Do you have bad credit? That should be a wake-up call. In many ways, bad credit is a life lesson: things don’t always go your way. And credit problems are certainly a fact of life for many small businesses. Bad credit will not help you get small business loans. But analyzing why you have financial problems will help you in the future.Periodic need to borrow money is a fact of life for small businesses. Credit problems make it tough to borrow when you need to. But bad credit does not mean no credit. You can get the money you need now to support your business. In fact, choosing the right small business loans can actually help improve your bad credit.
HOW DOES BAD CREDIT HURT YOUR BUSINESS? LET US COUNT THE WAYS . . .
Good credit brings distinct benefits to your business. When your business looks financially solid:
- You can conserve your cash flow. Instead of having to pay up front for supplies and inventory, you can negotiate generous 30- or 60-day terms from vendors.
- You can qualify for better business loan terms. You can borrow more, at lower interest rates. You can do more to expand your business with more money. And lower interest can save you big money over the life of the loan.
- Lenders may be less likely to require a personal guarantee for small business loans. Or demand your personal or business collateral.
- Everyone wants to do business with you. Many small business owners have no idea potential customers can check out their credit score. Not every customers wants to buy from an “iffy” company.
And, did you know that crummy credit devalues your business? Good credit is a real asset, if you ever want to sell.
However, thanks to your current bad credit, your business is missing out on all of these great benefits. It’s costing you more to operate. That’s not a workable long-term plan. And it gives your competitors a dangerous advantage. In short, bad credit is holding you back. I recommend you act now to improve your financial situation. The longer bad credit drags on, the worse things get. Your business could fail under the weight. And you’ll never get a good night’s sleep.
HOW DID YOU GET HERE?
Bad credit happens to small businesses for any number of reasons. Some are your fault as the business owner. Some causes are beyond your control. Usually the fundamental problem is erratic cash flow. Or poor cash flow management. Controlling your cash flow can be tricky, and too often small business owners aren’t adept at it. Plus, you’re so busy scrambling with today’s issues, it’s easy to neglect “esoteric” financial planning.
So whether you have reasons or excuses, your business has bad credit. When you can clearly see how your business got to this point, you can see how to go about improving the situation. That won’t happen overnight, but every step you take brings your business closer to financial stability. And greater profitability. In other words, bad credit can help you become a smarter business manager.
Bad credit business loans can help smooth your cash flow. That’s one of the most common reasons small business borrow. With proper cash flow management, you can plan for the expected. Things like regular operation expenses. And new expenses for upgrades or expansion. You can also be prepared for the unexpected. You won’t be thrown off pace by negative surprises. And you won’t miss out on surprise opportunities.
LEARN MORE ABOUT BUSINESS CREDIT
Everyone knows about personal FICO scores. But, sadly, a lot of small business owners don’t realize their business also has a credit score. A separate one. Maybe you relied on your personal credit to get your business up and running. Many entrepreneurs do that. But you can’t – and shouldn’t – support your business forever. It has to stand on its own. Establishing a strong, positive credit history ensures your business can get the best possible small business loans when it’s time to borrow.
Business credit is monitored and reported by agencies such as Experian and Dun & Bradstreet. They consider factors such as:
- How long you’ve been in business
- What industry you’re in
- Whether you pay bills on time
- How much debt your business has
- Unused credit available to your business (business credit cards and lines of credit)
Your business credit score is based on a scale of 1-100. Ideally, you want a score of 75 or higher.
Caron Beesley is a regular contributor to the SBA’s business resource pages. She says, “As a business owner, taking steps to separate your personal and business finances is a smart strategy. Obviously, this means implementing a strategy to build good credit in your company’s name.
Small business loans can be valuable assets. You can borrow strategically, and use the working capital to:
- Pull your business out of a temporary financial jam
- Catch up on your bills
- Proactively grow your business
You can also consolidate your business debts to ease repayment. All these benefits keep your business moving forward. And as you repay your bad credit business loans on time, your credit score will rise. That’s why Entrepreneur says, “The trick is to fund your business in ways that actually get your score back on track so when you’re ready to move your business to the next stage, your score will start opening doors rather than getting them slammed in your face.”
At United Capital Source, we never slam doors. Our job is to open more doors for you, right now. We specialize in business loans for bad credit because we understand what you’re up against. By matching you with the right small business loans, we can help you literally transform your business. You can rise above the frustration and limitations of bad credit. And soar to the heights you’ve always imagined.