![]() Using objective measures will help you make early corrections when you see things heading in the wrong direction and track gradual improvements that build financial stability. Trust your financial data, not gut feelings or impressions, when you consider how things are going in your business. Clients who value what you do and consistently pay on time are another. Strong income balanced by well-controlled expenses-including credit and loan payments that are well within your means-is one sign of health. The health of your credit score will always be driven by your ability to pay your obligations on time, so it helps to think of these streams of money as one interconnected system. Sit down with your numbers (or your accountant/bookkeeper) regularly to keep your finger on the pulse of revenues, expenses and, if you extend credit to your customers, your receivables. Relentlessly Monitor Cash Flow-And If You Offer Credit, Keep Your Receivables Clean The Small Business Administration offers loans, investment capital, disaster assistance and more, often coordinated through community banks and lending companies, so learn about their offerings. Consult with your business banker, too, and local business owners you trust. When you’re ready to find a lender, scanning online comparison services such as LendingTree can give you an overview of interest rates and terms. This will make applying for loans faster and easier-which can make all the difference if your need for capital is urgent. SCORE, a national organization offering mentoring services for new business owners, recommends you create these three financial documents and refresh them regularly. ![]() Prepare For A Business Loan (Even If You Don’t Need One Yet)Įven if you only have a few months of operating revenues to show, it’s not too early to set up the financial documents you will need to apply for business loans. Borrowing conservatively will make it easier to meet monthly obligations and build your credit rating. Your ultimate goal is to have plenty of available credit when you need it most, so every possible purchase should undergo a careful cost-benefit analysis.Īsk yourself: Can I be reasonably sure this expenditure will lead directly to more revenue? Improve customer service (also building revenue)? Help retain the staff you rely on for success? Think objectively, using numbers (instead of general impressions) to line out what you might gain and what you’d need to spend, including any interest you will pay. But remind yourself that business growth is never guaranteed. If you’re offered an impressive credit limit, it might be tempting to use that extra buying power immediately. Keep in mind that an excellent credit score expands your borrowing power and helps you qualify for lower interest rates down the road. This is the single most critical factor in building strong credit. Keep your monthly spend modest so you can pay on time, every time. You might need to apply for a card with special requirements-such as paying the balance off in full every month-then work up to a higher credit limit and more open terms.Īlways open new business accounts in your company’s name, using your business address, phone and EIN. ![]() If your personal credit isn’t strong or you don’t have many business references yet, ask your business banker for tips on finding the right credit offer. Pay attention to annual fees, interest rates, payment terms and cash-back offers. To find the right business card for you, you can start with side-by-side comparisons from objective sources such as NerdWallet. ![]() Getting a business credit card can be a healthy way to start, but take the time to choose wisely. Once you’re incorporated, you may be flooded with digital ads, emails and fat, shiny mailers dangling credit offers in front of you. ![]() Both steps give you credibility when you apply for business accounts.
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