As the recession has progressed, small business credit has been tougher to secure. And once the banks and Wall Street had their melt down, credit became nearly impossible for many small businesses.
Richard Flynn, Senior Vice President & General Manager, American Express OPEN, the small business division of American Express says “Given the current economy, it’s more critical than ever for small business owners to be strategic about applying for new credit and vigilant about managing their existing credit.” Here are some of Richard’s suggestions.
Before you apply for credit:
- Clean up financials. Review your company profile and credit report regularly and immediately address any issues, mistakes or irregularities in order to maintain your credit score.
- Register your business. Register your business with commercial bureaus like Dun and Bradstreet and the Small Business Financial Exchange to make it easier for card issuers to confirm you are an established business.
- Don’t apply for too much credit. Too many credit requests can lower your credit score and negatively impact your ability to access credit.
Once you secure credit:
- Practice good debt management. Borrow funds only for essential business purposes. “Good debt,” such as purchasing new equipment, moving to a better location or hiring key staff, helps a business grow. “Bad debt” such as buying a new computer when your current computer is working well, adds to a business’s monthly financial commitments but does little to up the revenue stream.
- Pay all bills on time. Late payment on any bill may have a negative effect on your credit score. Remember, your personal credit and business credit are linked and both should be managed carefully.
- Effectively manage cash flow. Your ability to pay bills depends on the cash that flows in and out of your business. Stay on top of accounts receivable and consider using a charge card to control business spending and expenses.
Believe it or not, you can still get credit for your small business. It’s just a little tougher these days.
Do you have a suggestion to offer other small business owners? Please leave a comment.
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