Tag: Raise

Business Credit Profile: Best Way to Raise Credit Score?

Your business credit profile is the overall picture of the creditworthiness of your business. Lenders look at it to determine whether or not they want to lend to you. Your business credit score is likely the most important piece of this.  As such, it’s important to know the best way to raise credit score.  You have a personal credit profile alsol, and that is considered by most lenders as well. 

Total Business Credit Profile Management: The Sure-Fire Best Way to Raise Credit Score

In fact, many lenders look at your personal credit profile first. However, if you have a strong business credit profile, it can only help you. Your business credit score is a huge part of that, so you need to know the best way to raise credit score for business. 

Best Way to Raise Credit Score: What Is a Credit Profile? 

Of course, you cannot let the rest of your business credit profile go unattended. Before you can work to execute the best way to raise credit score, you have to understand and learn how to manage your total business credit profile.

Your business credit profile is everything the business credit reporting agencies have on your business. For example, your open trade accounts, payment history, how you stand up in relation to other businesses, and more. The top three business credit reporting agencies are Dun & Bradstreent, Experian, and Equifax. FICO also offers a business credit report known as the FICO SBSS.

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Keep your business protected with our professional business credit monitoring.

When a potential lender looks at your business credit profit, it can pull from any of these.  The report will contain a business credit score, but it will contain a lot more as well. 

Best Ways to Raise Credit Score: What is a Business Credit Score

So, what exactly is a business credit score? It is similar to your personal credit score, but it is for your business. Unlike your personal credit score, it is connected to your EIN, not your social security number. It is a numeric rating assigned to your business that helps a lender determine how likely your business is to repay debt. The number is calculated based on a number of things.  The most influential factor is your payment history.

The more positive payment history you have, the better. That means two things. First, the longer you have been paying accounts on time the better your credit score will be. Also, the more accounts you are paying on time the better your score will be. 

Best Way to Raise Credit Score? 

So, what is the best way to raise your business credit score? The simple answer is to increase positive payment history and reduce negative payment history.  Let’s break it down further.

Add More Trade Accounts

It sounds simple, but it’s not really.  Unlike personal credit, not all business credit accounts report to the business credit reporting agencies. With personal credit, your payments on accounts are automatically reported to personal credit.

You have to be intentional about finding business credit accounts that will report.  This can take some time and digging.  A business credit expert can come in really handy here. Most vendors do not make it easy for the average Joe to find out if they report or not. A business credit expert will likely have relationships with vendors that allow them to know or find out this information more easily.

Aside from this, you can talk to vendors  you already have a relationship with. You can ask them to report your payments if they already extend you credit or net terms on invoices.  If they do not, you can ask if they will, and if they will then report. They don’t have to , but if they do, this can be the best way to raise credit score quickly.

You can also talk to providers that you pay monthly.  Everyone pays utilities, phone, and internet bills.  Ask those providers to report your payments to the business credit reporting agencies. They do not have to, but they might.  If they do, this is another great way to improve your business credit score.

Handle Accounts Responsibly

Handling your business responsibly in every way affects your entire business credit profile. However, handling your trade accounts responsibly by making consistent, on-time payments is the number one best way to increase credit score. After all, the business credit score tells lenders how likely you are to pay, and nothing predicts future behavior like current habits.

Monitor and Correct Your Business Credit Report

Sometimes the best way to raise your credit score is as simple as correcting mistakes.  However, without credit monitoring, you cannot know what those mistakes are, or if there are any at all. Personal credit monitoring is easy. You can access a full, complete report annually for free. Not only that, there are a plethora of free apps that offer a peek at your credit score and summary report throughout the year.
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Keep your business protected with our professional business credit monitoring.

That is not the case with your business credit report however. You have to pay to get a glimpse of it at all.  Each of the big three offer monitoring options, for a fee. Credit Suite can help you monitor your business credit for a fraction of the price. 

