Page 43 - EQ Mag-2019

BUSINESS DEVELOPMENT RESOURCES

5 Factors That Affect

Your Business Credit

By Larry Gilmore

hat makes up your business credit score? filing to use as security for another loan, explain that
What gives you the best chances of getting a fact in advance to get those items excluded from
Wloan? Here are a few factors that play into any blanket filings, or, alternatively, get the loan or
your business credit picture, and what you can do to account with the more specific UCC filing first. Some
make the most of them: experts recommend opening accounts with competing
UCC filings at the same time, and negotiating the
1. Payment History - Your payment history is an details with each party simultaneously.
important part of your business credit profile, and is
what your D&B Paydex score is based on. Many credit 4. Company Financials - With D&B, it’s important to
opportunities come with a minimum Paydex make sure your financials in your credit file are up
requirement. What you can do: always pay vendors to date. If they are not, it could negatively reflect on
EARLY. On time is “okay”, but paying early (as in your company when the lender is comparing the
before you receive the invoice) is best. available data. What you can do: update your financials
on your credit reports so that they reflect your
2. Credit Applications - Believe it or not, multiple current circumstances, and plan to do so periodically.
applications for credit can be a red flag that will keep
you from getting approved for a loan. Too many in a 5. Company Legal Structure - The legal structure of
short period of time will make your company look your company (LLC versus INC versus Partnership,
desperate and be a sign to potential lenders that etc.) can also affect your business credit. Lenders are
things are going downhill. What you can do: plan your less likely to loan money to Sole Proprietorships
use of credit accordingly, and keep applications to the and Partnerships than Corporations or Limited Liability
minimum necessary to accomplish your goals. Companies. What you can do: if you aren’t
incorporated, you should be. The advantages span far
3. Blanket UCC Filings - One thing that many people past just your ability to get credit.
don’t realize is that they need to pay attention to
the order in which they get certain types of loans, and There are other factors that affect your ability to get
what UCC filings the lenders will file. Some credit, such as the amount of debt you already
lenders may file a “blanket” UCC filing, which have, how heavily invested you are in your company,
essentially says they have an interest in ALL of your and even your personal credit can play a role in
assets. your approval or denial. Here we’ve covered five of
them. In the end, the better the all-around picture
These blanket UCC filings will then take precedence you can paint, the better your chances of getting
over any subsequent ones, which drastically reduces approved for loans will be.
your ability to get credit elsewhere. What you can do:
plan your credit carefully, and negotiate UCC
filings according to what your needs are. For example,
if you need particular assets excluded from a UCC

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