The Crucial Reasons to Keep Business and Personal Finances Separate

The Crucial Reasons to Keep Business and Personal Finances Separate

If you’re like many entrepreneurs, you likely used your own finances to start your business and didn’t bother to open a separate bank account. However, whether you started your business as a side hustle, wanted to test out a business idea, or are working as an independent contractor, mixing business and personal finances is never a good idea. Once you start making money and/or accumulating expenses, you’re taking unnecessary risks.

Keeping Business and Personal Finances Separate

As the business grows, it’s crucial to set up boundaries between your business and personal finances. Here’s what you need to know:

Hobby Vs. Business

The IRS assumes businesses are started to make a profit. Hobbies may or may not make a profit. Any profits you make from your hobby are listed as income on your personal tax returns and you have to pay income taxes on them. The drawback for a hobby is you cannot  claim any business deductions for expenses you may incur related to the hobby. 

If you want to claim business expenses as deductions, you must report any income or loss on a Schedule C (Form 1040). Keeping business and personal finances separate supports your intention of actually running a business and not a hobby in the eyes of the IRS, allowing you to make those deductions.

Choosing a Business Entity

The legal structure of your business also requires you to keep business and personal finances separate. If you set up your business as a corporation or Limited Liability Company (LLC), the business is considered a separate legal entity and therefore requires a separate accounting ledger and bank accounts. If you structured your business as a sole proprietorship and all profits/losses are tied to you personally, it’s even more essential to keep business and personal finances separate in the event the IRS decides to audit you. An audit requires you to disclose proof of your business expenses and income, so it’s important to keep good records. Separate business finance records also makes it easier to manage bills and tax responsibilities.

Businesses aren’t only at risk of an audit by the IRS. Other state and federal agencies could ask for financial records in regard to registration, corporate compliance, employment and sales taxes.

CARES Act Funding

When COVID-19 hit and the government created the CARES Act, small and large businesses across the country scrambled to get paperwork together to apply for disaster relief funding. Businesses with their financial and legal paperwork ready to go got the first crack at the money. Businesses struggling to show profits and losses from the business missed out. In addition, some lenders required businesses to have business bank accounts, while others only accepted incorporated businesses.

If you were lucky enough to receive money from the Paycheck Protection Program (PPP) and/or the Economic Injury Disaster Loan (EIDL), you will eventually be required to show how the money was spent. Already, the Justice Department has filed fraud cases against businesses that received disaster relief funding and spent the money on illegitimate expenses. 

The PPP requires 75 percent of the loan must be used for payroll costs; 25 percent can be used for rent, interest, and business utilities. EIDL funds must be used for fixed debts (rent, etc.), payroll, accounts payable and other bills unpaid due to disaster. When your lender comes back to you for proof of what the funds were used for, having separate finances is even more crucial to prove monies were properly allocated.

Independent Contractors and the AB5

For independent contractors, now more than ever before, it is important to show business finances as separate from personal finances. As of January 1, 2020, California’s Assembly Bill 5 (or AB5) requires new guidelines for determining whether a worker is considered an independent contractor or an employee. So far, the backlash by employers and independent contractors alike has resulted in many categories being exempt from AB5—most recently freelance writers and translators.

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However, many contractors will have the burden of proof to retain their independent status. To be considered an independent contractor, the person must show they control their own time, tasks, and techniques; work in a separate industry; and have established business operations. Maintaining separate business and personal finances goes a long way to support that position. 

Many independent contractors are also changing the legal structure of their businesses by setting up a corporation or LLC. As a separate legal entity, the work being done is paid to the business and not the individual, further proving the contractor is not an employee.

Across the country, the classification for the gig economy workers is under close scrutiny. Keeping separate finances, setting up the business as a separate entity and keeping good records can keep your business protected from unnecessary risks.

The Corporate Veil

As noted above, when you form an LLC or corporation it means the business is regarded as its own legal entity and the shareholders, officers, and directors will not be held personally liable for the actions of the corporation. In order to keep that “Corporate Veil” or “Corporate Shield” in place, the business is accountable for any debts and legal responsibilities it incurs and must maintain its own finances.

When kept in good standing, the corporate veil helps protect owners from having to surrender personal assets to pay the debts or settle the legal issues of the company. If a court determines that the corporation or LLC has compromised the separation, it is referred to as “piercing” or “lifting” the corporate veil and the liability protection no longer applies. Mixing business and personal finances is one way business owners put the corporate veil in jeopardy. Once the corporate veil is pierced, the individuals behind the business entity are then personally accountable for any debts or legal wrongdoing of the business.

Other ways to pierce the corporate veil are by failing to maintain LLC or corporate records required by the state, using business assets for personal purposes, paying for personal purchases with a company credit card, and personally guaranteeing a business loan or using personal property as collateral for a business loan.

Not only should business and personal finances be kept separate, the business should also conduct all business correspondence using the business’s name, and that includes proposals, contracts, invoices, sales receipts, marketing materials, and all financial documents.


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6 Ways Small Business Owners Can Protect Their Personal Finances

6 Ways Small Business Owners Can Protect Their Personal Finances

Being a small business owner or entrepreneur is fun, exciting, and rewarding. But it can also introduce your business to certain levels of risk that employees of other organizations don’t have to face. Thus you need to be proactive in protecting your personal finances from unwarranted risk.

Smart Tactics For Protecting Your Personal Finances

The road to entrepreneurial success is laced with risks. And even when you arrive to a point where you’re deemed “successful,” you still face numerous challenges.

One of the biggest challenges involves protecting your personal finances from any financial or legal challenges that the business may face.

Here are a few suggestions:

1. Choose the Right Business Structure

Most people think about business legal structures in terms of tax favorability. But there’s also something to be said for protecting your personal finances.