Business Credit Profile vs. Personal Credit Profile

To better understand the best way to raise credit score for your business, it can help to understand some of the differences between business credit profiles and personal profiles.  There are many, but these specifically seem to cause a lot of misunderstanding and confusion among borrowers when they are denied funding. 

Late Payments

Both business and personal credit reports are affected greatly by late payments. Yet, business credit scores are affected faster. Late payments are not reported to personal credit reports typically until they are 30 days past due. Late payments on business credit accounts are reported if only one day late.

Inquiries

Hard credit checks on your personal credit will lower your credit score. However, business credit reports are different. A credit check on your business credit profile does not affect your business credit score.

Data Reported

In addition to late payments being reported much more quickly, accounts on your business credit profile are listed by industry.  In contrast, personal credit lists the name of the company that issues the credit.

Also, personal credit reports show the exact amounts of accounts, while business credit reports show rounded amounts. How long data stays on a personal credit report varies, but typically it’s the life of the file. Information stays on business credit reports an average of 3 years.
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Keep your business protected with our professional business credit monitoring.

Also, with personal credit accounts,  almost every account reports to the credit reporting agencies. In contrast, only about 7% of business credit accounts report to business credit reporting agencies. This is why you have to be intentional to get accounts reporting to business credit, and that is only one of many reasons working with a business credit expert is the way to go. 

One last thing to note about business credit versus personal credit is this. While your business credit profile is totally separate from your personal credit profile and does not affect in any way, the reverse is not true.  Your personal credit information can affect your business credit profile, and in some cases, even your business credit score. 

What’s the Best Way to Raise Credit Score for Your Business? 

There isn’t really one best way to raise credit score. In reality, the best way depends on what is pulling your score down to begin with. Is it a lack of sufficient history? Then you just have to give it time. Are there not enough accounts? You need to add more. Are you not paying on time? Start paying on time!  Are there mistakes on your business credit report? Fix them. However, one thing is for sure. Whatever the problem is, paying your accounts consistently on-time will only raise your score. You cannot go wrong there.

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Raise Your Recession Business Banking Rates and Get Funding Even in a Bad Economy

Do You Need to Know Just How Banks Determine Your Recession Business Banking Rates?

Banks are in the business of judging your company’s creditworthiness. This has a direct relationship to several important issues. Ignore these at your peril! It pays to take the time to try to understand how your recession business banking rates will work.

Recession Era Funding

The number of American financial institutions and also thrifts has been decreasing gradually for a quarter of a century. This is from consolidation in the market along with deregulation in the 1990s, decreasing obstacles to interstate banking. See: https://www.fundera.com/blog/happened-americas-small-businesses-financial-crisis-six-years-start-crisis-look-back-10-charts

Assets concentrated in ever‐larger banks is troublesome for local business proprietors. Big financial institutions are a lot less likely to make small loans. Economic recessions mean financial institutions become more careful with financing. For this reason, you need to understand your business bank ratings. It’s the only way you will be able to improve them.

Your Recession Business Banking Rates – It All Has to do With Your Bank Credit Score

But what’s that all about?

Did you know there are many ways you can ravage your bank credit score? It is, regrettably, quite easy to run a power saw through your bank rating. Your recession business banking rates can easily end up taking a hit.

But before going any further, do you know the difference between bank credit ratings and small business credit?

Business credit is the full and complete amount of cash that your small business can receive from all manner of lenders. That means credit unions, credit card companies, and also renting businesses. And it also means vendors, under what’s called trade credit or vendor credit or trade lines.

A bank credit score, on the other hand, is a measure of the full amount of borrowing ability which a company can get from the banking system only.

Bank Credit Scores Explained

A company can get more business credit fast . That is, as long as it has at least one financial institution reference. Plus it must have an average day to day account balance of at the very least $10,000 for the most recent three months. This setup will generate a bank credit rating of a Low-5. So this means it is an Adjusted Debt Balance of from $5,000 to $30,000.

