Do you feel like the Energizer Bunny that keeps “going and going” moving toward what’s next? Without a doubt, forward energy is what helped you build an excellent personal credit history. Now that your business is a reality or about to be, there’s one caveat about credit that most business owners don’t know about. Personal and business credit histories are equally important but they aren’t the same. Unfortunately, entrepreneurs find out, after the fact, when lenders turn them down for small business loans.
A solid business credit score opens doors that otherwise stay closed. When lenders see you as a lower credit risk, you’ll qualify for better rates and can acquire funding for projects you had put on the back burner. Other people notice your business credit score besides lenders. Suppliers and investors know you’re on solid footing when your business credit score is in the 76-100 range indicating you’re a low-risk borrower. When personal and business scores are in the higher range, they won’t hesitate to do business with you.
To help you understand a business credit score’s importance, the hypothetical example below is a scenario played out every day in real life.
Mateo Didn’t Know the Importance of Building Credit.
This Latino business owner operates a thriving pastry shop. Mateo loves watching his customers enjoy eating milhojas filled with sweet cream, crispy churros, and quesitos topped with a sugary glaze. In addition to pastries, he serves gourmet coffee, hot chocolate, and other beverages. Patrons are literally bumping into each other because there’s not enough space for them to eat and mingle. He wants to expand his business by renting space adjacent to his store. Therefore, he applies for a business loan but is rejected. The reason: He has a poor business credit score even though his personal score is good. To work through his discouragement, the lender sits down with Mateo and discusses steps he can take to improve his business score in very little time. For example, Mateo hadn’t applied for a business bank account or a business credit card. The lender stresses that by establishing credit in the business name and keeping current on payments, the business world will take him more seriously. Likewise, a business credit score will help him secure needed capital. After completing a few practical tasks, within a few months Mateo will be ready to apply for another business loan. The outcome is likely to be positive.
You Can Build Your Business Credit Score Too.
Do you identify with the business owner’s plight in the above example because you didn’t know a personal credit history wasn’t enough for lenders to affirm creditworthiness? It’s discouraging to encounter financial rejection when your business is on the cusp of expansion and a business loan is your next step. How can you build business credit quickly and with ease? What tips and techniques can you use that other profitable small businesses already know about? This article, how to build business credit quickly, details three actionable steps you can take, right now. The suggestions aren’t hard to implement either.
Once you establish a good business credit score, you can apply for business lines of credit, have finances to purchase a company vehicle or lease cutting-edge technology equipment. Plus, there may come a day when someone wants to buy your business because you’ve built an excellent business credit score that speaks volumes to lenders and others.
In three minutes, you can read the above-mentioned article to learn how to build business credit and change your business’s financial trajectory.