Just as plants need water to grow – growing companies need cash. Why do you think they call it liquidity.
We know that as individuals, we need to develop a credit history, pay our bills on time, and start small with our personal credit and build it up as we go. Why do we expect our business to be any different.
Here are some tips you might want to consider if you want to improve your bankability:
1. Your tax advisor may be saving you money on taxes and destroying you future ability to get a loan. Banks look at historical documents like your P&L, Balance Sheet and TAX RETURNS as part of the data they use to decide if you are credit worthy. They need to have confidence that you will be able to repay what you borrowed. Year after year of tax returns showing little to no profits is NOT a way to inspire confidence in your banker.
2. Get a personal business banker. It’s free! Of all my professional services providers – accountants, auditors, lawyers, etc. Only my personal banker spends the time to counsel me without handing me a bill for his services at the end. Plus – the more they know about my business, the more likely they are to introduce me to other businesses that might help my business grow or go to bat for me when I need it. When we grow – they grow as more money goes into my accounts and their bank. Its a win-win situation.
3. Start small and work your way up. Open a line of credit for a reasonable amount to begin. Use it – pay it off. Use it – Pay it off. Show the bank that you know who to manage your credit relationship wisely and they will often reward you with higher lines of credit.
4. Understand the different types of credit and diversify your portfolio. Many banks have great resources on line to help you calculate the type of credit that is right for you. A good example is Comerica Bank – one of the top small business lenders in the country. Go to www.ComericaBank.com and click the Small Business or Corporate tabs based on your company size. It is full of great information PLUS calculators to help you determine the right type of credit for what you might need.
5. Monitor your progress. Talk to your personal business banker. Know what your Dunn and Bradstreet profile says about you. Create a credit portfolio and manage it like you do your stocks and other investments.
So you might want to work on your business credit – you never know when you might need it!
Thanks for stopping by. Stay Tuned…