As a small business owner, it’s important to have access to business credit to help you grow your business. Without it, your business may not be able to compete in today’s marketplace. In this article, we will discuss why having business credit is crucial for small businesses and how it can help you lower your cost of doing business.
What is Business Credit?
Business credit is the ability of a business to obtain credit from lenders, vendors, and suppliers based on its creditworthiness. It is an essential resource for small businesses because it allows them to access the funding they need to start, operate, and grow their business. Business credit is based on a company’s credit history and financial standing.
Why is Business Credit Important for Small Businesses?
Having access to business credit is critical for small businesses for several reasons. Here are 10 key statistics that explain why:
- Nearly 50% of small businesses rely on credit cards to finance their operations.
- Small businesses with less than 500 employees account for 99.9% of all businesses in the United States.
- 20% of small businesses fail within their first year of operation.
- 82% of failed businesses cite cash flow problems as a contributing factor.
- 45% of small businesses have been rejected for a loan in the past four years.
- The average small business has $195,000 in debt.
- Small businesses that borrow money are twice as likely to succeed as those that don’t.
- Business credit scores are used by lenders to determine loan terms and interest rates.
- Small businesses that use credit cards for business expenses have an average of $11,000 in credit card debt.
- Small businesses that establish business credit have an average of 10 times more credit capacity than those that do not.
These statistics demonstrate the vital importance of having business credit for small businesses. Without it, small businesses are at risk of failing due to cash flow problems, high debt levels, and inability to access funding.
How to Build Business Credit
Building business credit takes time and effort, but it is worth it in the long run. Here are some steps you can take to start building your business credit:
- Incorporate your business or form an LLC.
- Obtain a federal tax identification number (EIN) from the IRS.
- Open a business bank account.
- Obtain a DUNS number from Dun & Bradstreet.
- Apply for a business credit card or small business loan.
- Make payments on time and in full.
- Monitor your credit score and report regularly.
By following these steps, you can establish a strong business credit history and increase your chances of being approved for loans and credit in the future.
How Business Credit Can Lower Your Cost of Doing Business
Having business credit can help you lower your cost of doing business in several ways. Here are some examples:
- Lower interest rates: With a good business credit score, you can qualify for lower interest rates on loans and credit cards, which can save you money over time.
- Better loan terms: Lenders are more likely to offer favorable loan terms to businesses with strong credit histories, such as longer repayment periods and lower fees.
- Improved cash flow: Access to credit can help you manage your cash flow more effectively, allowing you to pay bills on time and avoid late fees.
- Vendor discounts: With good business credit, you may be able to negotiate better terms with suppliers, such as discounts for early payment or larger orders.
Having business credit is crucial for small businesses that want to succeed in today’s competitive marketplace. By building a strong business credit history and using it wisely, you can lower your cost of doing business, access funding and resources, and increase your chances of long-term success. Building business credit takes time and effort, but it is an investment in your business’s future. So, take the steps necessary to establish and maintain a good business credit history, and watch your business thrive.
Take Control of Your Business Credit with The NET 30 – Build, Thrive, Succeed!
Are you ready to take control of your business credit and lower your cost of doing business? Discover the power of The NET 30, our innovative business credit solution. With The NET 30, you can establish and build your business credit faster and more efficiently, gaining access to funding and resources to help your small business thrive in today’s competitive marketplace. Don’t let cash flow problems, high debt levels, and funding rejections hold your business back. Take the first step towards financial success by signing up for The NET 30 today. Click here to learn more and get started on building a strong business credit history that will benefit your business for years to come. Remember, establishing and maintaining good business credit is an investment in your business’s future. Don’t miss out on the opportunities that The NET 30 can provide. Act now and unlock the power of business credit with The NET 30!
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