Small Business Owners Struggle To Get Loans
According to a recent article by Andrew Johnson in the Arizona Republic, small business owners in Arizona are finding it difficult to fund their operations these days, and 97.3 percent of employer establishments in this state are classified as small businesses. As a result, many employers are dipping into personal savings, putting off growth, cutting salaries and jobs, and facing bankruptcy. It seems banks only want to lend to firms who already have excellent balance sheets and credit histories. This is a worrisome message if it means there is only lending available to those that need it the least, but it’s also a clear message about the importance of building good credit.
According to Johnson’s article, Wells Fargo, for example, typically looks for a FICO score of 680 or higher for traditional commercial loans and 640 for loans through the US Small Business Administration, and in many cases personal credit is hurting business owners’ chances of qualifying for loans and business credit lines.
One way for small businesses to build or repair credit is through business credit cards. A Tower Group report indicates that over 2/3 of small businesses use credit cards, and 40 percent use them exclusively; with prudent and careful management, business credit cards can help improve a FICO score over time.
Some tips on proper management of business credit cards and how to build a better credit rating can be found online in the advice sections of sites like SmallOfficeCredit.com.
