Access to capital to small businesses is the lifeblood of any successful business. Our country has seen first hand what happens when small business owners and entrepreneurs do not have this access to capital readily available. Small business owners cannot hire employees, start awarded projects, create new markets, or keep their businesses moving forward.
Now that were coming out of what many called a recession, there are going to be new boundaries as far as what consists of a successful small business. The last ten years the banking sector forced the small business community to become lazy in their bookkeeping and operations. Business loans and lines of credit were being handed out without even showing a single piece of paper to the bank. Today however, the rules are different. Banks and lending institutions are going to be looking full circle at your business to make sure that you are in fact a low risk small business borrower.Banks and lending institutions are going to be looking at your entire business before approving you for a business loan or line of credit
Looking full circle in your business means that you need to be prepared and organized. One of the most important aspects of being approved for a business loan or line of credit today is having good business credit scores with all three business credit reporting agencies. The three main credit reporting agencies are Dun & Bradstreet, Experian, and Equifax. Lexus Nexus is another business credit reporting agency that is coming to the service pretty quickly. Each credit reporting agency reports data a bit differently, or aggregates their data from different sources. One agency might have more information on your bank account standings where a different agency might have more information on trade lines. This is why it is important to grow and monitor your business credit with all three agencies.
With new technology available to creditors today, a bank or lending institution can view all three of your business credit scores by pulling one business credit report. They call this the tri-merge report. Again, another reason why having a good business credit score is a good idea.
Establishing a good business credit asset will help you:
- Separate your business credit from your personal credit in turn protecting your personal assets.
- Allows for your business to take advantage of all business opportunities like government contracting.
- Expresses to potential future investors and buyers that you have access to capital in mind when it comes to an operational standpoint.
- Will allow you to be approved for a business loan without a personal guarantee. Wells Fargo is one of the nations largest small business lender and they warn, “The longer you delay establishing business credit, the longer you delay taking advantage of business financing and lines of credit with a personal guarantee.”