The four most common types of business entities include:

  • Sole proprietorship. This is the most basic type of entity. (In fact, you don’t even have to declare anything to be a sole proprietor – it’s the default.) The problem with a sole proprietorship – from a legal perspective – is that there’s no separation between personal and professional assets. Thus, if you were to get sued, the other party could come after your cash, investments, house, etc.
  • Partnership. When a business is owned by two or more people, a partnership is often the preferred option. There are two types of partnerships: (1) A general partnership, where everything is shared equally; and (2) A limited partnership where one partner controls the operation and the other partner contributes to and receives part of the profits.
  • LLC. This entity is basically a hybrid structure that allows business owners to limit personal liability and still enjoy the tax advantages of a partnership. LLCs are easy to set up and maintain.
  • Corporation. Finally, there are corporations. These entities have their own legal rights independent of the owners. In other words, the business can be sued separately from the individuals who own or operate the business.

Each of these four business structures comes with its own unique set of pros and cons. It’s up to you to determine how much protection you need, which opportunities you have, and how to proceed. (Most small business owners like LLCs for their ability to separate assets.)

2. Follow the Rules

Simply having a business entity doesn’t always grant you full protection. In order to enjoy these protections, you must play by the rules. A failure to do so could expose you to certain risks.

Let’s look at an LLC as an example. While an LLC is designed to provide separation between personal assets and business assets, all of this protection can be lost if you “pierce the corporate veil.”

Piercing the corporate veil is legal jargon for commingling assets. It could be as simple as buying a personal item on one of your business credit cards. Or it could be as serious as funneling extra money from your business accounts to your personal checking account without going through the proper steps. Either way, it causes the protective veil to disappear – leaving you vulnerable to lawsuits and other unwanted external threats.

3. Get Insured

As a business owner and entrepreneur, insurance is very important on multiple fronts. In addition to having the right insurance policies for your business, it’s also vital to have the right life insurance policy on yourself (and perhaps any business partners that you have).

The key when getting life insurance is to make sure you’re choosing the right policy from the right company. Check out this list of the 75 worst life insurance companies for paying claims so that you know which ones to avoid.

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4. Diversify Income Streams

When you’re an entrepreneur, it’s always helpful to have multiple streams of income so that you don’t become too dependent on any one source of money.

Be on the lookout for ways to diversify income streams by looking at different sources outside of your primary business. This might look like starting another business, investing in income-producing assets, buying an annuity product, or something else entirely.

5. Build Up an Emergency Fund

You never know when you’ll experience a dry spell or the economy will take a downturn. And that’s why it’s always smart to keep a personal emergency fund on hand.

The general rule of thumb is to keep an emergency fund of at least three to six months of expenses. Thus, if it takes you $5,000 to pay your bills every month, you need somewhere between $15,000 and $30,000 in the bank.

An emergency fund should be kept separate from your checking account. This is money that you only touch if you absolutely have to. (And once you do touch it, your foremost objective is to fill it back up as quickly as possible.)

6. Separate Assets

Even with an LLC or other protective legal entity, it’s smart to establish as much separation as possible between your personal and business assets. Meet with an attorney to figure out the best route. You can use different investment vehicles to shelter certain types of assets. There may also be situations where it makes more sense to put certain assets in a spouse’s name. (With the right legal counsel, you’ll be able to formulate a game plan.)

Looking Towards the Future

It’s only natural to focus on the here and now. But if you want to be successful over the long-term, you have to keep one eye on the future. And that means implementing and executing financial strategies that set you up well for the months and years to come.

The most successful entrepreneurs tend to be the ones with the most discipline and patience. If you’re willing to put the right safeguards and contingency plans in place, you’ll find it easier to overcome mitigating circumstances and win.

Using the principles outlined in this article, take some time to develop an actionable game plan that steadily moves you from where you are to where you want to be – protecting and growing your business finances and personal finances along the way.



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Don’t Want to Risk Your Own Money on Your Business? 13 Alternative Financing Strategies

Don’t Want to Risk Your Own Money on Your Business? 13 Alternative Financing Strategies

Getting any business off the ground requires sufficient capital. However, all the financial stress doesn’t have to fall on you as the entrepreneur — there are other ways to secure funding for your startup without assuming 100% of the risk yourself. That’s why we asked the members of Young Entrepreneur Council (YEC) the following question:

“Starting a business is a big risk — especially financially. What’s one alternative to risking their own money an entrepreneur could consider when starting their business?”

Where to Get Alternative Financing for Business

Here’s what YEC community members had to say:

1. Solidify Your Business Model to Attract Private Capital

“If you have a solid idea, do not try to reinvent the wheel. Go with a business concept that is more proven to work so you mitigate your risk a bit. Also, when you raise private capital, if it’s a good idea, you will be able to find money easily. If you face challenges, usually the idea needs more refining.” ~ Julian Montoya, JM11 Investments

2. Tap Into Your Personal and Professional Networks

“As soon as you start thinking about starting a business, you should utilize your entire network, both personally and professionally, to see if you can drum up interest from potential investors. This can come from family, friends or other business owners who believe in your vision. Have a clear plan in place to show those people you have a viable business model.” ~ Justin Lefkovitch, Mirrored Media

3. Invest in Free or Low-Cost Tools

“See how far you can go just based on sweat equity and invest in the tools you need that won’t hurt you financially. It’s the best way to learn how to do things lean, and learn even more intimately what you actually need versus what you perceive you need — and that’s the best lesson you could possibly ever receive.” ~ Richard Fong, Ready Green

4. Build Something From Within a Company

“If the entrepreneur route is not a perfect fit for you (yet), try to build from inside a company. Be an “intrapreneur,” so to speak. Perhaps you could start a new branch, product or service. The downside is that you will likely need a high position, soft power, a track record and quite a bit of strategic thinking – but if your thing is good, the company will back you.” ~ Joey Bertschler, bitgrit

5. Pre-Sell Your Product or Service

“Pre-selling your product or service ensures that there truly is a market for what you are offering, and also provides you with the capital to then fund the development of your product. Crowdfunding platforms such as Kickstarter have become quite popular, but it could also be as simple as approaching a couple of prospective clients and getting signed contracts and deposits from them.” ~ Diana Goodwin, MarketBox

