is look to organise this. You do not need to worry about paying off all of your debts, however at the very least you should have a plan in order to pay them off, have spoken to all of your creditors and have placed notes on your individual credit file.

Once you have taken steps to get your own personal credit in order, you can begin looking at building business credit.

Setting Up Your Business

Do not fall for the misguided beliefs that will tell you to set your name up under an assumed name or anything like that – it may sound like a good idea however it amounts to fraud and will likely see you end up with a considerable stretch in prison!

When you set up your business, immediately ensure that you register with the relevant authorities, including for taxation, and find yourself a good accountant if you do not already have one. Establishing these early will make it a lot likelier for you to be able to acquire business credit. Certainly, if you apply for a bank loan, for example, they will ask for tax details for your business as a means of checking your financial set up.

Think Small First

If you are trying to get your business up and running and need credit, look at setting up mobile phones, for example, on your business account and ensuring they are paid for on time each month. Although you may only be paying a few hundred pounds a month for company phones, you will be building up your trust rating in the eyes of lenders.

Also look to take advantage of business credit from wholesalers. If you are buying bulk products you can usually get credit for these, and when you pay for them on time you can respectfully ask the seller to write to credit reference agencies informing that you are a reliable payee.

Be smart with your business finances and learn from your personal mistakes, you will soon realise that bad personal credit does not have to be a barrier to business success.

Dealmarket offers an extensive global private equity platform and has included venture capital funding.