Category: Business Today

We speak to credit score expert Paul Ryan to discover what a business credit score is and how you develop, maintain, and use your score

A business credit score is very similar to a personal credit score. Just like a personal credit score, your business credit score is an official measure of whether your business is likely to repay its credit, loan, or debt. Companies, including Equifax, Dun and Bradstreet, and Experian, create and update these scores based on your business payment history and cash flow. With a good business credit score, you can fund your business growth and operations far more easily. 

“Credit score companies look at the business’s payment history. They check if you are paying on time and confirm whether your business might be a little late in paying its credit or, worst case, delinquent. That’s the number one check credit agencies check,” said Paul Ryan, Business Solution Architect, ProSource. “I advise organizations to ensure that any type of credit you use is provided to the credit agencies. These include credit, leases, credit cards, and any other vendors or other payments that may not be applied to a credit score automatically.”  

Establishing a line of credit is

We’ve explained why your business credit score matters — it can help you secure financing, receive better insurance rates, and negotiate the terms of your lease. Now we’re focusing on the ways you can improve your business credit score, so you can enjoy those benefits and more.

Basics for Building Business Credit

To build positive business credit history, you should follow many of the same principles for building personal credit. We’ll go over them here, along with business-specific tips.

1. Make sure your personal credit is separate from your business credit. 

To establish good business credit, you’ll first want to make sure your business credit profile is actually established. That means opening a commercial banking account to keep your business’s funds separate from your personal funds. From there, you can apply for and receive business funding separate from your personal credit.

2. Pay early or on time.

Once you’ve been approved for business credit, it’s critical that you make all payments for your outstanding debts on time. This will be the most impactful part of your business credit score. Not only will you improve your credit score by paying on time, but you won’t have

Whether you have a dedicated IT team, sell your products online or simply use a computer for work tasks, it’s important to follow the latest security guidelines to help protect your data. Although security threats are ever changing, you can help safeguard information with a few solid tactics. Read these everyday tips we follow at The Business Backer to help keep your business more secure.

Follow Password Safety Best Practices

Weak passwords are one of the biggest security vulnerabilities when it comes to cyberattacks and account takeovers. In order to avoid password-related breaches, you may want to set up network guidelines to require a new password every couple of months, or talk to an IT professional to help set up password regulations for your work computers. Ideally, all computer users should regularly update all passwords used with a combination of letters, symbols and numbers. You can make managing passwords easier and more secure with the following technology:

• Two-Factor Authorization: This option requires an additional step, like entering a code from a trusted device, to verify the identity of the user upon login.
• Password Manager: You can use an encrypted password manager to

When you apply for a small business loan, you may be asked to provide an EBS, or electronic bank statement. Generally, a special type of software is used to interpret and transmit data from an EBS file to other financial technology. This software, sometimes referred to as a data transfer service, helps provide a safe way to send information across financial institutions, lenders and other services. The Business Backer uses Plaid, a secure data transfer service that can quickly connect to your bank account for fast and easy transmission.

Why Was I Asked To Provide an EBS?

Lenders generally ask you to provide bank statements, financial data and/or link to a data transfer service in order to verify the information provided on loan applications, as well as to make sure that you can reasonably afford to take out the loan. Using an electronic bank statement can help save time when you apply for a loan when compared to other document submission methods.

What Is Plaid?

Plaid is a popular data transfer service that safely and securely transmits data from your bank account when needed, like when you apply for a loan or

Funding your business with outside capital is often necessary to help it grow and realize its full potential. If you’re in the market for small business capital, you may quickly realize there are many funding methods available. Read our guide to learn what to look for when choosing the right financing method for your company.

Determine Your Funding Needs

There are a few different types of business financing available to suit your funding needs. One of the main differences is whether you need ongoing capital from some type of revolving credit, or a larger lump sum from a small business loan.

Additionally, the funding timeline varies widely by lender. Small business creditors like The Business Backer work hard to make the funding process as easy and efficient as possible. Other business lenders, including banks and credit unions, can take much longer to review applications and fund approved borrowers.

