Everything You Need to Know About a DUNS Number – and Why You Should Care
Almost every business, at some time, will need a line of credit – and this is the main reason for needing a DUNS number.
If you own a small business, you may have paid a lawyer for articles of incorporation and to secure a federal tax id number so that you could start a company. However, now that you are in business, you may realize that the startup capital you have in the bank may not be enough, as your cash flow fluctuates.
In order to get a line of credit though, you are hearing from different people that you will also need a DUNS number. So, is a DUNS number the same as a federal tax id number? If not, what is a DUNS number used for?
Let’s look at what a DUNS number is first. Then, why it is important to have one, how it works, and finally, how to apply for one.
If you own a small business, you may have paid a lawyer for articles of incorporation and to secure a federal tax id number so that you could start a company. However, now that you are in business, you may realize that the startup capital you have in the bank may not be enough, as your cash flow fluctuates.
In order to get a line of credit though, you are hearing from different people that you will also need a DUNS number. So, is a DUNS number the same as a federal tax id number? If not, what is a DUNS number used for?
Let’s look at what a DUNS number is first. Then, why it is important to have one, how it works, and finally, how to apply for one.
What Is a DUNS Number?
A DUNS number is a unique nine-digit ID number that is also known as a D&B number and is short for Data Universal Numbering System. This number, which is like having a social security number for your business, is issued by Dun & Bradstreet to any business that completes their informational profile.
This profile is put into a database with 225 million other companies as part of a credit reporting service for businesses. This database works something like Equifax or TransUnion does for your individual credit report. It’s a free service, although you can pay a small fee to get your number faster.
What Is the Purpose of a DUNS Number?
The purpose of a DUNS number is to establish creditworthiness and credit history of your business. This system was established back in 1963 and standardizes business information so that banks and other creditors understand what they are looking at when your business applies for credit or a loan.
This is very similar to what a bank will look at when they go to TransUnion to see if they should issue you a credit card, mortgage, or insurance.
Why Do I Need a Dun & Bradstreet number?
If you want to get a line of credit from a bank for your business, even if it is doing well, it is very hard to do it on your own. This is because a loan officer is not going to sort through your receivables, payables, or tax returns to see if your business is worthy of credit.
They will, however, give you a personal loan based on your credit score or a loan based on the equity in your house. However, it is never a good idea to take your personal money and use it to keep your business running. As well, the personal loan you qualify for is not usually enough to pay the bills a business will incur.
Plus, you and your family may wind up bankrupt if the business fails.
Applying for a personal credit card and using it for your business is also a bad idea – as you may run up bills that you cannot pay. Then your personal credit may be ruined.
Also a supplier may only work with you on a cash basis if your business is not creditworthy as proven by a recognized credit reporting agency like Dun & Bradstreet. So the best way to establish a positive credit history for your business that can be verified is to have and use a DUNS number.
What Is a DUNS Number Used For?
A Duns number is used to generate a credit report for any business that has completed the DUNS informational profile and then starts using the number to do business.
A D&B Number can lead to credit!
Doing business by using your DUNS number is the first step to start generating a credit history that can be verified by someone who wants to do business with you – including government agencies and other businesses who require it.
So registering with Dun & Bradstreet and getting a DUNS number assigned doesn’t really do anything for you until you start using it with other businesses that are also registered with a DUNS number and that can report payment history to Dun and Bradstreet.
In other words, if you purchase inventory from a vendor who has a DUNS number, they can report your credit limit, your payments, and years of doing business back to Dun & Bradstreet.
This is how you establish the credit history of your business and its creditworthiness. These positive reports will also allow your company to get credit cards and loans from banks without risking your personal credit.
How Do I Find my DUNS Number Online?
To find out if your business already has a DUNS number or to see if a company with your same name already has a DUNS number go to https://www.dnb.com/duns-number/lookup.html.
If you don’t find any listing under your name, you can go apply for one yourself.
How Do I Get a DUNS Number?
The process is as easy as going online to fill out the form and doesn’t take very long. Nevertheless, it is always good to enlist the professional help of someone who knows the process, as this will be information that will be used to build your business’s credit report.
You will also need all of the information required – like your business name as it appears on your articles of incorporation, the physical address of your business, type of business structure, etc. – before you begin filling out the form.
How Long Does It Take to Get a DUNS Number?
You can get a DUNS number very quickly – usually in less a week – if you are will to pay a nominal fee to expedite the process.
If not, it only takes about ten or fifteen minutes to apply online, assuming you have all the information required. Then, it takes about 30 days to get your number.
But as we talked about earlier, the number is just the start. Now you will have to find other businesses who also have DUNS numbers and can report your payments and credit limits back to Dun & Bradstreet in order to generate a credit history you can use to keep expanding your business. You can see a list of net 30 vendors that do this here.
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