8 Steps to Building Your Business Credit

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StrategyDriven Managing Your Finances ArticleOne of the biggest issues facing small and medium businesses is financing. And the ability to secure finance is often directly related to the business’s credit score. But it’s often a challenge for small businesses to establish their credit when they have nothing to show for it. However, there are some things any new small business owner can do to boost their credit and get access to more financing options. Here are the exact steps you should follow to boost your business’s credit score.

Know the Basics

If you want to build your business’s credit, you first have to understand how it works. While consumer credit scores are usually rated on a scale of 300 to 850, business credit scores are usually rated from 0 to 100. A variety of other indicators are also used to calculate business credit scores, like Fico’s rating service for small businesses (SBSS), which rates business credit on a different scale.

You should also know that each of the main credit bureaus for businesses, Dun & Bradstreet, Experian and Equifax, all have their own set of criteria when scoring a business’s credit. However, for the most part, they will all look at things like credit obligation data, how much outstanding debt you have with lenders and supplier, your total credit utilization, background info on your company, such as what sector you operate in and how long you’ve been in business, and various other factors.

While having no history can make getting credit more difficult, it’s also the perfect place to start since you have no blemishes on your record yet, which allows you to start building your credit on solid grounds.

In 2019, it becomes very hard to understand the credit score world, if you want to read more about credit score and basics, check out this guide from the experts of Finimpact.

Make Sure That Your Finances are Separated

If your business happens to be incorporated, keeping finances separate will be easy. But if you’re a sole proprietor, you have to make sure that you completely separate your finances and that you keep your personal transactions and business transactions separate at all times. This means opening a bank account and getting a business credit card as well.

When choosing a business credit card, make sure that you pick one with perks that will benefit you in your line of business. For instance, if you spend a lot on wireless phone service, there are business credit cards that will give you bonus cash back on wireless spending. It would also be wise to check reviews of business credit cards Canada so you can compare things like APR and rewards as well.

Keeping your finances separate will ensure that bad personal spending habits and debt do not end up affecting your business credit score and vice versa.

Get a DUNS Number

Dun & Bradstreet is a major credit bureau recognized worldwide and can play a vital role in helping you establish your business’s credit. You can also use your DUNS number to bid on a variety of government contracts.

Once you get your DUNS number, they will open your business’s credit profile using that number. It will help them track your vendor and lender relationships to get a clearer picture of your business’s financial stability and assess your creditworthiness.

Open Multiple Credit Accounts

Getting a business credit card and bank account is only the first step. Now, you should try opening more credit lines to help you establish your credit. These accounts will allow you to show that you are a trustworthy borrower. But you have to have discipline and use them correctly, however. Making one-time payments will help credit bureaus keep a track record of your financial activity and stability and adjust your score accordingly.

Some examples of accounts you could open include gas cards, store accounts, and lines of credit. Not enough small businesses open a line of credit, but it’s an important step for any business trying to establish their credit.

Choose Vocal Vendors

While you want to flex and use that credit, it’s essential that you spend money with vendors that will actually be reporting your activity to credit bureaus. You have to make sure that you spend your money with vendors who have an actual reporting strategy in place. If you aren’t sure, just ask them. If they don’t have one, then you should consider spending your money somewhere else.

Be Responsible

This should be common sense but make sure that you pay your bills on time is essential if you want to establish a strong credit score. And while paying on time is good, paying early is even better. Some indicators will only give you a perfect score if you consistently pay early, so do everything in your power to pay your bills as soon as possible if you can.

Make Sure You Check Your Reports Often

You’d be surprised at how many people got credit rejected because of false information on their credit reports. Maybe it’s an outstanding bill that they paid but didn’t show. Or an account that was closed that still shows as active. These are all things that could affect your credit negatively and that you must address immediately. All you need to do is request a copy of your credit report and look for any inconsistencies. If you see any, credit bureaus will have a clear and easy to set of procedures you can take to correct errors.