A lower score, like a High-4, or balance of $7,000 to $9,999 will not result in an automatic turn down of the small business’s loan application. But it will slow down the approval process.

What is a Bank Rating?

A bank rating is a measure of the average minimum balance as kept in a business bank account over a 3 month long period. Hence a $10,000 balance| will rate as a Low-5, a $5,000 balance will rate as a Mid-4, and a $999 balance will rate as a High-3, etc.

A company’s chief goal ought to always be to maintain a minimum Low-5 bank rating (or, an average $10,000 balance) for a minimum of 3 months. This is because, without at the very least a Low-5 score, most financial institutions will assume a business cannot pay back a loan or a business line of credit.

Yet there is one point to keep in mind – you will never see this number. The financial institution will keep this number in its back pocket.

The Bank Rating Ranges

The numbers work out to the following ranges:

To get a High-5 rating, your business will need to have an account balance of $70,000 to $99,999. For a Mid-5 score, your business has to have an account balance of $40,000 to $69,999. And for a Low-5 score, your company should hold onto an account balance of $10,000 to $39,000. So your small business needs this level bank rating or better to get a bank loan.

For a High-4 score, your small business needs to have an account balance of $7,000 to $9,999. And for a Mid-4 rating, your company must have an account balance of $4,000 to $6,999. So for a Low-4 score, your company will need to have an account balance of $1,000 to $3,999.

Your Recession Business Banking Rates – It Can Be Scary Easy to Damage Your Bank Rating

And now, without further ado, here are 7 ways you can leave your bank score in tatters. These methods can all too easily hurt your recession business banking rates.

7th Way to Ruin Your Bank Credit

Don’t maintain a minimum balance for at least three months. Since every bank score cycle has a basis in the last 3 months, a seesawing balance will harm your bank score.

6th Way to Ruin Your Bank Credit Rating

Don’t bother to assure that your company bank accounts are on report the exact same way as all your small business records are. And do not assume they are on report with the exact same physical address (no post office box) and contact number. Sow confusion here by editing one and not another, or not dealing with an error if there is one.

Recession Business Banking Rates Credit Suite

Have a look at our expert research on bank ratings, the obscure reason why you will – or won’t – get a bank loan for your company.

Fifth Way to Destroy Your Bank Credit

To support # 6, don’t make sure that each and every credit agency and trade credit vendor likewise lists the business name and address the precise same way. This is every keeper of financial records, earnings and sales taxes. It includes web addresses and email addresses, directory assistance, etc.

No loan provider is going to think of the myriad ways that a company may be listed, when they check out the business’s creditworthiness. So if they cannot find what they need fast, they will refute an application. Or it won’t be on the report to a company credit reporting bureau such as Experian, Equifax or Dun & Bradstreet.

For that reason, if they are not able to locate what they need quickly, they will simply reject the application. So make certain your documents are a mess!

4th Way to Damage Your Bank Credit Rating

Never handle your bank account responsibly. This means that your small business must not avoid writing non-sufficient funds (NSF) checks at all costs. Such is due to the fact that those decimate bank ratings. Non-sufficient funds checks are something which no company can afford to let happen.

Balancing checkbooks and accounts is so boring anyway. You’ve got adequate cash without even making sure, right?

Third Way to Ruin Your Bank Credit Rating

To add to # 4, do not add overdraft protection to your bank account ASAP, to avoid NSFs. Why bother thinking in advance or preparing for the future? Everything is going to be terrific permanently, right?

Writing checks insufficient funds (NSFs) is a sure way to wreck your bank score.

2nd Way to Damage Your Bank Credit Rating

Do not let your business show a positive cash flow. The cash coming in and leaving your business’s bank account should reflect a positive free cash flow.

A positive free cash flow is the quantity of revenue left over after a firm has paid all its expenses. According to Investopedia, it “represents the cash a company can generate after required investment to maintain or expand its asset base. It is a measurement of a company’s financial performance and health.”

When an account shows a positive cash flow it indicates your small business is generating more revenue than you use to run the firm. That means the bank will feel your small business can cover its costs.

