Business Credit: What it is and Why is it Important?
Posted by markoliver268 on July 3rd, 2020
Building business credit can be an essential part of transforming a company into an independent professional. Even when someone is bootstrapping his/her way in the initial years of the independent business, or acquire funds from investors to, a time will come during their business tenure when accumulating a positive business credit rating will turn out to be a rewarding experience. Credible business service providers like Creditsolutionexperts tell that a respectable business credit score can help you easily acquire more financing options, along with increasing the company’s value as well as protecting your personal credit.
Much similar to the way that you have a personal credit score, your business also comes with a credit score. Business credit can be considered to be a track record of a business’s financial aspect that are used by various associated companies, investors, or financial groups. The score can help determine whether or not a business can be trusted when it comes to lending money or to do business with. There are numerous calculation methods adopted by agencies to get the score, however, in most cases is in the range of 0 to 100. The higher your score, better the chance of a company to get associated with your company. Having a score of 80 or above that is a good rule of thumb.
The Importance of Business Credit
Powerful business credit can surely help to grow your business/company. Many of the investors and banks depend on your business creditworthiness when the time comes to setting down loan terms. According to a report by the Small Business Administration (SBA), delayed or inadequate financing is the one of the most common reasons for the failure of a good running business. Your business credit score is not confidential, which means it is visible to everyone. This is necessary to receive better interest rates, negotiation leverage and loan terms on payment periods with the suppliers.
If you are a small business owner, you need to separate personal credit and business credit as they are highly important. Visualize your business credit to be a wall separating your business decisions and all your personal credit history. Instead of being linked to your name and SSN, how business credits work is that they get linked to your business entity and distinctive Tax ID number. This division can eliminate all the potential funding obstacles that might bring obstacle to your business from growing.
Author: The author is a blogger and the article is about business credit.
About the Authormarkoliver268
Joined: December 31st, 2019
Articles Posted: 10
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