A healthy credit score and loan financing!

For small business owners, having a healthy credit score can help them more easily acquire loan financing, increase the value of the company, and protect their own personal credit rating.

There are literally hundreds of financing options available to the average small business, and hundreds of new online lenders entering the market each year. However, not all of these lenders will be a good fit for your business, or offer finance on terms that are attractive.

For their part, lenders like businesses with good credit scores, so the better yours is, the more choice you will have. Conversely, a poor score will limit your loan financing options, eliminating them altogether, or forcing you to accept money on onerous terms.

A healthy credit score also influences how much money a lender is prepared to offer, along with such factors as the purpose of the loan, and what collateral is offered. Therefore, a business considering applying for loan finance to fund future expansion, is advised to build-up their credit score in advance.

Not surprisingly, a good credit score also affects the rate of interest you will pay on a loan. The better your credit rating, the lower the interest rate you will be charged.

It can also enable a business to access trade credit from their suppliers and vendors – a hidden form of loan financing for many small companies. With trade credit, vendors allow a company to buy material, equipment and services from them now, and pay for it later on extended terms. Creditors will only offer favourable repayment terms if they have confidence they will be paid eventually – and a healthy credit score helps provide that.