Owning a business involves a lot of uncertainty, stress and risk. But it is also incredibly rewarding when you finally reach the goals you set for yourself at the very beginning. One of the biggest items on every business owners’ to-do list is to secure funding. Without the right amount of cash, your business will struggle to meet payroll, purchase new equipment, hire new employees and cover day-to-day costs.
Unfortunately, many businesses have a hard time finding a lender willing to work with them. While there are many reasons why you may not qualify, your credit situation definitely affects a lender saying “yes” or “no” to your application. Consider the following common credit struggles that might be separating you from the funding you need:
- Having no credit. Most of us know that having bad credit will make it difficult to find financing. However, having no credit is also an issue. To avoid not having enough of an established record, be sure that your business transactions are being counted in your new business history. Otherwise, you are missing an opportunity to establish a business credit score.
- Being unfamiliar with credit scores. A score of 180 is terrible, right? Think again. Business credit scores are often handled by different vendors than personal credit scores. There model is different as well. Make sure you understand how business credit scores work before applying for new credit.
- Not registering the business properly. Do you have a business that is outdated, but is still on the state’s registry? If you are one of the many entrepreneurs that has several “side hustles”, it is important that you know your business is registered correctly. You don’t want to risk a situation that causes you not to establish and maintain the credit history you need to expand your business down the road.
- Using personal credit to fund your business. Many business owners choose to use their personal credit when starting out. However, after your business is established, it is very important to switch all credit under your business name.
- Waiting too long to access credit. Credit is not just for a rainy day or emergencies. It is important to establish credit before you need it. When you find yourself in need of extra working capital, you will be able to secure cash more quickly because you have already built your credit reputation.
If you are already struggling with bad credit, there are still options available – options that will help you build your credit score overtime. You can secure the payment processing services you need for your business and flexible funding solutions through a bad credit merchant account. Depending on the alternative provider, you can apply and have your account setup in as little as 24 hours.
Author Bio: As an account executive, Michael Hollis has funded millions by using alternative fundingsolutions. His experience and extensive knowledge of the industry has made him a bad credit merchant account) expert at First American Merchant.