5 statistics that highlight the importance of business credit for small businesses:
- Improved Access to Capital: According to a survey by the Federal Reserve Banks, 43% of small businesses applied for financing in 2020, with credit cards being the most popular source of funding. Having good business credit can increase your chances of being approved for loans, credit cards, and other forms of financing, giving you access to the capital you need to grow your business.
- Lower Interest Rates: A study by the National Small Business Association found that small businesses with good credit scores are more likely to receive lower interest rates on loans and credit cards. This can save you thousands of dollars in interest charges over time, making it easier to manage your cash flow and invest in your business.
- More Favorable Payment Terms: With good business credit, you may also be able to negotiate better payment terms with your vendors and suppliers, such as longer payment windows or lower upfront deposits. This can help you conserve your cash and better manage your inventory and expenses.
- Increased Credibility: Your business credit score is often used as a measure of your business’s financial health and stability. A strong credit score can increase your credibility with customers, vendors, and investors, making it easier to attract new business and secure financing when you need it.
- Protection of Personal Credit: Finally, establishing business credit can help protect your personal credit score. By keeping your business finances separate from your personal finances, you can reduce your personal liability and ensure that any negative financial events affecting your business do not impact your personal credit.
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