Use Your Credit

Credit utilization is an important factor when credit bureaus assess your credit score. So, it’s important that you actually use your credit and don’t leave your credit lines sitting there without using them. This is why you should start using them as soon as possible, but make sure that you don’t max them out. As a rule of thumb, you should aim for about a 20 to 30 percent utilization rate.

Conclusion

Building your credit as a small business is possible if you take the proper steps and maintain good habits. Make sure that you follow the tips in this article if you want to start building your business credit the right way.

Understanding Private Equity: What You Need to Know

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StrategyDriven Managing Your Finances Article | Understanding Private Equity: What You Need to KnowIf you are looking for an alternative investment method, you might want to consider Private Equity investment. This involves investing in capital, also known as equity, that is not publicly listed or traded. The parts of a company that are available to be invested in are not publicly owned, quoted or traded on a stock exchange. Deciding if private equity is the right method for you can be tricky as it mainly comes down to your feelings on opportunities on a case-by-case basis. However, understanding function that private equity investments play and the opportunities they can offer businesses and investors alike will help you make these decisions further down the line.

Why Do Companies Opt for Private Equity?

The purpose of private equity is to raise additional funds in order to bring about a positive change in the company being invested in. This can cover situations such as growing a business (which requires ‘growth capital’ for expansion or development); financing operational changes such as restructuring to make the business more profitable; financing acquisitions of other companies; or delisting a public company in order to give it private status. The latter gives a company the opportunity to focus on long-term growth without the pressures of quarterly earnings reports. Private equity also offers businesses access to funds where they would be unable or unwilling to source financing from traditional sources such as business loans.

What Are the Different Types of Private Equity Funding?

  • Leveraged Buyouts involve buying out a company, improving it and then selling it on for profit. This is the most common example of private equity.
  • Distressed Funding is where money is invested in troubled or even bankrupt companies and turning them around by making necessary changes or selling off assets such as machinery, patents or property. This type of funding is also referred to as ‘vulture financing.’
  • Venture Capital is a form of private equity in which private investors (sometimes referred to as ‘angels’) provide capital to entrepreneurs. An example of this is the television program Dragons’ Den.
  • Real Estate Private Equity commonly involves funding commercial properties and Real Estate Investment Trusts. This type of funding involves higher minimum capital in comparison with other types of private equity funding and involves longer investment terms too.
  • Fund of Funds is the most accessible form of private equity. It primarily involves investing in mutual funds and hedge funds, which offer the opportunity to invest where you may not be able to meet the minimum capital alone.

What are the Benefits and Disadvantages for Investors?

For the investor, private equity offers the opportunity to invest in early-stage companies and ideas such as with venture capital opportunities. As with any investment opportunity, there are significant risks involved in private equity, but it presents the unique opportunity of funding companies and innovations that align with your personal interests. Using investment insights in order to gain full understanding of the opportunity at hand will be of vital importance for many private equity investors. Many people see private equity as an opportunity to invest in improvement and believe that firms seeking private equity are more likely to give higher returns due to their drive for growth.

Sources of Money That You Could Be Neglecting

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StrategyDriven Managing Your Finances Article |Sources of Money|Sources of Money That You Could Be NeglectingWhen it comes to improving our personal financial situation, it’s important to think about how you can budget to maintain a healthy and balanced lifestyle. However, it’s no secret that a little injection of cash could be a fantastic way to greatly improve your financial situation and give you a nice little boost. Whether it’s to pay off a debt early, go on holiday sooner or buy something that you’ve always wanted, it’s always nice to have a hidden source of money that you can rely on. So in this post, let’s take a look at a few hidden sources of money that you might have been neglecting.

Your friends and family

While borrowing money should be seen as a last resort in most cases, it’s still an option should you need to pay for an emergency expense or if you’re having financial difficulties. Alternatively, why not chase those friends and family members for debts that they owe you? This is common for anyone that lends money to other people, so don’t be afraid to dig into past debts and ask for a favour today.

Your accidents

You hear it all the time in adverts; call this number or contact that company to help you claim compensation. While it can seem spammy at first, it’s actually fairly important to understand how to get in touch with a work injury lawyer should you actually end up in an accident. It’s not just about claiming money from a situation that negatively affected you. It’s about claiming that money so you can pay your medical expenses and stabilize your income should it disrupt your ability to make a living.

