In today’s economy, it has become a daunting task for new and small businesses to access the capital they need to launch and grow their companies. Being forced to make personal guarantees and to use personal credit to fund a business adds a great deal of risk and pressure on the business owner. While there are several alternative funding methods out there, none are more lucrative than those offered by the traditional lending institutions; banks and government. So why not just walk in to your nearest bank, extend a hand, and walk out with cash? These traditional sources have stringent application processes that make it more difficult to qualify for loans. But, this doesn’t mean you need to head down the block to your nearest loan shark for a business loan. By following these 3 simple steps, you can help get your business into the correct position to secure funding:
- Establish your Business Credit File – Establishing Business Credit doesn’t happen spontaneously. Companies first must obtain their D&B® DUNS number; a unique 9-digit number which is the industry standard for keeping track of the world's businesses. Think of a Social Security Number for your business. Once a business receives its DUNS Number, a D&B credit file, in conjunction with the DUNS Number, begins to compile scores and ratings from collecting financial data and payment history. This credit file is what the banks and other major lending institutions use to assess and qualify your business for loans. With a D&B Credit File, business owners now won’t need to solely rely on their personal credit and assets as collateral for loans.
- Secure a good Rating with D&B – So I have my D&B Credit File. I’m ready for funding! Right? Not quite! The majority of businesses already have a DUNS Number and credit file that they received when they registered for a NAICS or SIC Code. The file is just incomplete or inaccurate. In this case, there are two ways to ensure your credit file is accurate and strong:
- Make sure your vendors are reporting trade history to Dun & Bradstreet
- Make sure you have good trade history reported
Of the over 500,000 companies that provide credit to businesses, only about 6,000 of them report their purchase transactions with D&B and the other business credit bureaus. So chances are, the vendors you have the best financial relationships with may not be reporting them. By accessing your business credit file and reviewing and/or submitting trade references for approval, you can be confident that your good payment history will be compiled and accurately reflected through your D&B scores and ratings.
- Continuously Monitor Your Credit – Business Credit ratings fluctuate frequently. Make a late payment to a vendor, or change your term length, and it can impact your scores. And, on occasion, your scores can be impacted by errors in your vendors’ reporting. That is why it’s imperative to stay on top of your business credit file with year-round monitoring and alerts.
For more information about building business credit, and to take your first step towards a stronger credit file, visit the D&B Credibility Corp. CreditBuilder page today.