6. Seek Out Flexible Funding Options

“Before turning to traditional funding options, it’s important to consider all your options. There are so many sources of flexible funding out there today that can help you successfully launch your business, cover daily costs and support growth. A merchant cash advance, for example, is easy for startups to qualify for and does not add a burden of debt because it is a cash advance and not a loan.” ~ Blair Thomas, eMerchantBroker

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7. Trade Your Time and Skills for Resources

“When I started my massage practice, I couldn’t afford to rent a space on my own, so I offered my therapeutic services for free at a physical therapy clinic in exchange for a free treatment room to build up my private practice. When you start a business you sometimes need to get creative, especially if you lack funds.” ~ Rachel Beider, PRESS Modern Massage

8. Share an Office

“When we first got started, we could not afford to pay our team and full rent. We found another small business in the area with an extra two rooms, and we rented them out. It saved us money, it saved them money, and after being in the same space for a few months, we ended up collaborating on some ideas with them.” ~ Zach Binder, Bell + Ivy

9. Launch a Crowdfunding Campaign

“Crowdfunding is generally viewed as a mixed bag, but there’s still plenty of good that’s come from this strategy. If you have a good idea, you’ll be able to connect to people who have similar interests, including your target audience. You can use these funds to get your business started, which could encourage bigger investors to step in to help.” ~ John Turner, SeedProd LLC

10. Partner With Someone

“One of the best ways to start a business without investing your own money is to look at your network. Consider who may be willing to partner with you (for instance, on a strategic alliance or equity allocation) so you can leverage their audience to build your own audience and brand. Just keep in mind, this approach needs to be mutually beneficial.” ~ Kristin Kimberly Marquet, Marquet Media, LLC

11. Consult First, Productize Later

“Whenever possible, build a business around consulting and productize later. All digital tools are designed to save time or optimize processes. Offer this as a service until you generate enough demand to invest in a product that handles that. Then you can slowly transition from a consultancy model to a product company and expand with the economy of scale.” ~ Mario Peshev, DevriX

12. Start Pitching Investors

“If you don’t want to risk your own money or if you don’t have the amount of money that is necessary to get your thing started from the ground, do what most startups do. Pitch your idea to the investors, involve more stakeholders with your project, and if you’re convincing enough, you’ll be able to raise enough funds.” ~ Solomon Thimothy, OneIMS

13. Do the Things You’re Good At

“You can reduce expenses and risk by doing things you’re already good at. Part of the reason why you’d need to invest in your business is to hire people to carry out other activities. Try to streamline your work and solutions so that it’s something you can do on your own, whether it’s coding or writing content. In this way, you’ll minimize your investment size and risk.” ~ Blair Williams, MemberPress


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64% of Companies Applying for PPP Funds Got Money

64% of Companies Applying for PPP Funds Got Money

A survey by Paychex reveals 64% of companies applying for a Paycheck Protection Program (PPP) loan found success.

The data for the survey comes from owners the SBA classifies as small businesses.

By mid-June, a third (34%) of respondents applied for a PPP loan and of those who had applied 64% received payment. And another 15% of them had their applications approved and are awaiting payment. Only 10% of them submitted their paperwork and are waiting for approval.

PPP Loan Application Success Rate

Among the business owners surveyed a resounding number of them (90%) say the Paycheck Protection Program Flexibility Act’s provision extending the forgiveness period from eight to 24 weeks would be impactful to their business. A further 82% say the same about the loan repayment term being extended from two to five years. They say it will also have a positive impact.

Additional perceived benefits of the Flexibility Act include payroll taxes being differed (80%) and forgiveness being allowed even if the full workforce doesn’t return (78%).

More than half (60%) say the PPP will help them retain or rehire all of their employees. While another 28% say it will help them retain or rehire at least half of their pre-lockdown workforce.

“The PPP Flexibility Act has eliminated some of the barriers to businesses getting the most out of their PPP loans during the reopening phase and beyond,” said Martin Mucci, Paychex president and CEO.

PPP Giving Businesses a Leg Up

As of mid-June, almost half (49%) of those in the survey say they are fully open and operational. Almost the same amount (42%) say they are open on a limited basis. A fraction (9%) say they are currently not open, but do have plans to reopen.

Among those businesses that are closed, 12% plan to open this month. A further 27% plan to reopen in July while the same amount (27%) plan to reopen after July. However, there are still 19% of these businesses waiting on conditions to improve before they reopen.

Already 30% of businesses have said they are already profitable. Despite the optimism, businesses expect to experience reopening challenges. Almost a quarter (26%) are concerned too few customers might be returning to them when they open. Others anticipate customers might not be comfortable coming to their place of business (20%). And others are grappling over how to get the word out when they actually open (18%).

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On communicating with customers when they are open. 28% say they are using the opportunity to put to rest concerns by addressing their safety and social distancing practice. While 22% are being transparent about their cleaning practices. The top three means of communications businesses are using to engage with customers on these issues are through email, word of mouth and phone calls.

Surprisingly, 35% of business owners have not used any promotions to notify customers that they have reopened. A further 35% said they aren’t advertising any differently than they were before the pandemic.

What are Businesses Doing Differently

According to the survey, 24% of businesses are allowing employees to work from home permanently during the post-lockdown period. From an industry perspective, professional services businesses are far more likely (36%) to institute permanent work from home policies than their peers in other industries.

Businesses are also planning on permanently increasing their use of technology to increase employee productivity (23%). A small portion (18%) have said they plan to offer flexible employee scheduling moving forward.

The crisis has also strengthened community spirit with businesses recognizing they are in this together. Some 70% of those in the survey say they are making an effort to support other local businesses during this time.

