Author: Peyton Montgomery

Where to Find Financing for Your Startup

It is exciting to start your own business, but it is also quite intimidating. However, the most intimidating part of starting a business is to acquire financing. New businesses are faced with substantial costs when starting up. Thus, getting financed is among the most important step to starting your own business. But where can you find your financing source?

There are investors and lenders that can help you with financing, but they want to see first that the business has a good likelihood of succeeding before backing you up financially. The main concern of a lender or investor is to ensure that they can get their money back, along with the accrued interest. If you can convince an investor or lender, you have greater chance to get a startup business loan.

Cleaning up your credit

Most startup businesses assume that because they are financing a business, their personal credit will not have a role to play. The truth is that because your business is just starting up, it does not have any track record of either bill payments or income so lenders will rely on your credit worthiness. First of all, you will have to pull your credit report from each credit report company because a major difference may exist between what each one of them reports, especially if there are some mistakes.  Then you need to fix any mistakes and make sure everything is in order. Here is a video to show you how to pull your own credit reports.

Writing a business plan

While you would go through the lengthy process of cleaning your credit up, it is the perfect time to research your business venture thoroughly. Starting your own business is more than just getting a loan and hanging your shingle up. It is important to know where the market stands at the moment, where it will go, and how your business can fit in.  This is information that needs to be included in your business plan along with your mission statement.  If you are unsure how to write a business plan you can start here.

Proper funding

Among the most important parts of launching a business is to get enough of funding so you can start off on the right step. You should rack up considerable costs and it can be disastrous to try cutting corners on some of these to your chances of business success. Take time to find your proper funding because these lenders or investors will not only support a successful launch, but it will also make your business more likely to succeed.

No matter where you go in your business venture, there will always be lenders and investors ready to help you get started. By writing an effective business plan, cleaning your credit up, and/or having a collateral, you will surely be provided with the proper funding that you need for a successful launch.

5 Tips to Help Maintain the Positive Business Credit Rating

To have better access to finance and credit from both lenders and suppliers, your business requires a positive and well-maintained credit rating. Besides, having positive and strong business credit ratings and scores are crucial to the growth of your business.

Below are 5 tips to help you maintain the positive business credit rating.

Keep your accounts updated

When you want to apply for a business loan or financing, the lenders will want to see your company’s financial reports. They will want up to date, accurate and orderly financial statements of your business. Attaching the most recent tax statements along with the most current monthly income reports is an added advantage in securing not just financing, but it’s also necessary for tax purposes.  So, it’s in your business best interest to have your accounting books kept updated and orderly.

Check your business credit reports and correct mistakes

Being aware of your business credit reports is perhaps one of the best ways to build and maintain a positive credit score and rating for your business. Make it your habit to regularly inspect your company’s credit reports and correct any possible registered errors there and then.

Always remember that a positive and well maintained credit score positions your business high, in addition to offering it easier access to business loans and office leasing at low interest rates.

Positive personal finance

When you have just started a business, but you have inadequate financial information about your company, many lenders are most likely to review your personal finances. If you have a positive personal credit history, then you increase your chances of credit approval by lenders. But if you have multiple unsuccessful credit applications, it will be difficult for your business to have access to loans in the future.

Increase Your Credit Limit

One way to improve and maintain your business’s credit score is to increase your credit limits. You can request for your credit limit increase usually after the first six months of opening a credit account. Having your credit limit increased lowers your credit utilization ratio. This is beneficial as it will ultimately improve your business credit score and rating.

Avoid mixing personal and business finance

It always important to categorize your accounts correctly. Open your business accounts using your EIN (Employee Identification Number), and not using your Social Security Number (SSN). Separating personal and business finances helps to maintain good credit score for both of your accounts. If by any chance your personal credit score is poor, it may affect your business score when you mix them.

While you are making your best efforts to grow and maintain your business credit score, ensure that you know the process is time-consuming. However, by raising and maintaining your credit score, you will be doing yourself and your credit a great service.