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Business tradelines have become a key part of having a successful business. While technology has definitely made it than ever before to start a new business, this does not mean that building a business from scratch – or growing a business that’s already been established – is easy or effortless.
More than 33% of all small business owners in the United States report a lack of financing opportunities or a lack of cash flow is the biggest impediment to their success. Small businesses in particular are usually “bootstrapped” with financing for less than $13,000 (on average) in the US – but even that kind of business financing can be difficult to secure for many.
A big piece of the business financing puzzle that a lot of new entrepreneurs are not aware of is the importance and value of business tradelines.
It’s critical to not only understand what business tradelines are, how they work, and why they are so valuable for small to midsized businesses (and larger organizations as well) but also who can capitalize on business tradelines most as well.
Below we dig a little deeper into everything you need to know about business tradeline opportunities, how tradelines work, and how you can leverage this form of financing to accelerate the success of your business even when other financing options haven’t helped as much.
Let’s dig right in!
What is a Business Tradeline of Credit, Anyway?
Before you get into figuring out the more advanced parts of figuring out how do tradelines work (like buying business tradelines, creating seasoned business tradelines, and tapping into corporate tradelines, etc.) it’s important to understand what tradelines are to begin with.
Every single business as a credit history all its own, just like every individual. New businesses have little to no credit, more established businesses may have more in-depth credit histories, and pretty much any business that’s been around for two or three years will have at least a few tradelines open on their report.
You see, a business tradeline is basically financial industry speak for any open account (or closed account, for that matter) that pops up on your business credit history.
This can include (but definitely isn’t limited to):
… And anything else that might show up on the credit history for your business.
Each and every one of these tradelines will have quite a bit of data attached to it, including information regarding the vendors that these tradelines are offered from, the amount of credit that has been extended through these tradelines, payment activity and history, and a couple of other critical data points.
All of this information is relayed to vendors that your business is working with or may want to work with in the future and a traditional “tradeline” is established. The big difference between these kinds of accounts on your business credit history and the accounts you might have on your own personal credit history is that these tradelines are ALWAYS established as an agreement between a vendor and another business (your business).
Most of the time, these tradelines are going to allow you to purchase goods or services from a specific vendor on very specific credit terms. Your agreement will differ on a tradeline by tradeline basis, but in most circumstances you’ll have an opportunity to repay that total debt within 120 days of receiving the initial invoice from the vendor themselves.
After your payment has been made and recorded by the vendor a report is sent off to the credit bureaus. Stack a couple of these positive reports up on top of one another and all of a sudden you have seasoned business tradelines that open up new credit opportunities with other vendors.
Highlighting the Different Types of Business Tradelines
Now that we have taken care of the basics in regards to what is a tradeline of credit it’s important to dig a little bit deeper into how do tradelines work and what kinds of tradelines are available to businesses large and small.
Zero History Business Tradelines
It should come as no surprise to anyone here, but zero history business tradelines are the types of corporate tradelines made available to businesses that have no payment history with a vendor in the past.
This does not necessarily mean that a business has no repayment history with any vendor whatsoever, but instead just that they do not have any repayment history with this specific vendor that is offering them credit across this new tradeline.
For obvious reasons, a zero history tradeline isn’t going to move the needle for your business credit score (one way or another) all that much. These accounts have not accumulated any age whatsoever, have not accumulated any seasoning, and aren’t going to increase your score or decrease your score as far as your business credit is concerned.
The other thing that makes zero history business tradelines a bit different is the sheer amount of paperwork that has to be processed to get them up and running. You’ll have to almost always submit a brand-new, formal request with a vendor for a zero history tradeline to be established – a process that usually results in a (temporary) slight decrease to your business credit score because of the hard inquiry that it reports.
Seasoned Business Tradelines
Seasoned business tradelines, on the other hand, sit at the opposite end of the spectrum from zero history tradelines.
These are the kinds of individual vendor accounts businesses have with anywhere between 12 months and 24 months of perfect repayment history already recorded. These kinds of tradelines are a big net positive for your business credit score, helping to increase that score with each and every month of perfect repayment history that goes recorded with them on your credit history.
Best of all, once you have a couple of seasoned tradelines under your belt taking advantage of other financing opportunities (particularly with traditional lenders like banks and credit unions) becomes simple, straightforward, and almost effortless.