So if you really intend to wreck your bank score, get whatever’s expensive for your company so your costs overtake your profits. Doesn’t every factory merit luxurious carpets in the loading dock?

Recession Business Banking Rates Credit Suite

Have a look at our expert research on bank ratings, the obscure reason why you will – or won’t – get a bank loan for your company.

First Way to Damage Your Bank Credit Rating

Financial institutions have quite the motivation to lend to a small business with consistent deposits. And an entrepreneur must also make regular deposits to keep a positive bank rating. The business owner has to make a lot of regular deposits, greater than the withdrawals they are making, to have and maintain a great bank rating. If they can do that, then they will have a great bank credit score.

Consistency is the hobgoblin of little minds, right? So be a free spirit!

Your Recession Business Banking Rates – It is Way too Easy to Destroy Your Company’s Bank Score – Even Though You Will Never See It

You, the entrepreneur must never make consistent deposits. And these deposits ought to never be more than the withdrawals you are making, to ruin your bank credit.

If you can do these things, then your company will have a horrible bank credit score. And then a bad bank credit score means your firm is much less likely to get small business loans. This is how you can truly muck up your recession business banking rates.

Your Recession Business Banking Rates – Just Kidding: Of Course We Do Not Actually Want You to Destroy Your Company’s Bank Credit Rating!

But your recession business banking rates are a thing of value. You should want to protect and nurture it. So, where do you go from here?

The First Great Way to Rescue Your Bank Credit Rating

Probably the easiest way to achieve and maintain an excellent bank credit rating is to deposit at least $10,000 into your company bank account. And keep it there for as much as six months. While you will still have to make regular deposits, this one simple step will assist in 3 ways. One, you will have kept an excellent minimum balance for at the very least 3 months. Two, you will probably not overdraw with such a great balance. And three, you will be at the magic minimum for a Low-5 bank credit rating. Thus you will be dealing with our # 4 and # 7, above.

And you may even have the ability to get around our # 3. But we still highly recommend overdraft protection.

Recession Business Banking Rates Credit Suite

Have a look at our expert research on bank ratings, the obscure reason why you will – or won’t – get a bank loan for your company.

The 2nd Excellent Way to Rescue Your Bank Credit Rating

A 2nd thing you can do is make certain your small business account details are consistent across the board, everywhere. While it may take some work order to make certain every little thing is right, you will be dealing with our # 5 as well as # 6, above.

The Third Great Way to Rescue Your Bank Credit Score

A 3rd thing you can do is make consistent deposits, as well as make sure they are greater than the quantities you are withdrawing each month. This will take care of our # 1 and also # 2.

Your Recession Business Banking Rates –Takeaways

Your bank score is not to be trifled with. The financial institutions maintain a mystery about them. Still, failing to keep your bank credit rating high will make it a whole lot harder to do well in business. In this way, you can defend and improve your recession business banking rates.

The post Raise Your Recession Business Banking Rates and Get Funding Even in a Bad Economy appeared first on Credit Suite.

5 Ways to Raise Money for Business You May Not Think About

Even with the world going crazy due to the COVID-19 pandemic and the resulting economic downslide, it is possible to raise money for business.  The key is to think outside the box and get creative.

Raise Money for Business: Beyond Traditional Loans and Investors

Most often people turn to traditional loans, including SBA loans, and standard investors when they need to raise money for business.  In times like these however, those options may not work so well. That means it will be necessary to seek out ways to fund your business you may not have thought of already.

Raise Money for Business: Angel Investors

Angel investors  are usually only in for a one-time deal. Many choose to spread their risk out over a lot of people and businesses to be certain they get a safe return on their investment.

Angels tend to be a lot more informal than most types of funding. They can be people you know, or people you connect with through networking or other means.

Angels are not covered by the Securities Exchange Commission’s (SEC) standards for accredited investors. Still, a lot of them are accredited investors anyway.