The Flexibility Act enacted on June 5, 2020, made key changes in the program that makes it easier for small businesses and self-employed individuals to comply with the Program requirements and obtain forgiveness of the loan. Additional changes include more PPO lenders being made available as well as an extension on the period to spend the loan.

With an average loan size of $113,228 and 5,458 lenders participating in the program so far more than 4.6 million loans nationwide have been approved. Remember loans are eligible to be fully forgiven if businesses spend 60% of it on payroll; paying interest for mortgage, rent and utilities. The program officially runs out on June 30, 2020.



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Best cost reduction ideas for your company

Best cost reduction ideas for your company

Investing in your business is often required to improve operations and increase profits over time. However, this expenditure can sometimes increase too much and may no longer be affordable for small businesses. Many companies are currently struggling with closings and social distancing practices. Therefore, they are looking for ways to reduce costs to stay in business in a difficult time. Regardless of whether you're facing an immediate loss of funds or a prolonged period of cash flow issues, it can be important to learn how to lower business costs to keep your business alive. <! – ->

In some cases, a few small shifts can save you a lot of money on your monthly expenses. In other cases, stricter cost-cutting measures may be required. Fortunately, there are cost-cutting options, large and small, that are available to companies of all types and sizes.

No company wants to keep their expenses to a minimum, but if you absolutely need to save money in your company read our list of cost-cutting ideas to stop bleeding, ease cash flow, and increase profits improve

Best tips for cost reduction

<! – -> If you want to save money now and make your company more profitable in the future, here are 31 tips and ideas for reducing costs business .

Remote Work

If you are a solo preneur or work with a very small team in an office, it may be worth considering reducing this leasing rate overall. If you need to work together in person, this may not be possible. However, consider whether you can make do with virtual communication or sporadic meetings in a local coworking space. This is definitely a great cost-cutting measure for your company.

Go Paperless

Continuous printing of documents is not an efficient use of money or resources for your company . If you can, go completely paperless – or at least develop a system that allows team members to understand when to print so you can waste less paper. Going paperless is also a way to make your business greener.

Opt for free cloud tools

There are countless paid technical tools available that companies can use to work more efficiently. But there are also tons of free options like Google Drive to save files and collaborate that you can use as a cost-cutting measure. Switching one or two of these services could greatly help your bottom line.

Organize virtual meetings

Traveling to, or even across town to, gatherings to speak to customers can increase transportation costs and waste of time. Instead, consider videoconferencing via Skype or Zoom to push your cost reduction plans. In addition, the ability to meet potential customers or service providers in other locations can improve your bottom line. <! – ->

Cut off landline phones

A dedicated business phone system can help your company look more professional and offer customers, customers, and partners an easy way to connect with them. However, there are now VoIP and mobile options. With VoIP, you can still get a dedicated number that you can use on existing phones. And the people you call don't know the difference.

Change your thermostat

A large part of your company's monthly expenditure is probably due to heating and cooling . Reduce your bills by lowering the temperature by a few degrees in summer and only a few degrees in winter. You may also be able to program your thermostat to automatically adjust when all of your employees are out of the office.

Improve your insulation

<! – -> In addition, your HVAC system runs more than necessary if there are gaps around your exterior or there is insufficient insulation. Fill in drafty areas and have a contractor ensure that your walls and ceilings are properly insulated to keep your equipment running at maximum efficiency.

Get an HVAC inspection

It may seem counterproductive to spend on HVAC services when trying to cut costs, but seasonal inspections actually help save money in the long run. They help you ensure that everything in your company runs efficiently so that you don't waste money on energy losses or expensive repairs later on.

Negotiate your rental

Most of your business expenses are likely to be negotiable. For example, the rent is one of the largest. So talk to your landlord to get a discounted price. This may be more likely if you agree to pay in advance, pay early, or sign an extended lease. If you've negotiated a lower rent, try these cost-cutting measures in other areas such as utility and supplier agreements.

Restructuring Loans

Loan repayments can also add to your company's financial difficulties. Check with your lender about refinancing and restructuring options to see if you can keep payments manageable. Try to do this directly with the creditors first. However, there are debt rescheduling options from external credit and financial institutions to further reduce your costs of running your business.

Paying off debts

If you are financially in a difficult position, this is probably not an option as a cost-cutting measure. However, if you have a bit of money and just want to make your company financially more efficient, pay off part of your debt to avoid paying high interest rates in the future.

Sign up for automatic payments

Some lenders and providers offer small discounts for a company that signs up for automatic payments. You can also pay several months in advance as this means less risk for you. Find out if one of your creditors offers this and then set up automatic withdrawals. Just make sure that funds are actually available every month. You want to avoid late payments related payments that destroy the purpose of your cost reduction agenda.

Cut traditional advertising

If you want to reduce marketing costs, start with paid advertising campaigns. Conventional platforms such as television and print media are usually particularly expensive. You can get a lot of attention with free solutions like content marketing and social media. And if you choose advertising, you can often set your own budget on social and search platforms so you can run small campaigns to grow your business.

Create marketing partnerships

Another way to keep your marketing costs down is to work with other companies and split expenses. When you offer complementary services such as a florist and wedding planner, combine your resources to create a coherent advertising campaign online, in print, or at local events. Ultimately, this can help you increase your reach while paying less for the ad or initiative.

Promote recommendations

Word of mouth marketing is a free way to attract new customers and increase profits. However, companies do not always have control over this aspect of their marketing. For example, you can incentivize people to make recommendations or share your products or services online to do business without actually spending money.

Outsource short-term projects

By regularly hiring people for your company, you may be able to cut costs by outsourcing or using freelancers instead. Use this option only for non-essential or short-term projects. However, this gives you another cost-cutting measure for things like onboarding, social benefits, payroll, and additional office space

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Cap Employee Expenses

The reduction in the number of your employees should only be done as a last resort. However, you may be able to reduce discretionary expenses that are no longer necessary for your business. For example, you can reduce travel costs and instead send your employees to virtual conferences. Or when you offer your employees credit cards for discretionary spending, implement policies that can use those cards to reduce costs.

