What is Business Credit? Why do you need to care about it? - Fly Credit

What is Business Credit? Why do you need to care about it?

By Jake Song

Business Credit is the foundation of overall fundability. Many profitable companies can afford to have CFOs, but more than 85% of businesses today in America are made by small companies that have NO CFOs. Business Credit allows you to get funding for your business without any personal guarantor. With most business credit cards, you need to have good CONSUMER credit to get approved. But what if your personal credit isn’t so good and you don’t have enough income to prove? This is when BUILDING BUSINESS CREDIT makes a ton of sense. Even if you have good personal credit, building your business credit helps you get even more money and without a personal guarantee. Business credit is credit in a business name, that’s linked to the business’s EIN not the owner’s SSN. When done correctly, business credit can be obtained with no personal credit check and no personal guarantee.

What is Fundability?

In short, fundability is based on how lenders are viewing borrowers in terms of credit risk. Most borrowers believe that as long as they have good payment history, they can acquire a substantial amount of funding. In a short answer “yes”, but it gets more complicated than that. The whole fundability is based on Business Credit Score. 

Ask yourself these questions:

Have I ever been rejected to get a business loan?

Could I use a line of credit to raise capital?

Do I need now or in the future need to lease a piece of equipment?

Am I already stuck for having a personal guarantee loan?

Would I want to obtain cash business cards with a 0 percent interest rate for over 18 months?

How is Business Credit Score calculated?

Just like your personal credit score that is calculated by credit bureaus, business credit score works the same way. Mainly there are three major business credit bureaus, which include Dun & Bradstreet, Experian, and Equifax. Each agency uses its algorithm to calculate your business credit score.

Dun & Bradstreet uses PAYDEX score, which ranges from 1 to 100. Ultimately, your score based on the payment history information D&B has on its system. The higher the score is, the better your payment history is. 

The Equifax business credit score is made up of three different components to calculate your business risk: 1. A payment history 2. a credit risk 3. a business failure score.

Experian used Intelliscore Plus, a credit score that ranges from 1 to 100 that calculates multiple factors in your accounts such as your payment history, years of in the business, legal fillings, and public record. Experian credit score is the fairest system of all. 

Business Credit is the foundation of Fundability. If you need any help feel free to reach us out 1-800-727-4791 ☎️

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