To become an accredited investor, a person has to have a minimal net worth of $1 million and an annual income of $200,000.

There are a number of angels who aren’t millionaires. They could be friends or colleagues with home equity, or local professionals who are looking to invest.

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What frustrates you the most about funding your business during a recession? Check out how our guide can help.

How Do You Find Angel Investors?

The best way to find these kinds of investors is to ask. You can also try an angel investors website or network. Try Gust, which used to be called Angel Soft. They keep a database of investors, companies, and programs. Startups can also search for business plan competitions and more.

Another option is to look at the biggest angel investor groups. Be aware, however, that these meetings are really only going to happen if you can get an introduction.

According to Entrepreneur, in order from smallest to largest the top 10 Angel Investor groups are:

  1. New York Angels Inc.
  2. Alliance of Angels (Seattle)
  3. Pasadena Angels
  4. Hyde Park Angel Network (Chicago)
  5. Band of Angels (Menlo Park, CA)
  6. North Coast Angel Fund (Cleveland)
  7. Golden Seeds LLC (NYC)
  8. Investors’ Circle (San Francisco)
  9. Tech Coast Angels (Los Angeles) and
  10. Ohio Tech Angel Funds (Columbus, OH)

Focus and requirements may vary from group to group.  For example, some concentrate on local startups only. Do your research so you don’t waste yours and the angels’ time if it isn’t a good fit.

Raise Money for Business: Crowdfunding

Crowdfunding sites allow you to pitch your business to thousands of micro investors. Anyone who wants a piece of the action can buy in.

Investors pledge amounts ranging from as low as $5 to as high as they want. They may give $5, $80, $150, or even over $500. As a general rule, they can give as much or as little as they want.

Though not always necessary, most business owners offer rewards for investment. Typically, this comes in the form of the product the business will be selling. Different levels of giving result in different rewards.

Raise Money for Business: Credit Cards

You have to be careful with this one.  Many would consider it the easy way out.  This is because even with credit that isn’t stellar, credit cards aren’t all that hard to get.  They also are not hard to get in trouble with. If you have established business credit, it’s best to use that to get credit cards to raise money for business.

If you do not have business credit, it’s time to fix that.  Regardless of the state of the economy, you need business credit to access funding for capital, growth, and expansion. Building business credit can happen even in a recession.

Raise Money for Business: Credit Line Hybrid

A credit line hybrid is revolving, unsecured financing.  It allows you to fund your business without putting up collateral, and you only pay back what you use.

What Does it Take to Qualify?

It is not as hard to qualify as you may think.  You do need good personal credit.  That is, your personal credit score should be at least 685.  In addition, you can’t have any liens, judgments, bankruptcies or late payments.  Also, in the past 6 months, you should have less than 5 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards.  It’s also preferred that you have established business credit as well as personal credit.

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What frustrates you the most about funding your business during a recession? Check out how our guide can help.

If you do not meet all of the requirements, all is not lost. You can take on a credit partner that meets each of these requirements.  Many business owners work with a friend or relative to fund their business.  If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding.

Why Is It Such a Great Option?

There are many benefits to using a credit line hybrid.  First, it is unsecured, meaning you do not have to have any collateral to put up.  Next, the funding is “no-doc.”  This means you do not have to provide any bank statements or financials.

Not only that, but typically approval is up to 5x that of the highest credit limit on the personal credit report. Additionally, often you can get interest rates as low as 0% for the first few months, allowing you to put that savings back into your business.

The process is pretty fast, especially with a qualified expert to walk you through it.  One other benefit is this.  With the approval for multiple credit cards, competition is created.  This makes it easier, and likely even if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months.

Build Business Credit with a Credit Line Hybrid

The key is the approval of multiple business credit cards at once.  If your business is set up properly, they will report your on-time payments to the business credit reporting agencies.  These include Dun & Bradstreet, Experian, and Equifax mostly, though there are others. Not all of them report to all of the CRAs, but some of them report to at least one.  Each account reporting consistent on-time payments helps you build strong business credit.

