TreyMarkel

Business credit is one of those long lost business operational assets that has seemed to drift away from the small business community the last 10 years.  With the sub-prime market the way it was, small business owners didn’t need to have clean books, proper financials or even a business plan to be approved for a small business loan or line of credit.  All you really needed was a pulse and you were approved for a small business loan.  Today, the rules are a bit different and their are new underwriting guideline for small business success.

With the access to capital so tight today because of loose lending standards, banks and lending institutions are looking under every rock and down every crack when performing due diligence on your business.  Lenders have learned and have learned the hard way.  They want to make sure that if they are in fact going to lend out funds that they are going to be paid back in a timely fashion.  Any sign of risk whatsoever, the bank or lending institution you are working with is going to raise a red flag.  If your business is seeking a government guaranteed SBA loan, because the SBA loan requirements are much more strict then traditional lenders, this fact holds even more truth.

Because so many business owners are looking for business financing today, it is important to present yourself to a bank or lending institution only when you are fully prepared, or your application is most likely going in the trash.  If you think about it, how are loan officers paid?  They are paid on commission of closed loans.  If in fact these loan officers are paid on commission only,and every small business is seeking business financing today,  they are only going to look at loan applications that are complete, and have the best chances of being approved.  What this should mean to your business is that without a proper business credit asset, your business loan application is incomplete.

With these new underwriting guidelines for small business success, your business credit ratings can be the deal maker or deal breaker when seeking a business loan. Building business credit will help your business do the following:

• Separate your personal credit score from your business credit score in turn protecting your personal assets from business creditors.
• Allows for your business to take advantage all future business opportunities such as government contracting and certain partnership and affiliate relationships.
• Expresses to future potential buyers and investors that you have a strong business credit asset and that you know what you are doing from an operation stand point.
• Shows banks and lending institutions that your business is in good standing giving your business the opportunity to be approved for a business loan without a personal guarantee.

Wells Fargo is one of the largest small business lenders in the country and they warn, “The longer to delay in building your companies business credit, the longer you delay being able to take advantage of business loans and lines of credit.”  When the bank looks full circle at your business, make sure you have what you need.  A DUN’s number, an EIN number, your incorporation documents, vendor lines, business credit cards, a good solid business credit portfolio.

What has your experience been with lenders looking at your business credit score?  Have they mentioned it at all?  What does the bank tell you regarding your business credit score?