How to Get the Financing You Need for Your Business
Running a new business takes time, but it also takes a lot of money. Whether you are ramping up your enterprise or pouring your receivables into the future growth of your company, you will likely need outside financing to make it happen.
As a business owner, you believe in your vision and the power of your idea, but how can you convince skeptical lenders to get onboard? Without a proven track record of success, it can be difficult to get the loans, lines of credit and other financing you need, and you may need to get creative to obtain the cash you need. Here are seven effective ways to make your business more creditworthy.
- Bulk up your personal credit score. When you apply for a business credit card or other financing, you will likely be asked to provide your Social Security number, and your personal credit score will play a role in the approval process. Boosting your credit score now can help you obtain business financing later.
- Keep your business and personal expenses and accounts separate. Even if you are running a small home-based business, it is important to keep your accounts That means maintaining a separate business or savings account and using that account to pay any business-related expenses.
- Pay your vendors in a timely manner. The best way to appear creditworthy is to pay your bills on time, so establish a process and make sure vendors and other providers are paid as quickly as possible.
- Build up a solid client base. Repeat customers are the bread and butter of any business, and the more customer loyalty you can show the more creditworthy your business will appear. Work hard to exceed the expectations of every customer, ask for referrals and good reviews and do your best to solidify and enhance the image of your brand.
- Check your business credit profile. It is important to check your personal credit report, and keeping tabs on the perceived creditworthiness of your business is just as critical. Take the time to review credit records for your business and take immediate steps to correct any errors or omissions you find.
- Keep your receivables current. Your customers and their willingness to pay is a major factor in determining the creditworthiness of your business. A demonstrated ability to collect payment on a timely basis can help you obtain the financing you need.
- Use a business credit card for all business-related expenses. Applying for a business credit card is a great way to establish credit in the business name, making it easier to obtain future financing. Just be sure to pay off those credit card bills promptly to maintain great credit and avoid finance charges.
The Bottom Line
Running a business can be difficult, especially when you cannot get the financing you need to purchase supplies, pay your employees and serve your clients. If you want to keep your business in business, it is important to prove the creditworthiness of your enterprise. The seven tips listed above can help you do just that, so you can focus on running your business instead of convincing lenders to take a chance on you.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.