Traditional lenders are very attracted to businesses that have at least a couple of seasoned business tradelines already, as it is a good indicator of perfect repayment history, and ability to pay down financial obligations, and a sign of steady cash flow that makes them better prospects for risky business financing than those with zero history tradelines.
Best of all, you may start to receive individualized and specific financial offers and lending opportunities from tradeline services in the business financing world because of these seasoned histories.
This allows you to sort of pick and choose how you finance your business going forward, how you leverage cash and capital to grow, and lets you sift through a myriad of options to find the right one that suits your needs and your financial outlook rather than taking any lending lifeline from your way.
Highlighting the Big Benefits of Corporate Business Tradelines
When taken advantage of strategically, the benefits you’ll enjoy from business tradelines are off the charts.
For starters, you’ll be able to dramatically increase and improve your business credit score and history with a couple of quality, seasoned business tradelines under your belt.
Your business will start to have multiple financing offers to pick and choose from allowing you to leverage opportunities in a way that may not have been possible before, and as long as you follow the clearly outlined regulations for leveraging tradelines of the sky becomes the limit for financing.
Here are some of the other benefits you’ll enjoy with corporate tradelines.
Better Loan Approval Chances
As we alluded to earlier, with seasoned business tradelines attached to your business credit history you’ll find traditional lenders and nontraditional lenders alike more apt to provide you with business financing than you would have without these business assets.
This is why savvy entrepreneurs regularly make the decision to buy business tradelines (particularly seasoned tradelines) early on to sort of “seed” their credit history for their business right out of the gate.
Buying zero history tradelines won’t give you the bump you’re looking for right away that you would have seen with seasoned offers, but it can be a less expensive opportunity to create your own seasoned accounts that help you later down the line.
Lower Interest Rates
Financing organizations specifically targeting small to midsize businesses offer a variety of different opportunities to buy business tradelines, with competition heating up so much in the last 15 to 20 years that it’s possible to secure these financing offers at much lower interest rates than you’d find anywhere else.
On top of that, many of these financing organizations also provide ridiculously low traditional loan interest rates to customers of theirs that have purchased business tradelines, seasoned those tradelines, and have improved their business credits with the help of these services.
Lower interest rates allow you to take advantage of capital in a smarter and more strategic way, giving you every opportunity to leverage new opportunities and expand your business without fear of handicapping your cash flow or your business finances.
Lower Insurance Rates
Believe it or not, having quality corporate tradelines on your business credit history is also going to help you save quite a bit of money on the insurance for your business.
We have already mentioned a number of times that tradelines are going to be reported on your business credit report and make up a significant chunk of your business credit history. There are a number of entrepreneurs that are unaware the fact that their business credit score has a huge impact on how much they pay for business insurance as well as the types of insurance coverage options available.
With better credit scores (and seasoned credit tradelines) you’re going to see better insurance offers, better insurance coverage, and significantly lower insurance costs.
How to Make the Most of Business Tradelines
Building rock solid business credit should be a top-tier priority for every serious business owner and entrepreneur that wants to build and grow a successful operation.
It’s very difficult in today’s hyper competitive business environment to succeed without access to outside financing. Some organizations can bootstrap for a while or self fund through their profits, but if you’re really looking to scale, really looking to grow, and really looking to explode your business success the odds are good that you’ll need help from outside financing offers.
By choosing to buy business tradelines you shortcut this process significantly.
Sure, you can take the slow road to success by opening up a business credit card as early in your business history as possible and verifying that it will not only report to all three of the major credit bureaus but that it will also help your odds of getting new tradelines later down the line.
You could even establish accounts with traditional vendors and lenders that report to all three major credit bureaus as well, working with them over time to build and grow your own corporate tradelines and seasoning them over the span of 12 to 24 months with a perfect payment history.
But you can also choose to speed things up quite a bit by taking that shortcut we highlighted a little bit earlier, making the decision to buy business tradelines from reputable vendors to hit the ground running with tradelines that start building your business credit almost overnight.
Yes, you’re still going to have to make your payments on time to seasoned them yourself. But this is a lot faster approach to laying down that credit foundation for your business you’ll need to succeed later down the line.
Just be sure that you are always working with a vendor you can trust, a vendor that you have verified that offers quality tradelines, and you’ll have almost nothing to worry about.
Plenty of businesses are taking advantage of services to buy business tradelines right now to get a head start on things, something that all savvy and strategic entrepreneurs today should be doing to get a leg up on the global competition we all contend with right now.
