Do You Know How to Check Your Business Credit?

There are two reasons business owners need to fully understand business credit and how to check the business credit of their business and other businesses as well. The first, and obvious, reason for knowing how to go about finding your own company’s credit rating is to be sure it is in good shape and will help you get the loans you need. The second reason your own business credit is important is that others will look at it as a testament to your responsibility and the stability of your company.

You need to know how to check business credit ratings to be sure other companies are financially stable and responsible too. The same reasons others check your company are important to you when considering doing business with another company or making major purchases from them.

Where to Check Your Business Credit

Any of the major business reporting agencies will give you a copy of your report. Unlike personal credit, it is not a law that a credit company must provide any free reports except in the case of turning down an application for credit. You will either have to pay for your reports, or belong to a credit management plan with them, or an outside credit company. The main credit reporting agencies for businesses are:

• Equifax Business

• Experian Business

• Dun & Bradstreet

Getting another Company’s Report

You will need the full name and address of the business you are interested in researching. Use one of the above agencies and fill out the request form on their website. If you are checking on a company’s credit history to do business with them, ask the owner for the companies EIN number or DUNS number for an easier search. 

If they are not willing to give it to you, it may be a good idea to look elsewhere. In the case of business credit ratings, it is public record and all business owners should be ready to have outside people checking into it. When you check the business credit of your own company or someone else’s business rating, a score of 70 or higher is a very good credit history.

The 2017 Guide to Getting Business Credit for Your EIN that's Not Linked to Your SSN

Start Up Business Loans - How Do I Get One?

It may be the case that to make your dream of owning a company come true, you will need start up business loans. These loans can be obtained from banks and other financial institutions and are intended to help you on your way to achieving your goals. It is essential that you work out how much you are likely to need before you approach any financial institution.

The amount that will need to be borrowed will vary from business to business. Some larger companies may require more funding than smaller businesses, which only require a "shoestring budget" to get started. It is essential that you identify the start up costs that you will have during the first period of your business being developed.

Ongoing expenses that may be found during this period include liability and property insurance, utility bills and staff wages. There may also be one-time expenses such as decoration costs, sign making costs, attorney fees or the fees involved with the process of incorporating your business.

The expenses that you have should be broken down into two categories, namely overheads and variable expenses. Variable expenses usually relate to the costs associated with the direct sale of a product or service. Overhead covers things such as rent, utilities and administrative costs. It is best to make a list with the headings of the two types of expenses and work out from there how much you are likely to need.

It may be possible to "cut corners" by incorporating your company with a company formation agent. These companies can form and register your company for you and provide all the documents you need within a short space of time. This may save money as the costs are generally quite reasonable and certainly cheaper than the fees of an attorney.

Company formation agent companies are easily found via the internet. They may also offer special packages and bonuses; for example, they may provide you with a ready-to-go business bank account. In which case you may have a better chance of getting the start up business loan from the bank that has the business account the agent has provided you with.

Once you have this information you are ready to ask for start up business loans. The bank will ask you for a detailed business plan in order to decide whether they would be willing to lend you the cash. Your plan should detail how the money that they will lend you will be allocated and used in your company. If you have any experience of the trade you are about to enter, make sure that you mention this in the plan. This information will increase the chances of the bank or financial institution agreeing to the loan, as the risk of failure is diminished slightly.

Many start up business loans will have a fixed or variable rate, much like a mortgage. The institutions will assess which loan will be right for you and will discuss the repayments that you will need to make each month. With the right planning, details and figures it can be a simple process to get yourself ready to request start up business loans.

Small Business Credit and Small Business Lending

Most people who start and operate a small business expect to work hard for long hours in order to get their business idea off the ground. What they don't expect is to have to shine their shoes and their personal financial resume in order to get small business credit from their local bank or financial institution. Yet that is the experience of many small business owners who for a variety of reasons need to have loans, lines of credit, or other small business credit in order to keep their business afloat.

The ability to obtain small business credit from a lending institution is directly related to the financial reliability of the small business owner or operator. One of the first things a bank will ask for is proof that the person requesting the small business credit has a good financial standing in the community.

If one has previous bankruptcies, bad debts, or bad loans in their personal financial past, then the bank is usually very reluctant to provide small business credit or financing. Even if they do agree to provide some funding they almost always charge a premium rate of interest and may even demand guarantors or co-signers to the debt arrangement. That's why it is important to check your credit rating before you head off to the bank for your small business line of credit. There are loan programs available that don't use your personal credit such as cash advance on merchant accounts and accounts receivable factoring.

There may be errors or omissions on your credit report that you can change or amend before the bank turns down your small business credit application. There may a possibility of contacting former creditors to see if an arrangement can be reached before you even ask your lending institution to look at your commercial credit needs. Even if you can't change the content of your credit file you can be at least prepared to provide an explanation to the bank as to why they occurred in the past and to give them assurances they will not happen in the future.

A small business credit application may allow you to apply for start up funding to get your business rolling. It may be a small business line of credit that you can use for short term emergencies or tight cash flow months. It may be a business loan that you can use to buy new equipment for your enterprise or to purchase property on which to build your corporate headquarters. Your bank or commercial lender can help you make the right choice of small business credit vehicle to meet your needs for today and tomorrow.

It is hard to break into the world of small business credit, mostly because the risk of small business failure is greatest during the first couple of years of operation. But once you establish yourself in business with a small business line of credit you can rest at little easier and devote your efforts to making your small business a great success.