I will assume that this is a new home based business. Do understand that lending institutions look at a home based business a little more carefully than usual. So you want to make your case (file) very strong.

Think about this, if you have a home based consulting business and a bank lends you money. How easy would it be for you to just pack up and leave – defaulting on the loan. So it stands to reason that you should choose a business that is viewed as low risk by lending institutions. This brings me to the subject of SIC codes. SIC stands for Standard Industrial Classification. Basically every type of business can be classified by these codes so different businesses reflect a different SIC code.

The main point is to choose a business that has a low risk SIC code. By the way, just this tip 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 believe that this will harm your efforts in the long run. The nature of the business – its corresponding SIC is a big part of developing a solid foundation for business credit development. Your aim should be to develop your business file so you can get CASH lines of credit without any personal guarantees. No Personal guarantees means that you should not have to use your personal credit for the purpose of getting business credit. Many will tell you that this is an impossibility in this economy. Well it is rare but not impossible. It is only rare because most people approach business credit like they approach there personal credit. Plus remember that just because you are asked for your SS# does not automatically mean that your credit is pulled. For security reasons an SS# is required, especially if the amount being lend is large.

Having said that if you have a “high risk” SIC code business like real estate investing but you still have enough cash flow coming in from that business (and/or enough assets in the business’ name) than it will matter 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 which types of businesses your state is giving grants/aid to. Follow the stimulus money. If the government is willing to help a certain type of business than you know that business has a “good” SIC code. Health care, medical supplies are good examples (many more good examples). Visit the site for a lot more tips.

Make no mistake about it a good SIC code can make all the difference if you want great business credit.

Always remember a good website designer does not automatically become a business credit expert/guru.