When you’re running your own staffing company, it’s common to run out of working capital to cover payroll especially when you have lots of new clients. Sooner or later you’re going to need a staffing company loan. But you may not get the loan you need if your business credit rating is too low to qualify. This is the reason why small business factoring invoice for funding has become more popular, as your credit doesn’t matter as much as the creditworthiness of your customers.
When you’re trying to secure a loan, your business credit standing is crucial. What you may not know is that you may be inadvertently contributing to the low business credit score. Here are some possible mistakes you may be committing:
- You only depend on personal credit. It’s understandable to use personal savings and credit cards to start a business. But as soon as possible, you need to open one or two business credit cards. It has to be in the company’s name. While the credit line may not be large at first, what you’re really trying to do is establish a credit worthy profile. When you build your business credit, you increase your chances of getting a loan for your company in the future.
- You don’t regularly monitor your business credit. With so many hackers and identity thieves operating these days, you should really keep a constant eye out on your business credit. You can’t just check it when you need it, such as when it’s time to borrow money. Credit scores don’t really fluctuate wildly, so you can be notified right away when your credit score suddenly drops. You can then take measures to deal with the problem right away.
Monitoring your credit doesn’t have to be too much trouble for you. There are some monitoring tools you can use which will alert you when your credit score changes and some of these tools are even free to use.
- You don’t check for factual mistakes. It may surprise you to find out that a significant number of small business owners have discovered mistakes in their credit reports. One report published in the Wall Street Journal revealed that of the businesses that checked their credit reports, fully a quarter of them found errors or missed financial data that made them seem riskier to lend to.
So when you get your credit reports from credit bureaus, take some time to review the data to see that it doesn’t have any mistakes that damage your credit score. Check that the revenue figures are up to date, and your company is in the right industry classification code.
- You don’t pay your bills on time. For a business, paying late can have serious consequences. While you may think nothing of paying a day late in your personal life, in business paying late for just one day can adversely affect your credit score. So don’t pay late. Better yet, pay early because doing so may actually increase your credit score!
Your business credit is just one factor that will be checked when you apply for a staffing company loan. But having a very low business credit score may be enough for you to fail in getting the funding you need.