There are a number of factors that affect your ability to obtain a small business loan, but your age is not one of them. However, the age of your business and the age of your credit profile are important.
Most lenders try to answer some really important questions:
1-Can you repay a loan? That's why lenders look at your revenue and cash flow. You're trying to figure out if your company can service debt or not. So, do you have the means to make the periodic payments?
2-Will you repay a loan? Here, the age of your business along with the age of your corporate credit profile becomes part of the equation. You are looking for a track record that shows that you not only can, but that you make the regular payments.
It's important how many years your business has, but the age and depth of your credit rating may be even more important.
For example, if you have five or six years in business, but have never borrowed, your company has what is sometimes referred to as a thin profile, there is little there to show that your company will repay a loan. And it makes it much harder to get approved for a small business loan.Strategic creation of a corporate credit profile
Here are three strategies that will help you build a strong credit profile when you need to borrow - regardless of whether your business is already two or ten years old:1. Start with a level set
In other words, understand what your corporate credit profile looks like today. A business credit profile differs a bit from your personal credit rating as it is public. Once you have registered your business with your state, information about your business and credit profile will become part of your public records.Fortunately, all major credit bureaus provide this information. Some may charge a fee, but it's worth investigating so you can see what the offices are reporting about your business. In addition to major credit bureaus like Dun & Bradstreet, Experian and Equifax, there are also companies like Nav that can help your profile.
2. Make sure your profile is correct
Do not assume that the information in your profile is correct. Your profile contains information from the public file, eg. For example, the type of business you operate, your business revenues, and your industry. All of this is taken into account when assessing the creditworthiness of your business.Fortunately, the credit bureaus are motivated to ensure that their information about your business is as accurate as possible so that they offer all processes to correct verifiable errors. Regardless of whether your company has been in the business for several years or not, make sure the information you have about your business is accurate.
3. Build a solid track record
That's not as difficult as you might think. You do not necessarily need a loan for small businesses to build up loans. However, you have to prove that you can use credit successfully. Sounds like contradiction, right? Fortunately, there are a number of ways to build credit strategically, track down a story of success, and find credit easier for small businesses on the street.First, look at the vendors where you buy consumables or goods you buy for resale. Many of your suppliers are likely to offer their best customers 30 or 60 day terms. While this is not a small business loan, it can help you build a good balance sheet when you report your credit worthiness to the appropriate credit bureaus.
If you do not have providers offering credit terms, there are other locations, such as Staples or Home Depot, that sell many of the small businesses of the company that do so. You can also consider business credit cards. You will probably first approve a small credit. However, if you make timely payments and demonstrate your ability to deliver successful debt service, you are well on the way to building a track record that will qualify you for a corporate loan.
Move forward
I am an advocate of the regular review of your corporate credit profile. I believe that this is an important part of building a track record of strategic success that will allow you to qualify for small business financing in the future. What is regular? That's up to you, but I do not think monthly is too frequent.
If you are familiar with the story of the turtle and the hare, you know that slowly and steadily wins the race. This is true if you build a strong track record for corporate credit - even if you already have some shortcomings in your business credit profile. Creditors generally look for more positive than negative notes in their Corporate Credit Report. So, if you add positive notes to your credit file, your profile will improve over time. There are no shortcuts. However, as we are influencing what we value most, periodically reviewing your profile is the best first step you can take.
It's your company's track record, not your age, that's crucial when applying for a small business loan.
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