If you have a sub-par credit history, securing a small business loan can be quite difficult. Most banks and credit unions are not lending money to business owners who do not have solid credit scores. One thing to remember is that you are not alone. Small business owners throughout the country have poor credit scores for one reason or another. Fortunately, there are things you can do.
This Balboa Capital blog post has some real-world tips on how to boost your business credit score. These tips can guide you in the right direction and prepare you for success when it comes time to apply for small business funding.
Realize the benefits.
Having a good credit score does more than help you get funding for your small business. It also helps you save money because you will most likely get a lower interest rate. You can then pass the interest savings onto your customers in the form of lower prices, which is one way to give your company an advantage over the competition.
Next, a good credit score opens the door to new opportunities to grow your business without any personal liability. It enables you to acquire the funding your business needs while protecting your personal assets and working capital. Of course, this also reduces the stress that comes with using up your credit line.
It is never too late.
To develop good business credit and keep it in good standing, you need to pay your bills on time, keep your debt low, manage your personal credit in a smart manner, and maintain a good cash balance in your corporate bank account. Every company has its own unique situation, so it may take several months or longer to achieve good business credit.
However, always remember that it is never too late to improve your credit. The success of your company depends on your ability to borrow money, so do not wait to rebuild your credit. Here are some easy ways to start.
Review your credit profile.
Do you know what your credit profile looks like? If not, you should contact one of the leading credit bureaus and get a complete credit check. It will give you a full snapshot of your credit profile and let you know if you are in good standing. Checking your credit profile is the only way to see if it has any inaccuracies that might prevent you from securing a loan.
Register your small business.
Make sure that your company is registered properly with the major business reporting agencies, such as Dun & Bradstreet, the company that reports Paydex scores. Lenders often refer to data made available through these agencies in order to determine a company’s creditworthiness.
If you are incorporated, stay up-to-date with the necessary filings with your Secretary of State. This will keep your company listed with the State as a corporation that is active, and in good standing.
Review UCC and SIC information.
Carefully review any UCC filings on leases or liens that have been placed on your business. Similar to a personal credit profile, inaccurate information filed on your business can hinder your ability to get funding, or lessen the amount extended to your business. Next, check to see that your SIC code is correct, as the numerical code can have an effect on how a lender views your specific industry.
Your SIC code is a numerical code that is assigned to your business by the United States government, categorizing the industry you are in. It is essential to position your business in the best light possible by keeping an eye on critical information lenders use in their evaluation.