Your belongings

People have a tendency to hoard things. Thankfully, a lot of the things we buy actually hold value pretty well. Even old electronics such as video games and smartphones can hold value quite well, meaning you can sell them for a decent chunk of money. This is true even for collectable items that might be gathering dust in your attic, or even antiques and pieces of furniture that you have no need for. Sell these items locally or on websites like eBay for a little boost of cash and also a convenient way to declutter your home.

Your knowledge

A lot of people have skills that are marketable on the internet. With the advent of online study, blogging and content creation, it’s completely possible to make a bit of money on the side by just having expertise in a subject and being willing to talk about it. Get started on your blogging journey today and you can begin creating an online presence by teaching others about a subject you have expertise in. This even has the potential to turn into another stable source of income and can be a fantastic way to explore your passions.

There’s money in everything and, as long as you’re willing to invest some time and effort, you can easily extract it to help with your financial situation.

4 Business Finance Strategies You Need to Know About

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StrategyDriven Managing Your Finances Article |Financial Strategy|4 Business Finance Strategies You Need to Know AboutAs well as focusing on improving sales and generating more profit, all businesses also need to understand how to manage their internal finances and stay on track. Any slip in your financial strategy could have a negative effect, which can harm your business in the long run.

Why Do You Need a Financial Strategy?

To pursue your goals as a business, you need to understand your finances and how your funding is going to allow you to accomplish those goals. Having financial strategies in place means you can better focus your money on the things which matter, namely, the development and growth of your business.

Here are four financial methods you can implement to help your business stay on track.

1. Consider Your Funding Options

If your main financial concern is gaining the required funding to get your business off the ground – whether this is a small business endeavor or an entrepreneurial mission – then you will need to consider your funding options wisely.

You should always look for a funding option that you know you can comfortably pay back, and which eliminates any extortionate extra costs. Businesses like Become.co stand ready to help those businesses who might be unsure about the funding options available to them and would like to explore the possibilities.

2. Control Your Expenses

Have a solid business idea, product or service does not necessarily mean that it will be a financial success. What matters more in business – especially during the growth period – is always staying on top of your business expenses to ensure that your business does not fail very quickly if it does not make a high amount of sales in the first instance.

You should implement a firm strategy which allows your business to work at its most productive, for minimum cost. Understanding your set outgoings and look at ways in which you can reduce any expenses if your business sales are at a low.

3. Manage Any Business Risk

This doesn’t just mean financial risk; it means any variability within your business, which could compromise its ability to make a solid profit. This could include:

  • A new business competitor
  • Change in the demands of consumers
  • Environmental factors, such as bad weather, meaning deliveries cannot be made, and therefore orders cannot be processed
  • Technological issues
  • Change in technology
  • Change in business regulations

Only by understanding the risks posed to your business can you work to set up safeguards against them.

4. Don’t Put All Your Financial Eggs into One Basket

You don’t want to have pooled all your assets and resources into one area, only to have that area fail. By spreading out your investments and resources, you are securing less vulnerability if one of these areas should go wrong. When making investments within your business, think about a broad range of unrelated options that let you spread out your finances and assets into many different areas for more financial security.

The Importance Of Personal Loan To Start Or Expand A Business!

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StrategyDriven Managing Your Finances Article |Personal Loan|THE IMPORTANCE OF PERSONAL LOAN TO START OR EXPAND A BUSINESS!Throughout all stages of your life, everybody needs more money. Maybe they want to buy their desired items, but because of a lack of funds, they seem unable to buy. The problem here is that someone who has very little resources at a certain point has no obligation to see hopes and aspirations? Is he not allowed in time to meet his wishes?

Does he have to come back to reality? Yes, since these questions are answered. For such reasons just loan services are present.

Loans for those crucial situations that may happen at any moment are handed out to people. Throughout any lifetime there may be a case where you desperately need money. At that same time when you do not want the colleagues to make money.

