Small Business Credit
In the case of small business credit, many institutions have instituted a credit scoring system. Credit scoring is typically performed on loans ranging from $250,000 up to $1,000,000 in exposure. It is a centralized approach that looks at a set number of quantitative factors and typically results in a faster decision than traditional underwriting.
Understanding the elements that make up the business credit score can help companies obtain necessary funding at lower interest rates and improved terms over the course of their financial journey. Small business credit scores can be affected by a number of different factors. Vendors and other creditors may report on-time or late payments to credit reporting agencies, thus positively or negatively affecting the company's chances of obtaining future credit for small business needs. Paying off existing credit balances can also improve credit scores for small businesses. Major credit reporting agencies suggest maintaining a ratio of approximately 20 percent used and 80 percent unused credit on each available line of credit held by the business. Financial experts also recommend spreading out balances among a number of different credit cards or credit arrangements in order to maintain unused available credit on each. Leave unused credit accounts open; this increases the percentage of available credit that is reflected on the credit score for small businesses. Credit scores often drive loan availability, so the financial advantages are likely to outweigh the added inconvenience of monitoring an unused credit account or two. Small business credit scores may also be affected by other relevant factors that include number of years in business, size and stability of the operation and the credit histories of owners.
Improving the credit score of the business can create added opportunities for obtaining credit for small business needs. CNF Exchange provides the ideal platform for exploring those opportunities. Small business borrowers can submit their funding requests online free of charge through the secure CNF Exchange platform. Lenders can then evaluate these requests and present credit offers designed specifically to meet the company's needs. By presenting a persuasive credit application and maintaining a solid credit score, companies can ensure that they receive the funding they need to maintain operations on an even keel.