Author and experienced entrepreneur, C. Naomi Covington writes about the importance of an excellent business credit score and how to maintain it in her latest book, It’sSimply Business Credit: For Aspiring Entrepreneurs, Government Contractors, and Franchise Owners. Covington provides useful information for big and small businesses, assisting them with increasing their value and profits. She defines credit scores and business credit score as the basics. Due to years of experience in this field, Covington has learned the ins and outs of the business. She aims to help other businesses flourish and attain maximum cash flow.
Many business owners, especially small businesses, are unaware of their business credit scores and the benefits of it. According to Fora Financial, here are some benefits of a well-maintained business credit score, some of which are also mentioned in Covington’s book:
· It Will Be Easier to Qualify for a Loan
One of the biggest advantages of having excellent business credit is the ease in which you can qualify for a small business loan. Lenders are hesitant to lend money to businesses with poor credit history, for fear that they won’t be able to make their payments on time, or at all. As a business with an exemplary credit score, you’ll likely be able to get a loan quickly and painlessly!
· You’ll Receive Better Loan Terms
To expand on the last point, once you qualify for a loan, lenders will consider more favorable loan terms for businesses that have proven their creditworthiness. For example, you could leverage your great credit score to negotiate much lower interest rates and larger credit limits. Better terms can greatly benefit your business. For instance, lower interest rates will save your business thousands of dollars in interest payments!
· It Protects Your Personal Finances
With business credit, you can separate your personal and business financial obligations. Your company debts will be reported on your company’s credit reports, saving your personal credit rating from being impacted by any financial woes your business may face, and vice versa.
Of course, it’s still important to review your personal credit report too. When you apply for a loan, lenders may want to review your personal credit score in addition to your business’s credit report.
· You’ll Get More Favorable Terms from Suppliers
Once you’ve established great business credit, not only will this help you when you seek loans from financial lenders, but it also bodes well for the credit terms provided by suppliers.
When it’s time to purchase additional equipment and inventory, consider purchasing on credit. If your suppliers can trust that your business is financially stable and capable of repaying debts promptly, they’ll be more comfortable in forgoing prepayment and allowing you to purchase on credit.
· Get Access to Cash for Growth and Expansion
Even if your business can meet its current financial needs without credit, what happens when you decide to take your business to the next level? For instance, having the ability to take out a loan for a business expansion project will allow you to grow your business larger than initially imagined. Whether the expansion involves new facilities, equipment, or inventory, a loan can help you get started.
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