Credit is a necessary metric in all of our lives. For businesses, credit ratings can mean the difference between getting approved for financing and having to fund operations out of pocket. However, no business starts out with strong credit ratings, and existing businesses can experience setbacks that lower credit scores. Fortunately, there are ways to build, maintain, and manage credit for long-term success.
Step 1: Examine your credit report
Business credit reports reveal lots of details that many entrepreneurs might take for granted. A full business credit report shows outstanding balances owed, payments that have been moved to collections, and a lot of other factors. The advantage of looking over your business credit report is that you will be able to see any discrepancies that can be disputed and removed, as well as liabilities and obligations that need to be paid off. Knowing these details can give you a head start on improving your business credit ratings.
Step 3: Building business credit
New and established businesses need ways to build credit ratings. For new businesses, building strong credit can be as simple as working with suppliers to make purchases on credit and paying off the balance as soon as possible. For established businesses, the process could involve eliminating red marks on the credit report, consolidating debt from loans, and disputing any inaccuracies.
Step 4: Maintaining good business credit
For businesses, maintaining strong credit can be challenging. Loans are sometimes necessary and not all purchases can be made with cash. A key piece of advice is not to make purchases or investments that cannot be paid off easily and quickly. Keep up with tax liabilities and other financial obligations. By keeping fiscal responsibilities at the forefront, businesses can maintain excellent credit ratings.
Step 5: Financing with imperfect business credit
Low, damaged, or otherwise imperfect credit should not prevent businesses from getting the financing they need. There are a number of options available, such as accounts receivable financing, merchant advances, and others that do not depend on business credit ratings. Both new and established businesses can access unsecured lines of credit, which provide a good source of working capital without requiring collateral. Additionally, using these financing options allow businesses to preserve – and in some cases grow – their credit scores.
At Nanaki Capital, we provide a wide range of financing alternatives to businesses with less-than-perfect credit. Contact our team today to start exploring your options.