From the Author

Business credit is an important asset that you can be taking advantage of as a business owner. In the following article, we take a look at the importance of business credit.

Introduction
In 2021, business credit is more relevant than ever. Often business owners think that impeccable personal credit is the best way to take out a business loan. The truth is that vendors, credit card companies, and lenders prefer to evaluate your overall business position.
For starters, it is crucial that your business name matches up with licenses, corporation papers, and bank statements. If you want to establish separate business credit from personal credit, you will have to form an LLC or corporation.

The Secret of Creditworthiness

Your business’ creditworthiness comes down to a few factors such as tax returns, financial statements such as income statements, balance sheets, profit and loss statements, and in some cases even personal credit.

What is your business credit if your company is new? Credit companies will often establish the creditworthiness from your personal credit history in the case that your business is newer than 2 years old.

Importance of Building Business Credit

In times where business is more competitive than ever, it is more crucial for companies to build business credit. For starters, it distinguishes a difference between you and your company. As a business owner, operating as a separate entity gives great benefits and protections. With the separation of business, creditors won’t eye your personal assets. It means when you take out a line of credit in your business’ name. Doing this will protect your personal assets. Furthermore, excellent business credit provides a safety net for companies.

We know your business doesn’t always need additional money. As a business owner, however, you have to expect the unexpected. For instance, if sales start to drop due to uncontrollable disruptions, you will have to seek an extended line of credit to cover the business operations cost and pay the salaries of employees.

New Opportunities with Business Credit

With solid business credit, you can also expect more financial opportunities. In fact, businesses can open new windows of opportunities through excellent business credit. Your business credit score is an easy way for lenders to affirm your business’ credit history and provide funding to you. So long as you qualify, your company can access capital for an extended period at low-interest rates. When lenders know that your company is in a good financial position to pay back the borrowed sum, they are more willing to lower their rates.

Good business credit is the key to driving business growth and increasing overall company value in the market. Think of business credit as an asset that has the power to improve the value of the financial position of your company.

Final Thoughts

Whether you run an established or a new business, business credit is important. You’d be surprised how many businesses overlook their business credit as a factor for business health each year.
As a business, just like you focus on productivity, you need to prioritize building credit in the same manner. Follow in the footsteps of experienced business owners who understand building great credit leads to success. After all, business credit serves as a financial resource that improves the foundation of your copmany.

REFERENCES:

⦁ https://www.facebook.com/businessandcreditsolutions/
⦁ https://www.mbopartners.com/blog/how-grow-small-business/what-is-business-credit-and-why-is-it-important-to-independent-professionals/
⦁ https://blog.mycorporation.com/2013/04/understanding-the-importance-of-business-credit/
⦁ https://www.forafinancial.com/blog/small-business/benefits-good-business-credit-score/
⦁ http://frankenmuthcu.frc.finresourcecenter.com/Financial_Ratios_67584.html?article_id=2711
⦁ https://library.mtb.com/the-importance-of-building-business-credit-2/
⦁ https://www.businessnewsdaily.com/15847-how-to-build-business-credit.html

 

Blue Street Capital

Here at Blue Street Capital, we aim to provide you with the most up-to-date information on the financing industry so that you can become an educated buyer. Should you have any questions about this article, or any other information related to the equipment financing industry, please feel free to reach out to us using the contact form below. You may also give us a call at 714-316-1180.