Extending credit to customers is an important yet sometimes tricky issue for businesses. On the one hand, when you extend credit you can boost sales and acquire new customers. On the other hand, it can damage your cash flow if you don’t handle the process carefully. During the COVID-19 pandemic, the credit issue is especially relevant with so many customers asking for credit.
If you have a small business, there’s a good chance you’ll need to apply for a loan or other type of financing at some point. In order to understand the process, you should be familiar with the lingo. Here are some of the most frequently used financial and credit terms you should know. Chances are, you’ll already know some of these while you might need a refresher on others.
Your business credit score has a large impact on your ability to get funding for a small business. This is a major obstacle for anyone with bad credit. It’s also a problem if you don’t have much credit history at all. Banks are reluctant to take any risks when it comes to lending money to businesses without strong credit.
Alternatives to Bank Loans for Small Businesses
Because obtaining bank loans can be difficult, it’s worth investigating alternative types of small business funding. Here are a few options to consider if your business credit score is less than perfect.
Your business credit score is important if you want to qualify for financing. It’s also a good reflection of how you’re managing your finances overall. Here are some of the leading factors that impact your business credit score and that lenders typically consider when determining whether or not to lend to your business.
If you want to grow your business, you’ll probably need funding at some point. The challenge, however, is that it’s difficult for startups and businesses without a solid track record to obtain bank loans. As a consequence, many small business owners rely on their personal credit to secure loans. Getting approved for loans, of course, depends on your credit score. Let’s look at some ways to improve your credit score so you can fund your business.