In this current economic climate, many business owners are finding that they are in need of short-term (12 – 36 months) loans to cover expenses due to declining sales and increases in personal expenses (like adjusting mortgages).
Unfortunately, many business owners are also finding that banks and credit card issuers are cutting their lines of credit and personal credit limits just at the same time that business owners need the available credit. But many business owners fail to realize that they may be able to borrow money strictly in the company name without having to use their personal credit and without needing a personal guarantee.
In order to borrow money in the company name, you need to first have a business credit profile. In the past, we have covered topics dealing with personal credit, but many business owners fail to realize that there are also credit bureaus for business credit. The main credit bureau for business credit is Dun & Bradstreet, but business credit is also tracked by Experian and Equifax to a lesser extent.
The first step in building business credit is to check what current credit you already have and see what your current business credit score looks like right now. You can check your Dun & Bradstreet rating by going to www.dnb.com. Do a search for your business and then sign-up for a new account. Then you can pull your credit report and see what your score is. Dun & Bradstreet uses a PAYDEX score to rate businesses and their payment histories. A PAYDEX score of 80 or better is a good score and will qualify you for many business credit offers. A PAYDEX score below 75 is poor and will generally disqualify you for most credit offers. If you have a PAYDEX score of “DS” or “—“ you don’t have enough history or you have not had your business set up with Dun & Bradstreet, which you will need to do before applying for any business credit.
If this situation applies to you, please contact us as we can assist you with obtaining and building your PAYDEX credit score.
The next step to obtaining business credit in building your PAYDEX score is to add tradelines (people you do business with on credit terms) to your credit profile. This is a similar process to seeing credit cards and auto loans show up on your personal credit report. Once you have added tradelines to your credit report, your PAYDEX score will adjust accordingly. But remember to only add vendors who you have a good history with.
The final step is to actually apply for business credit once you have your new PAYDEX score.
At Culpepper And Associates, we maintain a current database of banks, credit grantors, and corporate credit cards which you can get based on your PAYDEX score. Contact us for more details. We can generally walk you thru which companies to apply with and we can help you obtain the credit you need to survive these trying economic times.