It can be tougher than you think to get a small business loan, especially if you have a bad credit rating. Did you know that 45% of small-business loans are denied because of insufficient credit scores? You could still get approved for a loan in order to gain much-needed capital for your business, but you might be stuck with much higher interest rates. If you’ve ever had credit problems in the past (personally or in a business capacity), you need to reestablish yourself with a good credit rating to help secure the best loans for your small business.

 

The other factor to consider is that a poor business credit profile can hinder your ability to attract new business. Though personal credit reports are confidential, business credit reports are not. Anyone can look them up if considering your business. This includes vendors, business capital partners and potential customers.

 

At Main Street Business Capital, we’ve compiled these 5 easy steps that will help you improve your business credit profile in order to secure better small-business loans and potentially attract more customers.

 

1. Make Sure Your Information is Kept Current with Every Credit Bureau

There are three primary credit bureaus that analyze data and create business credit ratings. They are Experian, Dun & Bradstreet and Equifax. What makes it difficult to track is that each of these bureaus calculate scores differently and rely on different lenders that may provide different data.

That’s why it is important to stay on top of all three of these credit bureaus. Make sure your information is current and accurate so that your scores with each bureau are as high as possible.

 

2. Maintain Trade Lines with Suppliers

If you are dealing with third-party vendors in your small business, ask them if they offer trade credit. This will not only enable you to pay for your supplies after the inventory is received, but it will also establish a strong accounts payable relationship that will benefit your credit report. Be sure to ask your vendors to report all payments to at least one of the business credit bureaus. Of course, it is important to pay your vendor bills on time and in full, as well.

 

3. Be On Time (or Early) with Your Payments

This is the simplest step of them all. When you pay your vendors and creditors that have provided working capital loans, just do everything you can to pay the full amounts on time. If you can pay early, that’s even better. If your creditors are reporting to Dun & Bradstreet in particular, they are the only bureau that assigns perfect scores for early payments.

 

4. Try to Deal with Reporting Lenders

Ask any creditors you deal with if they submit reports to credit bureaus. Not all lenders will, so try and get your small business capital from those that are most likely to report your on-time payments. Banks are usually the safest bet, as they all typically will submit reports to credit bureaus. The more likely another type of small-business lender will lend to you with poor credit, the less likely they will actually report payments to credit bureaus.

 

5. Maintain Your Public Records

When someone accesses your business credit report, they will also be able to see any public records that have been filed under your business’s name. Such filings may include court judgments, liens and bankruptcies. All of these will impose negatively on your business credit report and can be there for years. The more you can avoid legal and financial issues that will be publicly recorded, the better off your business credit report will be.

 

For more information on building your business credit, contact Main Street Capital today.