In case a crisis arises, a business that is low in funds will rely more on their credit to keep on with their everyday business. Most of the small businesses are the most affected in times of crisis since they are likely not to have enough emergency capital set aside. As a business owner, it is good to safeguard your business credit and find companies that help build business credit to improve and maintain your business credit score in case you need a loan in the future. With this done, your clients will respect your business and, in return, bring more business as possible hence making it grow even in bad times. Below are 6 ways that will help you to be able to safeguard your business credit in time of crisis.
1. Start multiple lending relationships
Starting a banking relationship is key to most of the small growing businesses. However, some lenders will tend to shift their credit appetite for countless reasons. When opening up discussions with some other lenders, this will offer substitute sources in case your primary relationship fails to work out. It is always good to have money since, in many certain occurrences, banks will want to lend money when you do not have the money.
2. Scrutinize the sources to use
Credits are not equal since they are of different types. To have full power over the repayment intervals it is good to consider using the best credit sources. For a business owner, it is important to have know-how on how you will be able to service the debt over time since the debt equals a credit. Consider funding sources that have no much difference to your financial plan instead of rushing for the big checks that might later get heavy for you to clear up when the worst happens. The crisis will come to an end after some time, and you do not want to feel the pain of debts afterward.
3. Keep in touch with your chain of supply
When there is a crisis, it is good to remember that your buyers and suppliers are also most likely to be facing the same issue concerning credit as you are. In such cases, it is good to try and maintain constant communication with your supply chain to puzzle out solutions together. Keep in touch with your buyer, lenders, and suppliers often and create a short term investment in mutually beginning sustainable payable terms that will later pay off well.
4. Enhance relationships with local banks
National banks with a cycling accounting officer might tend to be harsher in comparison to the local banks who might be quite forgiving. Create and also devote the time that you will use to establish a real and credible relationship to build personal brand equity. Having done this, it will have a dramatic impact and pay off in recognizable measures that will exceed the time you took in building the relationship. Real relationships are important in sustaining your business credit during a crisis.
5. Meet your promises at all times
Your suppliers are also as hit as you probably are and also have a lot of customers in the same bad state as you are. Reach out to the vendors and let them know how you are faring in the crisis time. In case you need any payment terms, it is good to ask for them and be clear on when and how you can resume back to the first terms. Mainly, ensure you meet the terms of the new agreement you had. Do not fail to make any payment since if you fail, then you will end up losing the trust you had with your vendors and the risk of being cut off.
6. Be open about your demands
In the course of an economic crisis, lenders typically reinforce their underwriting standards. To be able to show vendors, partners, and suppliers that you creditworthy to have your business access credit, it is good to have a strong business credit score. Ensure you pay your bills early and communicate to your suppliers in case you have any problem when making payment. Being open will make your suppliers want to work with you and preferably offer extensions or discounts.