Compare service packages

Some companies that offer employees benefits end up spending more than necessary just because they stick to the same plans for too long. Instead, look for the best prices to cut your costs. Although you want to avoid reducing coverage to the bare minimum, you may find slightly better rates from another provider.

Create a wellness program

You may also be able to lower employee health costs by promoting healthier living habits. A wellness program can be carried out relatively quickly and inexpensively and will help you to reduce costs over time. These programs can help team members improve their diet, get more exercise, and even quit smoking. Since people are more aware of their health today than ever before, this can be a simple buy-in for your team


Allow teleworking

Even if you need an office space, you can lower your electricity bill, fit in a smaller office space, and limit your consumable expenses by allowing your employees to work from home even a few days a month. It also offers other fringe benefits, such as improving employee morale, as team members will likely appreciate the freedom to create their own schedule.

Unplug rarely used electronics

Your utility bill may be unnecessarily high if you leave additional items connected that you do not need. These can be chargers for mobile phones and laptops, lights and presentation devices. Even when they are turned off, they consume a trace of electricity. So pull out the power plug or use a power strip that you can turn off at the end of the day.

Go through your subscriptions

Many small business owners subscribe to various services, mailing lists and publications. You can belong to several professional organizations or use some technical solutions that do essentially the same thing. If you can condense them and subscribe to only one or the other that you really need, you can significantly reduce your monthly expenses.

Purchase of used equipment

Of course, limiting purchases is the best way to control your costs. However, if you need to buy equipment, opt for used equipment if possible. Just make sure it's in good condition so you don't have to pay for additional repairs and maintenance. This is a good option if you need items like furniture or exhibition items.


If you need new equipment or services, contact other business owners to see if they're willing to trade instead of accepting direct payments. For example, you may be able to offer marketing support to companies that offer website help to your company. Not all companies accept this type of business, but try to ask a company or professional service provider before doing business. You can also search online for companies that are specifically open to barter.

Search for suppliers

You may be able to find better prices by looking at other providers. If you haven't been shopping for a while, look for suppliers or service providers at different stages in your supply chain. You could find better options for inventory, office supplies or even shipping services . If you find cost reductions, change them or use them as a lever to negotiate a better deal with current suppliers.

Buy in bulk – strategic

Sometimes you can get better deals on supplies or inventory by shopping in bulk to reduce costs. However, you should only do this if you actually use all of these elements quickly. Clearly avoid whether you need additional storage space for these items or just buy for a small volume discount. In these cases, the additional upfront price is usually not worth it.

Look for discounts at your local chamber.

Your local Chamber of Commerce can grant member discounts for various providers or service providers, e.g. B. for providers of web design, marketing or even shipping and fulfillment services. Check to see if you can get products or services that you are already using at a discounted price while supporting other companies in your local group of companies.

Joining a purchasing group

Suppliers and suppliers with a robust supply chain can usually offer products with high discounts if they know that they are continuously providing a high volume. However, many small businesses don't buy enough products to get a real volume discount like this. However, you may be able to get better prices by joining forces with other companies in your area as part of a purchasing group. Check to see if your local chamber or trade organization knows anything, or speak to other local businesses to start one.

Get an energy audit

If you try to reduce energy costs your utility company may be able to help. Some offer free or inexpensive energy audits. They identify or fix problems that lead to energy wastage in your office, such as old light bulbs and inefficiencies in heating and cooling. This option can help you significantly reduce these monthly bills while reducing your carbon footprint and helping your utility company keep costs down.

Searching for Tax Deductions

It makes no sense to pay more taxes than is required for your small business. There are free tax solutions to help you find deductions, and working with a local tax advisor is often quite affordable. If you find a few additional deductions, you can save a lot of money on the annual or quarterly tax burden.

Move your office

For those looking for an extreme cost-cutting option, moving to a new location can make a big difference. If you are in a big city or downtown, consider a less sought-after area. You can also choose a location where you can get cheaper tax rates. You may also have a little more space than you need. Downsizing can save you both rent and utilities. This is not possible for everyone. However, if your business is location-independent, considering other options or choosing a coworking space instead of a traditional lease can have a big impact.


Lowering business costs can be a difficult road. However, there are numerous options available that do not require staff reductions or operations to be limited to the essentials. Regardless of whether you want to save a little on monthly expenses or make a bigger shift to get your business up and running, the list above contains something for almost every business. Just make sure you implement cost reductions that are best suited to your specific situation.


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What is corporate debt consolidation and is it right for you?

What is corporate debt consolidation and is it right for you?

Several loans complicate business accounting. Multiple loans can also impact business cash flow during the month. <! – ->

Should you consider consolidating corporate debt? Absolutely. Even if you can easily manage multiple loans and cash flows, debt consolidation can save you money.

A Small Business Debt Consolidation Investigation That Can Save You Money? Sounds like a good idea. Let's take a look.

What is Debt Consolidation?

<! – -> Let's get the simple definition out of the way. Debt consolidation is when you take out multiple loans, including fixed loans and lines of credit, and combine the debt into one loan.

Can you consolidate business debt?

When you were dealing with adult life, you assumed financial responsibility. You have a mortgage, car payment, and credit card. Well, or credit cards.

At some point you thought, wait a second. My mortgage rate is good, but my credit card rate is ridiculous. My interest rate for car payment is somewhere in between. Hey, if I got a home loan, I could pay off the car and credit card with a lower interest rate.

Debt consolidation is not just for consumers – companies can also use this approach. You most likely have a business credit card. You may have taken on additional business debt to buy equipment or inventory if necessary. And maybe you did this with a number of business loans when you expanded the company.

Should you consider consolidating corporate debt? <! – ->

Advantages and disadvantages of debt consolidation

Every debt consolidation has its advantages and disadvantages. The advantages and disadvantages for each debt consolidation vary depending on the status of the small business applying for the loan. In other words, every small business has a unique financial operation that affects its suitability for debt consolidation.

