Fundamentals of Business Credit
Every entrepreneur has plans of tapping business credit to take the business further
. They might plan to use the funds for growth or diversification, one the core business has stabilized. However, it is no easy task for a small business to obtain funds from a bank. This is because most start ups fail with in five years. This makes banks consider a small business a risky bet. To avoid a situation where banks refuse to part with the money, the savvy business person has to plan ahead.Get Registered
While small business credit is tough to obtain, by taking the right steps at the right time, the business will have banks that are willing to lend it money when the need arises. For this the entrepreneur has to improve the credit rating of the company. To be considered for a business credit rating, the company has to be incorporated. Besides, it has to be registered with the necessary authorities. All licenses and permits should be applied for an obtained. Apart from this the business has to have its own telephone number listed in the Yellow Pages.
After taking these steps the entrepreneur should approach the bank for a loan when the company has a better cash flow. The bank will then be more willing to make a small loan. By repaying this on time, the business will build a positive relationship with the bank, enabling the bank to extend a bigger loan. This is one way of obtaining business credit.
Get Noticed
The business can also approach business credit bureaus to rate its credit profile. Apart from the three main business rating agencies there are many bureaus that operate in niche segments. By contacting these bureaus and requesting them to rate your business, you will soon be able to improve the credit profile of your business.
To obtain business credit line in a hurry, business can also pledge their assets with the lender. With the assets such as land and machinery as collateral, the business will be able to obtain low interest loans. By servicing these properly, the business will soon qualify for loans based on its business plans. Care has to be taken to ensure that the business plan is viable and clear. The entrepreneur also has to be thoroughly familiar with the plan and be ready to explain it the bank officials.
Use Credit Cards
Business credit profile can also be built up by using business credit cards. If used properly - that is, if the full amount due is paid on time - these are a great way of improving the credit history of the company. By making small purchases on a variety of credit cards, the business will soon have a great credit history.
Credit building services advice businesses in ways of improving their credit scores at a faster than normal speed. They do this because they know exactly which spending and payment habits the rating agencies track. They help the business to keep a high profile in these areas. The increased visibility leads to quicker ratings. This, in turn, makes it easier to obtain business credit.
Fundamentals of Business Credit
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