To be successful in business, you need credit. But in a bad economy, you may not be sure how to get business credit. Even when markets are slow, credit is being extended, and there’s no reason you can’t get your fair share. Here are some ideas on how to get business credit even when the economic climate is less than ideal.
How to Get Business Credit: Have a Good Business Plan
If you’re just starting your business, it is important to have a great business plan. Lending money is a business of its own, and lenders want to lend to entities that they think will offer them a money making opportunity. When times are bad, lenders may be more selective with who they offer money to. If you don’t have an extensive business history to fall back on, you need a terrific business plan that is clear and sensible; one that shows the potential lender that you have a legitimate plan to show a profit with the capital they provide.
How to Get Business Credit: Have Good Personal Credit
Like the many other Catch-22s in the world of business, you have to have good credit to get good credit. In other words, lenders need to see your history of credit in the past before they will lend you money now. If you haven’t borrowed any money before, you have a problem, because creditors have no way of knowing how good you are at repayment. So how do you get business credit without a business credit history? You may be able to use your personal credit history to have some business credit extended to you. Once you have even one business loan that you are paying off regularly, you are on your way.
But what if you’ve already had a business for awhile and you need a little something extra
to get you through a rough patch? That rough patch may not be your fault, but nevertheless, lenders are going to have you under more serious scrutiny, because they themselves are being more careful about where their money goes. The answer is to make sure that your business credit score and business credit report are as strong as they can be. The Paydex score is the main credit score for business that lenders use to assess risk. If your score is between 80 and 100, you have a good chance of getting business credit, and the higher it is, the better your chances are.
To improve your business credit score, you’ll need to start by finding out what it is. You can order your Paydex score and business credit report from Dun & Bradstreet at DnB.com. If your score needs to be raised, the best thing you can do is pay your bills on time or sooner. The earlier, the better. Also, take a look to make sure all the information in your report is correct. If it’s not, inform the credit reporting bureau, as this may be what is standing in the way of your getting the credit you need.