Here are factors that affect a business owner's decision.

Benefits of Consolidating Business Debt

    "The distribution of payments reduces the monthly payment.
  • Lower Interest Rate – Browse. Consolidating corporate debt only makes sense if you get a lower interest rate.
  • Helps with other loan applications – banks and other credit institutions don't want to see a list of multiple creditors. If you are looking for a separate loan, consolidating your existing loan into one loan can help you get that other new loan.
  • Business Expansion – As your business debt consolidates, you can take out more loans to cover the costs of growing your business. With the funds you can buy equipment or accessories.
  • Supports cash flow – When you perform business debt consolidation, you can choose the loan due date. You can choose this date based on the monthly schedule of your business income.
  • Simplifies the status and repayment of corporate debt – It's much easier to keep track of a loan. You will know when this loan is due. This makes it easier to coordinate your small business's earnings with debt repayment.

Disadvantages of consolidating business debt

  • Long Term – Do You Have A Mortgage? Did you find it discouraging to compare the home purchase price with the actual loan repayment amount? Yes. Lower monthly payments for debt consolidation can be a pro and a contra. The actual repayment amount is much higher than the loan amount. But don't forget that you can negate this fraud by throwing as much money at the client as possible.
  • New Loan Fees – The process of applying for and approving a loan can involve various fees and costs. You can often include these fees in the new loan.
  • Interest Rate – Depending on the type and interest rates on loans that you now have, you may not find better interest rates. Play with the numbers. Does it make sense to consolidate corporate debt to get a 1% lower interest rate? 2%? You can play with loan amounts and interest rates on websites like
  • Total Debt Amount – Your total amount of business debt may increase due to fees and costs.

Should I consolidate my business debt?

<! – -> Is this the right time for you to do a corporate debt consolidation? Here is a checklist with considerations:

You Qualify – While you have expanded your business, you may have taken on a number of small loans. You've been in business for a few years now. Based on your proven business balance sheet, you can now qualify for a business loan that you couldn't get back then.

Interest Rates – The new loan should have a lower interest rate. Calculate the interest rate you want by averaging the interest rates you now have on loans. The debt consolidation loan should have the same or lower interest rates than the average of your current loan.

Repayment Amounts – Add the payment amounts for your current loans. The monthly repayment amount for debt consolidation should be less than this total.

Time of Payments – Covering a number of monthly payments with different due dates can be a juggling process. With a loan payment to consolidate business debt, cash can be released during the month.

New Loan Costs – New loans may incur various borrowing fees and other related costs.

Term of the new loan – There is a compromise for a lower monthly payment if you combine several loans into one loan. The compromise for corporate debt consolidation is a longer period for the new loan.

Early Payoff Option – Small business owners are inherently good at self-discipline. Make these planned business debt loans. And pay whenever you can against the client's chunks. Few people feel comfortable with a lot of debt. You can alleviate this discomfort by combining planned loan payments with payments that target loan capital.

Consolidation of business debts

If you want to consolidate your business debt, do the following:

Step 1: Make a list of all your current loans. Enter the payment amounts, loan amounts, interest rates and the term. Calculate the average annual interest rates. Add up the totals for your loan and payment amounts.

Step 2: Add details for each existing loan. How is every existing loan structured? Is there a penalty for paying off early? If so, you have two options: calculate the penalty for early repayment and include it in the amount of the debt consolidation loan. Or do not include loans with penalties for early repayment.

Step 3: Find out about any repayment penalties. When examining debt consolidation options, consider which options do not include early repayment penalties. The ability to apply additional funds to the main loan amount can be a great benefit that cancels the extended loan term.

Step 4: Explore the loan options. Your small business is unique and there will be a loan and lender that best suit you.

Step 5: Compare APRs. The interest rate and annual percentage are like cousins ​​that were removed twice. The interest rate is a number that is applied to the loan amount and the repayment terms. It is easy to calculate a payment amount based only on the interest rate.

The second cousin APR is different. This is the interest rate plus any annual fees. The APR is the real number. Your goal is to get a better annual interest rate than you currently have with the existing loans.

Options for Consolidating Business Debts

The Small Business Administration is a good starting point for your plan to consolidate debt for small businesses. It is easy to find a bank that participates in the SBA loan program. The bank you are currently using can be a participant. A list can be found on the SBA website.

You can apply for a traditional bank loan or examine the debt consolidation options available through alternative lenders.

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Small Business Association Loan

Small business debt goes hand in hand with corporate growth. The SBA has decades of experience with the ups and downs and needs of small business owners.

The SBA offers both traditional temporary loans and lines of credit. There are loans specifically for seasonal businesses. Loans for the benefit of owners of minority companies, including women. And loans specifically to support veterans.

More information can be found here:

Related reading:

bank loan

Most banks and credit unions offer a debt consolidation loan. Is it the same as refinancing? Not exactly.

A refinancing loan can be a debt consolidation. How it works:

A Refinance Loan – This is a refi of an existing loan. The refi is done to get a better interest rate on the loan amount. A debt consolidation loan combines the amounts owed for different loans into one loan.

When you refinance, you can often do so and add consolidated debt. This is more likely if you have a good credit score and a squeaky clean bill of payments. The bank or credit union has already received your money plus interest. The bank or credit union wants to get the money and interest you paid to other lenders (again with an excellent repayment balance).

Options for consolidating small business debt include numerous loan options, including traditional temporary loans.

Related reading:

Alternative Lenders

You may also be able to get a debt consolidation loan based on the type of business you generate.

For example, there is a loan option called bill financing. As it sounds, you borrow money based on the amount of money you receive when bills are paid to you. This is not based on estimated bills. it is based on amounts that have been invoiced and have due dates.

There are various online credit platforms. Many are set up to provide working capital at certain times, e.g. B. Seasonal companies tied to construction and construction. There are online lenders that specialize in debt consolidation for small businesses.

Related reading:

Association of Friends

Funding Circle is a global small business credit platform that connects small business owners to investors. It was launched in the UK in 2010 and has been in the US since 2013.

Unlike other online lenders, Funding Circle only offers small business loans. Since its inception, the global credit platform has offered nearly $ 12 billion to 81,000 companies.

Don't have time to worry about debt consolidation for small businesses? Applications for funding groups are completed online.

Funding Circle as a lending and securities business that is subject to state law and the regulations of the Securities and Exchange Commission and the Federal Trade Commission.

FAQ on consolidating corporate debt

We answer the most frequently asked questions that entrepreneurs have about consolidating corporate debt.

Is business debt consolidation the same as refinancing?

Technically it is not the same. Refinancing, by definition, takes an existing loan debt and reverses it to get a lower interest rate.

Corporate debt consolidation takes a number of loans and combines them into one debt. When refi existing debt, however, it is possible to add further existing debt to the existing obligation. In fact, a lender can like that. A lender has a choice: get your money plus interest from one loan or your money plus interest from a number of loans (which other lenders are currently collecting).

Does Debt Consolidation Hurt Your Credit?

No. And it can actually help your credit. When you apply for a large loan, a lender doesn't want to see a laundry list with creditors. Having a creditor is cheaper if you apply for another loan.

Can I consolidate my business debt if I have a low credit score?

If you start with bad credit, you may have trouble finding a business consolidation loan. If you have a low credit score, you can try securing loans through these lenders for small business loans with bad credit .


As a small business owner, you have to make a variety of decisions every day. In addition to its potential to save money, debt consolidation is a form of disappointment.

Instead of having different loan payments on different days of the month, you have a monthly payment. This can free up your working capital and simplify business.


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How to Build Business Loans Quickly

How to Build Business Loans Quickly

Just as you have a personal credit score that describes your financial history and a potential risk to creditors, your company can have its own credit score. However, some companies do not take the necessary steps to build up corporate loans early, which may affect their ability to obtain finance, and other necessary steps to grow. <! – ->

If you want to learn how to quickly build business loans to take out a loan or perform other important functions, here is a guide that can help you.

Why you need to set up a business loan

A strong credit rating of the company can improve your access to finance, give you better APR rates, give you access to good vendor relationships, and reduce cash flow problems because you don't have to pay for as many prepaid purchases .

<! – -> Let's take the example of Sally, a marketing consultant. Up until that point, Sally had run her own business, mainly from home. She didn't need funding or credit, so she mainly used her own credit cards and bank accounts to buy supplies and run her business. Now she is ready to expand her business with an official office and team, but her company has no significant credit rating. Here are some steps that can help Sally and you quickly get a strong business credit score.

7 steps to building a business loan

As with personal loans, there are several credit bureaus that measure business credit. Most of them take into account factors similar to your ability to pay bills on time, your debt-to-credit ratio, your company's history, and your industry risk.

In the following we will show you the proven techniques to create a credit history for your small business and to put it on a favorable financial basis. Follow these 7 steps to build up your business balance:

1. Establishment of a separate business identity

Credit bureaus cannot track your payment history if they do not know that your company exists. While Sally bought supplies and software for her company under her personal name, these purchases did not build her business credit history. Here are some things you can do to make credit bureaus aware of your existence so they can start tracking your financial history and risk.

  • Starting a Business or LLC – If you run your business as a sole proprietorship like Sally, your business loan is tied to your personal loan. Creating a separate business unit makes it clear that your personal and business loans and finances are separate. In particular, the Dun & Bradstreet credit bureau recommends founding or founding an LLC.
  • Obtain an Employer Identification Number / EIN – An EIN (Employer Identification Number) is basically a social security number for your company. It is free to get one from the IRS and you must have one if you have employees or if you are taxed as a C-Corporation or LLC.
  • Obtaining a DUNS number – A DUNS number is another identifier that is used to track companies. It is monitored by Dun & Bradstreet and can be requested online free of charge . You also need this number if you want to apply for federal contracts.
  • Get a business phone number – A dedicated phone number listed on your company name provides additional credibility. You will also use it to sign up for a DUNS number and other accounts in your company name that are used to secure your business credit.

2. Open a business account

Many young business owners believe that they can use banking alternatives such as PayPal and Venmo. Or worse, some business owners like Sally mix all of their business funds into their personal bank accounts. The problem is that these transactions are not used to build up your business credit with hotlines to build up your credit. <! – ->

To resolve this issue, sign in with your company name for an official bank account. You can still use services like PayPal and Venmo, but you can connect them to your commercial bank account so you have an official record that credit bureaus can track.

3. Obtain a business credit card

A credit card is the easiest form of business loan to obtain. It will also help you make a repayment record that will improve your business credit rating. Basically, Sally can sign up for a credit card on behalf of her company and immediately start shopping and paying to prove to creditors that she is able to repay debt.

<! – -> Make sure you sign up with a credit card company that reports to major business credit agencies. Citi and Chase are two who do this, but you can research the card of your choice to be sure. Once you use your business credit card, you'll need to pay your bills on time or early to avoid late fees and credit hits.

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4. Use vendors to report to agencies

Working with vendors that provide equipment or inventory for your business can also help you build a long tradition of paying your bills and keeping agreements with partners. This is another way to build up your business credit. However, make sure that you choose providers that actually report to credit bureaus. Some of them are Quill, Grainger and Uline.

Maybe she just bought office supplies here and there in Sally's shop. However, if you sign up for a Quill account and make regular payments, your company builds business loans that are reported to the right agencies.

5. Pay on time or early

When you sign up for business credit cards and supplier agreements, you have to pay your bills on time if you want your business credit rating to increase. Payment by the due date is sufficient for most business credit bureaus. However, Dun & Bradstreet rewards companies that prepay their debts 30 days or more. Above all, avoid late payments that lead to tax liens or judgments against your company, as these can significantly affect your creditworthiness.

