Securing business capital can be a daunting task for any business owner. A significant number of businesses struggle due to a lack of knowledge regarding financing strategies. In fact, the Small Business Administration indicates that a large percentage of business loan applications face rejection.
Given the complexities of establishing business credit, many business owners are turning to business finance coaches for expert guidance. A common pitfall is attempting to secure business financing using personal credit. It’s crucial to keep personal and business credit separate, avoiding the use of a social security number for business financing.
Until a business establishes three distinct business credit scores, any financing obtained will heavily rely on personal credit scores and assets. This is analogous to applying for a home loan without any personal credit history – the application would likely be denied. Therefore, establishing business credit scores is a fundamental step in the financing process. However, building these scores is only the beginning; numerous other factors must be addressed before applying for business loans.
According to finance specialist James Christy, overlooking even one of these critical elements can lead to denial. A proficient business finance coach ensures that all necessary steps are completed correctly.
For instance, lenders might reject a business loan application if the business’s legal name isn’t properly listed with 411 Directory Assistance. A low bank rating or the absence of credit files with the three major business credit reporting agencies can also result in denial. Many lenders now require businesses to possess strong credit scores from all three agencies. These are just a few examples of the prerequisites for seeking funding approval.
The process of establishing business credit is generally more intricate than setting up personal credit. Some business credit agencies may attempt to charge a fee simply to open a credit file, but a knowledgeable business finance coach can explain why this payment is unnecessary. A qualified coach will guide businesses in establishing accounts with all three reporting credit agencies.
A business finance coach provides business owners with a structured, step-by-step approach to preparing their businesses for financing approval. They offer insights into how to build not only business credit but also the kind of positive business credit that banks and other lending institutions require. A good finance coach will typically direct you to sources for business credit cards, vendor lines of credit and for other creative forms of financing.
To find a business finance coach, search online using terms like “business finance coach.”