In a recent small business credit survey, the Fed Small Business Organization found that the approval rate on loans and credit declined in 2020. That means that firms were less successful in getting approved for a partial or full loan approval than the previous year. According to their findings, the number of applicants approved dropped from 81% to only 70%. According to the survey, online lenders are a popular choice with businesses that have lower credit scores, but the most common source of credit for small businesses continues to be from banks.
Just like consumers, every business needs to have a good credit score. Ensuring a strong credit profile makes it easier for a business to get financing without being asked to submit a personal guarantee. Whether a business is a sole proprietorship, an SME with a handful of employees, or a huge corporation, a good credit score is achieved by having vendors, suppliers, and lenders regularly report to a business credit bureau.
Net-30 Vendors and Business Credit
These are the most common business credit scores: Dun & Bradstreet, Experian Business, Equifax Small Business, and FICO Small Business Scoring Service. Net-30 vendors like Uline and Quill extend the payment of bills for purchased products to 30 days, allowing small businesses to buy now and pay later. Of course, if a business pays the amount in full earlier than the 30-day maximum, the vendor offers a discount.
These vendors report payments to the commercial credit reporting agencies, allowing a business to build a credit score. Each of these credit agencies uses a formula to work out the score based on payment history and credit lines. The higher the score, the more a business qualifies for financing.
Essential Steps for Opening a Net-30 Account
There are certain requirements that every business must have to qualify for a vendor account. It should preferably be a legal entity like an LLC or corporation, and if it is a sole proprietorship, it must be registered with the Secretary of State.
The business needs a business bank account and some business credit history proving that it pays bills on time.
Uline vs Quill
Dun & Bradstreet is the most reported business credit bureau, followed by Experian Business. Every business should establish net-30 starter accounts with companies that report to at least one of them.
In the confusion of finding the right net-30 starter accounts, TRUiC or The Really Useful Information Company is one of the companies making it easier for businesses to sift through the most important ones. Two of the vendors they recommend are Uline and Quill since both carry products required by even the smallest business. These two vendors report to major credit bureaus, helping build business credit and winning them favorable reviews.
Uline is a vendor that supplies a huge variety of products suitable for almost every type of business. Included in their range are kitchen supplies, food service packaging, shipping boxes, office furniture, and office supplies.
Their requirements for setting up a net-30 business account are business name, telephone number, and billing and shipping address.
Because of Uline’s excellent customer service, supplying them with this information can be done by phone. They have no automated recording system for customers to deal with and calls are answered immediately. No social security number is required and personal credit scores aren’t checked.
Most importantly, Uline has no minimum order amount, and they report to Dun & Bradstreet on the first of every month. They also report to other credit bureaus.
Quill is another vendor that is proving extremely popular with businesses wanting Dun & Bradstreet or Experian business credit points. Their range of products is also varied and includes cleaning agents, office supplies, tools, breakroom supplies, and safety supplies.
It can take a new business a couple of months before qualifying for credit terms with Quill. Once approved, they only start reporting the business account after three or four months.
Establishing an account with Quill is done online with a minimum prepaid order of $45. In the first month, a business must place a minimum of two $45 orders. Thereafter, they recommend at least one order of $100 per week. A business will likely be approved for reporting to Dun & Bradstreet in the third month if a good payment history is maintained.
At the End
Net-30 vendors form an essential part of building a good business credit history. Together with loans, business credit cards, and the information from other lenders, any business can ensure a line of approved business credit in tough times or for its expansion.