Your Business Credit Score Can Impact Funding Terms

Good business credit can help you qualify for more credit at lower rates and have a positive effect on your repayment terms.

Lenders consider a number of factors before deciding whether to help fund your business needs. Amongst these factors, they may consider how well your business repays its debts. This is where a business credit score comes into play.

As a general rule, a higher business credit score indicates to lenders that your business is a more trustworthy borrower. If your business has solid scores, it will have a higher likelihood of getting approved for financing, it can help you access more credit at lower rates and have a positive effect on your repayment terms. Here are five ways having a good credit score can help you when applying for financing.

Higher Likelihood of Approval

Business owners with solid business credit scores have a greater chance of getting approved for financing. You might not know about this because, unlike personal credit, lenders aren’t required to notify you that they have made an inquiry into your business credit when you apply.

Businesses applying to the Small Business Administration’s (SBA) most popular loan, the 7(a) loan program, are required to go through a business credit pre-screen if applying for a loan of up to $350,000. This involves checking the business’s FICO, LiquidCredit, Small Business Scoring Service score, or FICO SBSS score. The FICO SBSS score ranges from 0 to 300, and the minimum score to pass the SBA’s pre-screen is currently 140. Most banks and 7(a) lenders, however, require a 160 or higher.

Lower Rates

Even a slightly lower annual percentage rate (APR) can make a huge difference in the cost of a business loan or line of credit, so having a good business credit score can help even if the effect on your loan interest rate is marginal.

Imagine a business with low credit scores qualifies for a $200,000 business loan with a 12-month repayment period at 20% APR. If that business had a credit score high enough to help shave just 2% off that APR, they’d save over $2,000 on the total cost of the loan.


Better Repayment Terms

Obtaining a good business credit score before applying for business financing is particularly important for businesses that struggle to maintain a consistent monthly cash flow, because some lenders will offer longer repayment periods to businesses that can show they successfully repay their debts.

Let’s take our $200,000, 12-month term loan example from above. If the credit score of the business in question was good enough to help it qualify for a longer repayment term on that loan, say an 18-month term instead of a 12-month term, they would be responsible for paying back less than $13,000 per month rather than over $18,000 per month.

Higher Amounts

If you’re looking to finance a big purchase or large project, you’ll want to get your business credit in shape before applying for financing. Businesses with solid credit scores may be able to qualify for higher lines of credit or loan amounts—if lenders see that your business successfully pays back debts already, they’re more likely to lend you more cash.

Wider Variety of Financing Options

Having a solid score can help businesses qualify for another, less talked about type of financing that many businesses don’t realize are available to them: trade credit.

If you work with vendors or suppliers and have maintained solid relationships with them, they may be willing to extend you “terms.” For example, net-30 terms give you 30 days after the invoice to pay, while net-90 terms give you 90 days. This is actually the most common type of financing used by businesses and it can improve your business’s cash management should you qualify. Vendors and suppliers may look into your D&B PAYDEX score before extending this form of credit.

Not all lenders are going to look at your business credit scores, but because you may not know when your scores will come into question, it’s a good idea to keep them in good shape. Different lenders look at different scores, so it helps to know how multiple scores rate your credit before you start searching for financing.


Back to work…

Back to Business

Back to Sales

Back to reality


The Election is over

Lame “Everyone is waiting on the election” excuses are over
Back to reality
Back to business
Back to sales


And by the way, in case you missed the news, the economy is still not so hot.


Back to reality. The economy is still weak. Business is still slow. Your competition is still cutting prices. Your customers are still paying slowly. And you are struggling to create a difference between you, and the people with whom you compete. REALITY: Concentrate on YOUR economy, not THE economy.

What can you do that actually creates new and renewed opportunities to sell? PLENTY! But you have to renew your personal commitment to do more and work more.

Here are the elements you’ll need to devote time, creativity, and hard work to:
1. Understanding THEIR reality. You’re down because they are down. You’re slow because they’re slow. Meet with them. Talk to them. Understand them. Help them, and they will reward you with both business and loyalty. REALITY: Unless you help your customers win, you will continue to lose.

2. Value first. The more I espouse this philosophy, the more I am convinced it’s a key differentiator. Make a list of what you have discovered about your customers needs, and give them ideas to meet those needs. REALITY: Value first requires a new mindset.

3. Value perception. Whatever you decide to do in favor of the customer must be perceived by them as valuable. REALITY: If the customer doesn’t perceive it, then it isn’t.

4. Daily social media activity. Assuming that your policies and lawyers are coming to the reality that social media is dominating the world’s market attention, and are choosing to let you participate, get involved today. Begin your personal value-branding today. Goal yourself to gain 100 LinkedIn connections, achieve 500 Facebook followers who “like” you on your business page, and earn 250 Twitter followers who are re-tweeting the value messages you have to offer to them. REALITY: Social media is the new cold call.

5. Differentiation. Decide on what’s REALLY different about you. NOT what you think is different or better, rather what your customers think is different or better. And then get customer video testimonials that support those differences. REALITY: Testimonials are the only proof you’ve got.

6. Helping customers. If you know what your customers need, why not spend quality time actually helping them. Connect with them and offer genuine help. REALITY: Even if they don’t accept the offer, you will win their respect.

7. Brand building. This is BOTH for your product or service, AND you. REALITY: If you blog, have a personal website, and send a weekly email magazine, you can build both brands at once.

8. Creating WOW! There are huge opportunities right now to make a difference. Maybe it’s your email, your welcome, your delivery, your phone response, or your service. REALITY: You’ll know it when you hear it.

9. Breakfast and lunch. These are the two best times for relationship building and sales meetings. REALITY: You can combine this with WOW! by bringing a referral or prospect for your customer.

10. Creating and capturing IDEAS. The key ingredient to this entire “back to reality” process is your ability to generate and capture ideas. This requires new study, new habits, and new thinking. REALITY: Ideas come from focused thought, an open mind, a positive attitude, and a renewed belief that you can do it.

10.5 Forget your “sales-pitch” and lose your “sales-pitch.” It sounds pathetically like your competitors. It never ceases to amaze me that a sales presentation that ends in “send a proposal” or “I want to think about it” or “NO!” gets repeated over and over. IDEA: Collaborate with the last ten customers that bought from you. They have all the answers. It’s time to revise and revamp your value proposition, and present something new and exciting. REALITY: The more the prospect perceives value, the less that price will matter.

REALITY: Sales have not stopped, they’ve just slowed down. Your value and hard work will ensure you more than your fair share.