Every crisis can arise when a great deal of money is needed. There are different kinds of loans, such as home mortgages, personal loans, college loans, corporate loans, etc. Every kind of loan that is required can be taken.

Loans are of various kinds, however, the important ones we are dealing with in this section are personal loans. The various loans are distinct and intended for multiple uses, however, personal loans are sometimes used for commercial reasons. It is, therefore, necessary to realize whether this should be achieved, and whether or not it makes perfect perception to have a personal loan. If you want to

If anyone wants to know what is probably the fastest loan? Click here to find the cheapest and quickest loans in your area. However, the importance of personal loans for starting or expanding a business is mentioned here.

IMPORTANCE OF PERSONAL LOAN FOR A BUSINESS

Take the following into consideration, but keep in mind that the optimal loan service relies on a range of factors, such as the lender’s performance, wages, properties, standard payment period and original intent of line of credit or mortgage.

1- Charges for start-up

Credited resources help to pay investment costs for businesses. Crediting capital is among the most important causes of finance for smaller companies. Tiny management of companies. Even new businesses increase their loans over upfront costs. The reality that the lenders want to depend on loans, deposits and credit cards to finance new business transactions does profit entrepreneurs from the liquidity of entrepreneurs. Consumer loans reduce the individual financial burden that corporate owners carry on at the beginning of a new venture.

2- Support Building

For entrepreneurs, a strong business credit history is beneficial as it improves the reputation and potential of the enterprise to encourage new investors in the prospect. A business loan is a mortgage that only occurs in the original company and is distinct from both the personal loan of the company owner. The loan is generated by the applicant as it makes regular payments to credit companies who provide a credit history for the new company.

3- Specifications are minimal

If the money required is high, a private loan can be allowed. The fee is disbursal and therefore does not involve the same amounts of paperwork as a business loan. It might be all right so that you can get a personal loan if you ever need a couple of short amount of money.

4- Tools for reimbursement

Companies are generally able to repay debt more flexibly than persons. To companies with insufficient liquidity to reimburse money borrowed, this one is important. Some companies pay debts per month, although new companies might have the choice of structuring their expenses so that, if the company becomes less successful, it is smaller at the start. As long as the company earns money, payments continually increase.

5- Deductions on investments

The Financial services authority provides entrepreneurs with the right to subtract justifiable business costs. Owners of businesses can subtract against their income tax report the interest charged on commercial loans. This is good for begin-ups that need to recycle their earnings into the venture.

6- Making Tax Payments

Your projected annual tax contributions cover no rate, quick-term government loans, and state taxes. Why are you making payments on the money that you earn?

Secondly, because it needs the profitability. You may not even have sufficient money inside to make equivalent contributions if you are running an enterprise or sole owner who receives unusual or periodic profits–like a cafe or an accountancy agency that specializes in professional services. You will settle the debt by the complete declaration deadline or immediately thereafter by using credit cards to pay the taxation. Without such a prolonged zero percent APR contract period for several months, however, higher interest rate rates undermine over longer periods the collection of credit card taxes. A personal loan of less value is a much more affordable option.

7- Protection

Personal loans are unprotected in default, implying that, broadly speaking, you do not require protection to enjoy the benefits of them. On the other side, corporate mortgages are often free, so you need to guarantee it. If you don’t have or do not want to have leverage for a loan, revolving credit is a great way to increase funds.

8- Time and return date

If the purpose of a mortgage is to offset an immediate cash deficit a personal loan can be significant. Even though you have unsecured loans to deal with such circumstances, it is appealing because of the relatively easily of accessing a private loan. Furthermore, you may choose a private loan for the company, when you are confident that you would be able to pay back the sum inside the specified period or perhaps even i.e. before-pay the project.

Conclusion

You’ve got opportunities. Assess the personal and business accounts, have your investments to allow your company somewhat more intimate and consult with a mortgage professional to give you some idea if your investment makes complete sense. An actual lender’s credit history is based on a personal loan. You might or could never take a personal loan when you do have debts available now, based on your salary.