Assess the Available Business Funding Options

You may qualify for more than one type of loan to help fund your business. Some businesses choose to leverage more than one financing method to manage larger business expenses and pay for everyday costs. Some business funding

When you apply for small business funding, lenders take a variety of factors into consideration before making a decision. Details such as your credit score, time in business and revenue are important, but what you may not have considered is your business’s cash flow. Read our quick guide to learn more about cash flow and how it can impact a small business loan application. 

What Is Cash Flow?

Cash flow is defined as the net amount of money transferred into and out of a company over a set time period. A positive cash flow indicates that more money is moving into the company than out of it, whereas a negative cash flow means that the business is spending more cash than it generates in revenue. Read this guide to learn how to calculate cash flow and access free cash flow statement templates.

How Does Cash Flow Affect My Loan Application? 

Small business lenders typically ask for bank statements and other financial data to determine whether you have positive cash flow and can afford to take out the loan. If you have a history of positive cash flow, you’re more likely

If you’re in need of small business financing, both your personal and business credit can affect your ability to secure a small business loan. Your personal credit health is especially important if your business is relatively new or hasn’t taken out a loan in the past.

Although credit reporting errors are relatively rare, such errors can negatively impact your credit scores. Learn how to access your full credit reports and dispute any reporting errors with our helpful guide.

Step 1: Access Your Full Credit Reports

There are three major personal credit reporting bureaus and three major business credit bureaus. Make sure to monitor your full credit reports from all major credit bureaus to get the full picture of your credit health.

To access your personal credit reports, head to AnnualCreditReports.com or use the links below:

To access your business credit reports, contact each bureau directly:

Step 2: Review Your Credit Report

Next, make sure all your information is complete and correct. It’s especially important that your financial data is accurate and free of errors, including your payment history, credit accounts and outstanding debt.

Personal credit reports may include:

• Personally identifiable information
• Credit

Running a business is full of challenges, and growth can add new ones. Adequate funding helps you meet every opportunity head-on.

In today’s unpredictable environment, it’s important to know what options are available — and how they can work together to help your business grow. Each unique situation calls for a unique approach.

Looking to tackle the next chapter of your business? Here are four reasons why you may want to combine multiple financing options to do it.

1. Combining Financing Options Can Provide Additional Funds

A small business loan can be a great way to give your company the boost it needs to get off the ground. But what happens when you encounter a new growth opportunity that requires additional funding?

Combining multiple financing options is one way to keep the momentum up. Do you need to cover expenses? Has growth started to outpace your ability to keep up? Is there an unexpected opportunity you want to take advantage of? There are many types of financing that work in conjunction with your current plan to give your business the boost it needs.

Explore your options by talking with your lender —

Funding is essential to running a small business. Whether you’re just starting out or looking to grow, having the right financing can be the difference between success and failure. Still, it can be hard to obtain funding. According to a 2020 estimate, nearly four out of five small businesses were denied loans from big and small banks.¹ 

Being denied financing is scary — especially if you’re trying to keep your doors open during uncertain times. If you’ve been denied, don’t lose hope. There are steps you can take to secure the financing you need.

Determine Why You Weren’t Approved

First, figure out why your application was rejected. Knowing what went wrong can help you identify areas for improvement, strengthening your future applications and boosting your chances of approval. Here are a few common reasons applications are denied.

• Your Credit Score Is Too Low — A damaged or subprime credit score is one of the main reasons applications are rejected. Lenders use this score to gauge your potential to default. Look at your credit score before applying to ensure you meet the lender’s requirements.
  
• Insufficient Cash Flow — If a lender

Running a business takes a lot of careful planning. Occasionally, you may require additional rounds of funding to fully execute your business goals.

Some business owners may pursue loans from different small business lenders. However, loan stacking, or taking out too many loans from separate lenders within a short period, can be risky. Read our guide to learn more about loan stacking and what you can do to avoid it.

Why Is Loan Stacking Risky?

Taking out different loans from various lenders can quickly become very difficult to manage. Handling too many due dates throughout the month can adversely affect your cash flow and the ability to save for the future.

Additionally, if you miss any due dates, you may also run the risk of defaulting on one or more of your business loans. Missed or late payments can negatively affect your credit score, and past-due amounts can become considerably harder to pay off. When you have several different loans from multiple lenders, you may also have a harder time making payment arrangements in case you get behind on your loans.

What Are Some Alternatives to Loan Stacking?

If you’re in need