The Golden Rule to Establishing Business Credit

The first golden rule to establishing business credit lines is to ask for them. If you don’t ask, no one is going to come over and say "hey, here have some credit".

There are two main sources of business credit. That granted by a bank or other financial institution, or credit terms given by suppliers.

Using a planned approach is essential if you are to successfully build business credit. It is important to have an idea of what you need to prove about your business, if you ever want to consider a business loan, or negotiate credit terms, or extend existing credit terms with suppliers.

It is quite common when you start a business to have to pay for things before you collect monies in. This delay requires funding from somewhere, and normally, either a bank facility or some form of supplier credit will be needed to ease the strain on the owners own capital investment.

Lets look at how credit worthiness is determined All lenders are concerned with the granting of and repayment of small business loans in accordance with their terms and conditions.

They use what is commonly called the five “C’s” of credit. Cash flow, Capital, Collateral, Conditions, and Character.

Check out what are 5 "C's" here.

No comments: