There is no business without capital, and to acquire it, financing is paramount. Regardless of the sector in which a company is developed, it must have financial resources to improve products or services, administrative and operational processes, and develop marketing strategies in line with current needs.
Ideally, all individuals and businesses should have a savings fund to consolidate new projects or improve existing ones. According to information from CNBC, on average, Americans aspire to save only 5,710 dollars by 2022. Given this reality, getting a small business loan, a commercial credit card, or even the support of a credit union are excellent possibilities to consolidate a company.
It is a priority for everyone to work on their credit reputation from the beginning of adulthood. The personal history will be the letter of recommendation to access good financing for a company. Take into consideration that using a personal loan for your business is an appropriate strategy for new companies. Still, in the case of companies with more experience, it is best to turn to financial products such as small business loans, with which you will be able to grow your company's credit history.
How can you get a loan to help improve your credit score?
Obtaining financing is a task that requires focus and perseverance. Most traditional financial institutions have many requirements, making it impossible for small businesses to access funding. The most common conditions are operating for at least two years, having sales exceeding 100 thousand dollars per year, and having a score higher than 650 points.
When a company is in its start-up phase, it is practically impossible to meet this requirement. For this reason, financial products granted by online lenders have emerged, offering small business loans with better conditions, in particular without a mandatory credit score. This allows companies to start building their credit reputation to turn financing into an ally for the growth and success of entrepreneurship.
How can you maintain a good score over time?
Pay on time
Although it may seem obvious, it is necessary to emphasize that the best financing you can obtain is the one you can pay. Complying on time with the agreed payments is your best guarantee to access larger amounts of credit in the future.
Domicile your payment of services to a credit card
Another resource that you can use to your advantage is a business credit card and only pay for fixed services such as internet, rent, gas, electricity, water. This way, you will pay the same and get benefits.
Put your cash in your bank account
If your business receives many cash payments, put that money in your bank account. This way, you will have documentation to prove solid income when you apply for other financings.
Keep your credit utilization rate low
In the case of a credit card or line of credit, try not to use the entire authorized amount. A good recommendation is to keep the credit utilization rate below 10%.
Control your personal credit, separate from your business credit
Getting personal loans to use for your business will not work if you want to build a good credit reputation for your company. These financial products exist to take advantage of these resources and specialized features.
What are the benefits of having a good credit score?
A company with a good credit score is a reliable company. It is undeniable proof of healthy finances, responsibility, and commitment when contracting a debt. Take into consideration that the best ally of business growth is financing because it allows you to obtain capital, which otherwise would take years to get it. Other great benefits of having an excellent credit score are:
- Better interest rates on credit cards or small business loans
- Higher financing amounts
- Easier approval to lease commercial establishments
Obtaining small business loans is an excellent alternative to consolidate growth projects and, at the same time, generate a good credit history and credit score for your company. Having a good relationship with financing is a step forward in consolidating a profitable, successful, and scalable company. Access funding and achieve all your professional goals.