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All About Business Credit

1. An introduction to Business Credit (cont'd)

4.  Inventory:  The impact of having a good business credit score and profile is felt most directly when it comes to inventory management.  As we all know that from time to time every business can get into a cash crunch and may need to have quick access to cash for short term working capital requirements.  One of the most trusted sources of quick capital in firms that carry inventory is inventory loans which are secured by the general business assets.  These are loans that are given by financing companies that specialize in your industry and these companies depend on one item above all when making their decision about lending you money – your business credit score and profile.

5.  Accounts Receivable:  Once you have made your sale and are waiting for your customer to pay you, there are times when you may have to wait forever.  In tough economic times it is quite common for business owners to have to wait between 60 to 90 days before receiving payments for the goods delivered by them.  In the meanwhile you still need money to run your day to day operations – this is where factoring comes in.  Factoring comes into play when a lender lends you money based on the accounts receivable that you have coming in the next few months and guess what factoring companies look at when they are about to make their decision about lending you money? – your business credit score and profile.

6.  Mergers & Acquisitions:  When larger and more profitable companies or your own competitors are looking for candidates for prospective partnerships or buyouts they start by looking at a company’s business credit score and profile.  You may have an excellent business and have an excellent and loyal customer base but you may lose out on the opportunity of a lifetime when you are passed over for somebody else in a possible buyout or merger situation just because your business credit score and profile were not good.

2. The Creation of Business Credit

In the United States the largest and most widely used business credit service is provided by Dun & Bradstreet (www.dnb.com).  D&B is the world’s leading source of commercial information and insight on businesses, enabling companies and individuals to find out about the credit and profile of businesses located globally.  Almost every lender, vendor, equipment supplier, inventory lender, factoring company and prospective investor looks to the D&B reports on a businesses before making a decision to do business with them.

The first step towards creating business credit or into looking into what D&B currently has on you in their databases, is to reach out to D&B.  They have an excellent website that gives business owners / partners the ability to create their own unique profile and get assigned a number for their business called the DUNS number.  This number becomes their record identifier within the D&B database and once a company has a DUNS number they can begin the process of supplying D&B with the information they need to create a business credit score and profile on you.

In the event you have been in business for a few years there is a good chance that D&B already had a profile created for you – check with them to make sure.  Once you create a profile with D&B you will have the ability to edit and update the information that they have on you in their databases.

Just as in the case of a personal credit bureau, many vendors, lenders and finance companies choose to report the credit history that they have with a business to D&B however there is one major difference between the business credit report world and the personal credit report world – vendors and lenders do not have to report your loan data to D&B and many of them choose not to do.  It is up to you, the business owner / partner to report this data to D&B who in turn verifies this data with your vendors and lenders and gives you a credit score based on their findings.  Thus in the world of business credit scores – you have to ‘build’ you own business credit whereas in the world of personal credit scores, your payment history is automatically reported to the three repositories of data as discussed in the personal credit report section.

Small Business Owner Resource Center


Articles on the Small Business Financing Sources, the Small Business Loan Basics, small business loans Checklist and SBA Loans are incredible sources of knowledge for the small business owner.



Credit Report and Credit Score Analysis, how to Read a Personal Credit Report and all about Business Credit cover the intricacies of credit and are required reading for everybody.



The Foundation Grant Directory is a free listing of sources for grants by state. Why not look if there is some free money out there for your business. Hey - you never know!



The Business Loan Application covers every item you will need in your loan package and tells you how to get approved for business loans.



Fire your loan broker and use our Free Business Loans Bank / Lender Directory to find every bank in the country lending to small businesses.



If you are looking to start a business - look no further.  Check out the Free Incorporation Guide discussion and the State Incorporation Resource Directory.

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