How Small Companies Can Boost Their Credit

For the smaller company that lacks investors with deep pockets, possessing a healthy credit rating will certainly impact that company’s rate of growth and ability to develop over the years. This is especially true for startups in niche markets, where initial growth can be very slow and even plateau until marketing and word of mouth kick in to capture a secure customer base. To build a small company’s credit rating into something that will make lenders WANT to finance loans takes patience, savvy, and a complete understanding of the inner workings of business credit management and the tricks of the trade available to establish a reputation for sterling credit within the confines of an industry or trade. 

One of the reasons so many startups fail so early on is that they don’t protect their initial credit rating carefully enough. There are dozens of seemingly small and unimportant things that can smudge a credit record for an enterprise to the point that short term repairs are impossible. Personal credit scores for owners and upper management are often factored in to the equation when granting credit to a new company. Any previous vendors who have had trouble collecting a debt from anyone connected with a new company can gum up the credit works with years by going to small claims court. In other words, bad credit for whatever reason, means no credit for a startup.

Successful small companies know to spread their purchases out among different vendors, and not buy from just one or two only. This prevents major bills from falling due that can become major credit problems for a company. A vendor who is owed a small amount is going to be much more patient and accommodating than a vendor who is owed thousands of dollars and needs to collect immediately or face his own credit problems.