Establishing strong credit is a must for many small businesses.
Companies with consistently robust credit scores reap significant benefits including favorable repayment terms, quicker lease approvals, and ready-access to working capital. Bolster your business credit rating by considering the following 5 Ds:
Detailed plan. Step one of building credit is convincing a lender that your company is a good risk. Start with a well-written business plan. The document should address your business structure, the basis for cash flow projections, competition in your industry and locale, pricing, products, and potential obstacles to success.
Discrete accounts. Establish a business credit history separate from your personal finances by using your company’s legal name when opening bank accounts and applying for loans or other types of credit. Then use these accounts – and not your personal accounts – to pay all business expenses.
Diverse credit. Utilize multiple types of debt, including installment loans, revolving loans, and credit cards. Also try to secure debt from multiple institutions. The more banks that will lend you money, the more others will see you as creditworthy.
Due-date awareness. Your business credit rating will climb as managers prove their skill at managing and honoring the firm’s obligations. To judge creditworthiness, lenders watch how your company handles cash flow. If at all possible, invoices should be paid before due dates. Consistently late payments can tank your credit and put future borrowing out of reach.
Diligent monitoring. It’s important to review your company’s credit score periodically. The major reporting agencies—Dun & Bradstreet, Experian, and Equifax—track your business credit and record of on-time payments. Regular monitoring can also identify false liens, inaccurately-reported loans, and other suspicious activity.
Smaller PPP Loans Can Be Forgiven With Fewer Administrative Headaches
Millions of small businesses who took out a Paycheck Protection Program (PPP) loan for $50,000 or less are now eligible to apply for loan forgiveness using a simplified application form according to the Small Business Administration (SBA).
Just over 3.57 million, or 68.5%, of the 5.21 million PPP loans granted this year were for $50,000 or less, according to the SBA. These loans can now use a less stringent application process for determining if they can be forgiven.
Here’s how to take advantage of the simplified forgiveness application.
Don’t confuse with the EZ application form. There is another loan forgiveness form for small businesses called the EZ Application Form (Form 3508EZ). Click here to download the EZ form. Click here to download instructions for the EZ form.
Stay in touch with your lender about submitting your application. Remember that only your lender can submit your forgiveness application to the SBA. Stay in contact with your lending institution about when and how to complete the loan forgiveness application.