By Angela Wills
One of the most well known facts about starting a business, especially a small business, is that there will be challenges to come and obstacles to overcome. Entrepreneurs often run into issues that place their businesses in jeopardy and can lead to dire consequences for their companies. One of the biggest obstacles encountered is that of obtaining appropriate financing to operate a successful business.
Securing capital for the business has grown significantly harder for many small businesses, in spite of their being more available financing options. There is currently a wider platform of lending options available for small businesses but there is a wrinkle in the process. This missing piece of the puzzle is a critical step that many are simply not paying attention too and it’s causing major frustration to those business owners who face rejection for their lines of credit and loans.
What is the ripple in the system of bank financing? Small business loans and denial rates are not aligned to properly help small business owners successfully realize the dream.
An examination done by The Small Business American Gap Report looked into the economic blueprint and compared it to a year ago. Findings were that although a positive picture was painted surrounding the success of small businesses, almost 30% of them, find it challenging to cut their operating costs. In addition, there is difficulty encountered in being able to properly prepare for unexpected expenses. A survey revealed that within the last year, almost 20% of businesses said they were faced with the consideration of closing their business due to failure to grow and money issues.
The Missing Link
A study showed that the main reason many small businesses weren’t able to obtain small business loans is because they simply don’t understand their business credit score. In fact, almost half of those surveyed, weren’t aware that they even had a business credit score. Almost 75% of those surveyed, had no idea where to find the score or information pertaining to it.
Many business owners start a business with a goal, a business plan but no real insight on the condition of their business credit and how to maintain and improve it. This allows for significant harm to be done to the credit of the business by maxed out credit accounts that could crated permanent damage to the financial standing of the business.