Shakespeare once advised “neither a borrower nor lender be,” but success in small business can require owners to be both. Credit and lending can become business assets.
Credit Fuels Growth for Small Businesses
Expanding your small business is difficult without using credit. You would have to save the entire amount needed for the project before you could even begin, and that could mean missing a business opportunity. The time to act is when the opportunity exists, which will not always be when you have sufficient cash available.
In order to be ready to act on a moment’s notice, you should have a strong credit history for your business. Building the credit history should start the moment your business is formed by getting a D&B D-U-N-S® from Dun & Bradstreet. This is a number that will be used to track the payment history of your business; in many ways, it is similar to a Social Security Number for a small business credit report.
Consider leasing equipment and obtaining a secured credit card as additional steps to building a credit history. Have a solid business plan and detailed financial projections ready to go at all times so that you can submit a loan application quickly.
Lending Boosts Sales for Small Businesses
Cash flow is the lifeline of a small business, and that is true not just for your own business, but for your customers as well. You can help them improve their cash flow by extending credit terms. This will involve some risk and you should only make the credit decision and set appropriate terms after reviewing the company’s credit history.
Business credit reports on other small businesses are available from Dun & Bradstreet; these reports will give you a quick summary of your customer’s financial health, along with a credit limit recommendation. Using credit wisely and lending to good customers can be the tools that take your business to the next level.