Business Credit Mistakes

Understanding your finances and credit best practices to help your business grow

01/25/2017

Business Credit Mistakes

If you’re ready to take the leap and expand your business, you may be wondering how you’ll be able to come up with the money to finance it. Before diving into contact a lender, there are a few steps to take.
 
“Most lenders will first consider the four C's of lending, which are capacity, collateral, credit and character,” says President of the International Franchise Association Don DeBolt.
 
One way to help you establish your net worth is to create a personal balance sheet that outlines your assets (what you own, i.e., cash, savings, real estate, etc.) and your liabilities (what you owe, i.e., bills, auto loans, home mortgage, etc.). Most of the time, lenders need to know the following about you:
 

  • Income - How much money you make and the basis of how you live within your means will help lenders determine whether you can manage business finances. So sometimes, it’s not always about the number itself. For example, if one person makes $20,000 a year but budgets well, and another person makes $200,000 and is in debt, the person who makes less would still be considered the better money manager. 
  • Stability - Factors such as how long you’ve been at your job or lived in your home are important too. These things show whether you tend to finish what you start. This is true for finances as well; knowing how well you manage your profits gives lenders a good base point for predicting how well you’ll manage business expenses.
  • Track record - Lenders will determine how successful you’ve been at paying off past finances. Contact a credit bureau who will allow you to see information about your credit history. This is what most lenders will do before allotting you money to borrow.
 
The next step is assembling a business plan. Include a detailed description of your business, cost analyses, working capital estimates and a marketing plan, as well as credit references and certified proof of your net worth. If you’re not sure how to devise a business plan, contact a professional business plan-writing company or look into business plan preparation software such as Business Plan Pro or BizPlan Builder Interactive. Having a professionally acquired business plan will help in obtaining the funds you need for your business.
 
Call us or stop by today to find out how we can help you finance your business growth.

Published by North Shore Bank. Includes copyrighted material of IMakeNews, Inc. and its suppliers. 

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