The Connection Between Business Credit and Fundability

Here is how it works.  The fundability of your business is like a huge puzzle.  All the pieces fit together, and you have to have all the pieces to see the complete picture.  Unlike a puzzle, some pieces are bigger than others, meaning if you are missing those pieces, the impact on your complete fundability picture is bigger. Business credit is the biggest piece of the fundability puzzle.

To begin building business credit, and thus fundability, you first have to set your business up to be a fundability entity apart from yourself.

How to Set Up Your Business to Build Business Credit and Be Fundable

There are a few things you have to do to be sure that your business debts are reported to the business credit reporting agencies and thus your business credit report, not your personal credit report.

Make Sure You Have Separate Contact Information

Your business has to have its own phone number, fax number, and address.  You can still run your business from your home or on your computer if that is what you want.  There is no need to even have a fax machine.

You can get a business phone number and fax number that will work over the internet instead of phone lines.  Also, the phone number will forward to any phone you want.  As a result, you can simply use your personal cell phone or landline.  Whenever someone calls your business number it will ring straight through.

Faxes can be sent to an online fax service, if anyone ever happens to actually fax you.  This part may seem outdated, but it does help your business appear legitimate to lenders.

You can use a virtual office for a business address. How do you get a virtual office?  What is that?  It’s not what you may think.  This is a business that offers a physical address for a fee, and sometimes they even offer mail service and live receptionist services.  In addition, there are some that offer meeting spaces for those times you may need to have an in person meeting.

You Need an EIN

Next, get an EIN for your business.  This is an identifying number that works for your business the same way your SSN works for you personally. By using an EIN for business transactions, you help ensure your SSN is not associated with your business.  That makes it more likely your account will report to your personal credit rather than your business credit. You can get an EIN for free from the IRS.

You Have to Incorporate

Incorporating your business as an LLC, S-corp, or corporation is non-negotiable.  First, it lends credence to your business as one that is legitimate. Also, it offers some protection from liability.

Which option you choose does not matter as much for fundability as it does for other things.  Your budget and need for liability protection play more into that decision.   The best thing to do is talk to your attorney or a tax professional.  You will lose the time in business that you already have.  When you incorporate, you become a new entity. That means, you basically have to start over.  You’ll also lose any positive payment history you may have accumulated.

This is why you have to incorporate as soon as possible.  Time in business is also important to building business credit and fundability.  The longer you have been in business the more fundable you appear to be. That starts on the date of incorporation, not the date you started doing business.

You Must Open a Separate Business Bank Account

You have to open a separate, dedicated business bank account.  There are a few reasons for this.  First, it will help you keep track of business finances.  It will also help you keep them separate from personal finances for tax purposes.

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What frustrates you the most about funding your business during a recession? Check out how our guide can help.

There’s more to it however.  There are several types of funding you cannot get without a business bank account.  Many lenders and credit cards want to see one with a minimum average balance.  In addition, you cannot get a merchant account without a business account at a bank. That means, you cannot take credit card payments.  Studies show consumers tend to spend more when they can pay by credit card.

Licenses

For a business to be legitimate it has to have all of the necessary licenses it needs to run.  If it doesn’t, red flags are going to fly up all over the place.  Do the research you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels.

No Matter What the Economy Looks Like, You Will Always Need to Raise Money for Business

As you can see, there are a few ways to raise money for business.  The need to do this is not something that comes along just with a recession.  With or without the COVID-19 pandemic and resulting economic crash, you would still need funding for your business at some point.  If your business is suffering due to the pandemic and needs for social distancing, be sure you take advantage of all that is available.  This includes the Paycheck Protection Plan, as well as relief options from the Federal and State governments.  Even some businesses and professional organizations are offering help.

The first options mentioned however, including the credit line hybrid, are always available.  Be sure you work now to get your fundability and business credit in order. It will serve you well not only in hard economic times, but when the dust settles as well.

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