Expanding credit for small businesses is urgently required.
Every small business owner is in desperate need of money right now. Your credit score and credit limits should be improved regardless of whether you require money right now. Let’s be frank about this. Covid-19 didn’t vanish with the onset of spring, and infections are once again on the rise. As long as consumers don’t feel safe, they won’t return to normal.
It won’t be soon. If a vaccine isn’t widely used by 2021 or widespread testing, it will not be effective. That means that small businesses will be in a slump for months if not a year, before customers return to pre-pandemic levels because the President opposes widespread testing.
You’ll need access to credit if you want to make it through this dry spell. Furthermore, your creditworthiness is likely to be better now than it will be in six months. Here are some options for you:
Check your credit reports.
Personal and business credit are intertwined when running a small or self-employed business. You are permitted to receive a free credit report from each of the three major credit reporting agencies once a year under federal law.
Covid is now offering free weekly reports through April 2021 as part of the program.
Get a handle on your credit history.
Review your credit report thoroughly once you have it in your hands. Erroneous information should be challenged or cleaned up. Even minor errors can result in higher interest rates or reject future credit requests.
For example, “Rhonda Abrams” with an entirely different social security number and address ended up on my credit report years ago because of a mistake made by another “Rhonda Abrams.” Check this out as soon as you can because it took me a while to get that off of my record.
Get a credit card or increase your credit limit.
LOCs (or “lines of credit”) from banks and credit unions are the most common form of business credit. These are predetermined funds that you can draw on as needed, with the understanding that they must be repaid in full within a year. The interest rate is only a few points above the
prime rate in most cases. Talk to your banker about setting a line of credit (LOC) or increasing the amount of credit you have available. Read Also: craigslist fort collins
Raise the amount of credit you can borrow. Your credit cards’ credit limits have probably not been adjusted in a while. Instead, call your credit card company and see if they can increase your credit card limits for you.
To keep your credit cards safe, use them sparingly.
You don’t have to spend all of your credit card limits just because you have a higher limit. However, when it comes to accruing debt, using a credit card is by far the most expensive option. Only charge debt you can pay off in a month on your credit cards.
Request cooperation from your vendors.
Don’t forget to give credit to your vendors. They rely on you to keep their business afloat. However, even if they’re a small business, you can try to work out a better payment plan with them by reaching out to them and seeing if you can get a better deal.
Keep an eye out for “fintech” businesses.
Online lenders have taken action to fill the funding gap created by the growing number of small businesses that are in desperate need. These so-called “fintech” lenders employ methods other than traditional bank checks to determine a company’s creditworthiness, such as access to your QuickBooks accounts or social media engagement.
You’ll hear back within hours, if not minutes, about whether or not your application was approved or denied. There is, however, a caveat! You’re likely to pay high interest rates, and lenders will add on additional fees that you won’t be aware of (often hidden from you). Be cautious of these “innovative” sharks and stick to the tried-and-true methods.
Get government assistance.
PPP (Paycheck Protection Program) and the EIDL (Earned Income Development Loan) are still available for government loans (Economic Injury Disaster Loan). The deadline for PPP applications has been extended to August 8th, and there is still plenty of money available to those who qualify (though finding a lender may be a bit of a challenge).
There is a chance that the PPP money will be forgiven, but the interest rate is only 1%, and EIDL’s interest rate is 75%, making these loans relatively cheap.