Build Your Business Credit
Why Building Your Business's Credit Profile Is Important
Small business owners know how difficult it can be to stay on top of financial obligations. Payrolls must be met. Suppliers must be paid. Rent and other overhead must be taken care of - all within a reasonable period of time. When your company's available working capital is limited, you may need access to business credit in order to meet your expanding business needs. The flexibility to obtain financial resources when most needed can help your company to reduce business risk.
Just as your personal credit record is reviewed by lenders to determine how risky they consider you and, ultimately, what interest rate and credit amount they will extend to you, your business credit is also scrutinized by lenders and other companies that may wish to do business with you. Many small business owners may not realize just how easy it is for other businesses to review your business credit, including your payment history and whether your business has recorded legal judgments against it. Given this relatively easy visibility to your track record (available through major credit bureaus such as Dun & Bradstreet (D&B) and Experian), as well as the beneficial leverage provided by access to credit to secure needed capital, maintaining a good credit rating is just smart business!
The Use of Credit Scoring For Small Business Is Growing
Some Key Findings:
- According to a recent study commissioned by the U.S. Small Business Administration (SBA), the use of credit scoring for small business is a fairly recent phenomenon, especially when compared with consumer lending*.
- The SBA study revealed that, for the surveyed lending institutions, if any form of credit scoring was used when evaluating a small business loan application, 44 percent of the creditors based their decision primarily on an evaluation of the personal credit profile of the business owner*. This is sometimes referred to as a Personal Guarantee.
The Four C's of Credit:
According to D&B, there are four key considerations lenders use for extending business credit*. These attributes are often available in the business credit report:
If you have not already done so, getting listed in D&B's database with a DUNS number may be your best first step. This will allow you to establish your business credit record with a major business credit reporting agency, and ensure it is updated with accurate information.
- Character (business size, number years in business, number of employees, location, etc.)
- Capacity (company's ability to repay it's financial obligations)
- Capital (as indicated from financial statements)
- Conditions (market conditions and business climate)
How Dell Can Help You Grow Your Business Credit
While business credit is becoming more widespread in lending decisions, the SBA study found that a relationship with creditors is an important factor in business lending. Forming a direct relationship with Dell for your technology needs, and financing products and services directly with Dell Financial Services, can help you grow your business's credit rating. Lenders and other businesses will look favorably on your good payment history with Dell or other vendors, especially when that payment history demonstrates a balance that has been successfully paid out over a period of time.
Financing is easy with Dell Financial Services. Just fill out our online credit application and within seconds a credit decision will be made*. If a credit amount is granted, you are ready to make your first credit purchase. Remember, it is common for lenders to request a Personal Guarantee, so if you are a sole proprietor or don't yet have a longstanding business history, a Personal Guarantee may be requested.