Your company’s business credit determines whether it can be trusted by the way it manages its finances. It’s important in many aspects of small business financing, including your ability to qualify for needed loans and financing.
But what exactly is business credit? How does it apply to you, and is it worth improving? Here’s our advice:
What Is Business Credit?
Business credit is based on the financial standing of your company, that is, credit that has been extended to your company, such as a small business loan or business credit card.
The employer identification number (EIN), or business tax ID number, is tied to your business credit, rather than your SSN. You can apply for an EIN online if you don’t have one already. An EIN allows the government to recognize your business.
Note that a single-member LLC or a sole proprietorship, which does not have employees, does not require an EIN. As a result, your business’s credit is tied to your social security number, and therefore to your personal credit. Business credit, however, is usually separate from personal credit.
Why Is Your Score Important?
Having a good credit score indicates how financially risky your company is and helps lenders, suppliers, and other vendors assess whether to give you financial credit. They are often taken into account by lenders and suppliers before they work with your small business.
According to Cardhub in 2015, it takes the average business 12-18 months to improve its score. However, the higher the score, the better chances your business has of gaining needed capital through loans.
While banks tend to have particular requirements for small business loans, there are other small business financing options available.
CAB Capital Group Is Your Solution For Financing
Small businesses with capital needs that can’t be met by banks or traditional lenders can turn to Asset-based Lending (ABL). An ABL loan is straightforward: you use your own assets (e.g. – investments, inventory, property, machinery, real estate, etc.) as security for receiving a clearly defined loan. Amounts lent generally depend on the value of your assets used as deposits.
CAB Capital helps small businesses get asset-based lending, as it’s easier than traditional bank loans. CAB Capital also offers these options for small businesses:
- Cash Flow Financing
- Equipment Financing
- Account Receivable Financing
- Debt Restructuring
Speaking with the experts at CAB Capital can help guide you towards the lending solutions that work best for your business. Schedule a call today.