I will assume this is a new home business. Understand that lenders view a home business with a little more care than usual. So you want your case (file) to be very strong.
Think about this, if you run a home-based consulting business and a bank lends you money. How easy it would be for you to pack up and go, defaulting on the loan. So it makes sense for you to choose a business that lenders consider low risk. This brings me to the topic of SIC codes. SIC stands for Standard Industrial Classification. Basically all types of companies can be classified using these codes, so different companies reflect a different SIC code.
The main point is to choose a company that has a low risk SIC code. By the way, this advice alone is worth its “weight in gold”. Many business credit consulting gurus will tell you to classify your business as “General Management” or “Business Management,” a generic name. I really think this will hurt your efforts in the long run. The nature of the business, its corresponding SIC, is a large part of developing a solid foundation for business credit development. Your objective should be to develop your business file so that you can obtain CASH lines of credit without personal guarantees. No personal guarantees means that you shouldn’t have to use your personal credit for the purpose of obtaining business credit. Many will tell you that this is impossible in this economy. Well, it’s weird but not impossible. It’s weird because most people approach business credit the way they approach personal credit. Also, remember that just because you are asked for your social security number does not automatically mean your credit will be withdrawn. For security reasons, a social security number is required, especially if the loan amount is large.
That said, if you have a “high risk” SIC code business, such as real estate investing, but you still have enough cash flow from that business (and / or enough assets on behalf of the business), then you will import less since the business is so strong. For the rest of us, a good SIC code is a must.
So what is a low-risk SIC? Try to find out what types of businesses your state awards grants / aid to. Follow the stimulus money. If the government is willing to help a certain type of company, then it will know that the company has a “good” SIC code. Health care, medical supplies are good examples (many more good examples). Visit the site for many more tips.
Make no mistake about it, a good SIC code can make a difference if you want great business credit.
Always remember that a good website designer does not automatically become a business credit expert / guru.