6. Monitor your business credit rating

Sometimes your business credit report may contain inaccurate information that may affect your chances of getting a loan or an attractive interest rate. When you review your business credit scores, you can find misinformation and then contact the credit bureau concerned to have that information corrected or removed. For example, in her credit report, Sally could find penalties for late payments to a supplier she doesn't even work with. This can be the result of a mistake or identity theft, but early detection of the problem can help her avoid further problems for your company in the future.

In addition, reviewing your business credit report can be instructive as it can help you understand what factors you may need to work on. Sally, who pays all of her bills on time, finds that her reports, with the exception of Dun & Bradstreet, are largely positive. By learning that she can increase her score by paying early, this little shift can make a big difference in the future to strengthen her business profile.

Most credit bureaus offer you the opportunity to view your credit report once free of charge or for a small fee. Some of you can also sign up for notifications so you can see when your account has new activity.

7. Update public business records

Updating and completing your business credit file gives you additional credibility and ensures that the information about your business is correct. Different credit agencies offer different levels of access. For example, Dun & Bradstreet D-U-N-S Manager offers an online platform where you can edit your business information directly. This does not directly affect your creditworthiness, but it can indirectly ensure that your information is up to date so that offices can easily track your activity.

Also actively monitor and update other public records, including those in Google my Business, Bing Places, Apple Maps, Google Maps, and Yelp. Make sure that basic information such as your business address, phone number, and company name is correct, especially for your Google My Business listing. This information may be out of date or contain other inaccuracies. In addition, entries with similar names can be confusing, and some are even blurred by competitors. So keep your online business listings clean and accurate to avoid misinformation that affects your credit rating.

Top 8 Credit Mistakes to Avoid

Finally, think of 8 of the most common small business loan mistakes that restrict their access to capital and growth.

  • Excessive Trust in Personal Loans It is a mistake to rely on personal credit cards or a home equity line of credit to expand your business or cash flow. As a young startup, you may have no choice. However, as your business matures, this brief attitude changes your family and limits the amount of credit you have available for both business and personal use. You can expand the available funds with a separate business loan. You have personal resources and the business credit limits that you can use instead of telling the family that there is no vacation this year because your only credit card for new office computers is maximum. If the business gets into trouble, your family home and other personal assets will remain separate and will not be at risk.
  • Suppose you can't change anything. You have more power to control your business credit fate than you think. You can positively influence it as long as you continue to educate yourself. This is why monitoring your business credit report is so important. Find inaccuracies and take the necessary measures to remove them. And if all the information is correct, look at the factors that lower your score and take positive steps in these areas.
  • Neglect Your Personal Credit While the point of the business credit is to separate it from your personal credit, do not completely ignore your personal credit. The two are often connected to each other, especially for sole traders. Your personal credit rating may affect your ability to get a business loan. And some creditors require that the owner guarantee or be liable together with the business unit for certain credit decisions, especially early. In addition, a rating like FICO SBSS actually takes into account the owner's personal credit rating when determining the corporate credit rating.
  • Maximum Credit Cards Although a business credit card is a great way to determine your payment history, you don't want to use up all of the credit available to you. This leads to a negative debt-to-credit ratio, indicating a high risk for creditors. When you sign up for a new business credit card, use it for the essentials and try to pay it off every month or at least make recurring payments before the due date.
  • Too many credit accounts open at the same time As with personal loans, corporate credit values ​​can go down if a lot of credit requests are made within a short time. This tells creditors that you can open tons of new accounts and increase your debt in a short period of time – or that your financial situation may worsen than it seems. Take out the business credit cards and credits you need, but avoid going overboard.
  • Giving employees too much leeway You already know that late payments can have a negative impact on your creditworthiness. However, your employees may be less motivated than you to protect this score. When you issue business credit cards to team members for expenses, make sure they pay on time and don't incur too much debt. If a business credit card is removed from your company, it is likely to have a greater impact than one with your primary account holder. However, it is always a good idea to set up repayment processes and policies.
  • Choosing the Wrong Loan Just because your company is approved for a loan or funding opportunity doesn't mean you should take advantage of it. If the payments are too high, the terms are unreasonable, or the repayment schedule is on a schedule that does not fit your company, you can do more harm than good. Look for the best prices and only look for offers that are suitable for your small business. If you make sure that you can actually pay on time and repay the full amount, you will benefit more from your corporate loans in the long term.
  • Wait too long to start. If you wait until the day before you're ready to apply for a loan to think about your business credit rating, you won't have enough time to make any sense. If you build business credit before you need to borrow money, you have a better chance of building a strong payment history and bringing your business credit rating to a level acceptable to creditors. Even if you can't do everything, you can position your company better for the future with just a few of the steps above.


It takes time to build up business loans. However, the steps above include some things you can start doing right now so that you can get your business on the right financial path. Regardless of whether you are applying for a loan or just want to position your company for potential growth in the future, understanding business credit building is the first step to preparing your business for future success.


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Your Business Credit Score, explained

Your Business Credit Score, explained

Most people know that they have personal credit scores. But not all entrepreneurs are aware that they may also have a separate corporate loan value. <! – ->

Similar to the individual credit scores known to most people, business credit scores are numbers that are used to measure a company's financial performance and ability to repay loans. A business credit score can affect a variety of financial decisions for a company. Understanding how this number is calculated and how you can track or improve your credit rating can therefore be a great asset.

Business vs Personal Credit Scores

Business and personal credit scores are similar in concept. Both are designed to demonstrate creditworthiness and assess potential risks for lenders or other financial partners. And both business and personal credit scores take into account various factors such as the ability to repay debts and make timely payments.

<! – -> However, the way in which personal and business creditworthiness is calculated and assessed varies. In particular, most consumer rating agencies offer a range between 300 and 850 for personal credit scores, while most corporate credit scores are rated on a 0 to 100 scale. However, different reporting agencies such as Dun & Bradstreet and Experian have different calculations and numerical values ​​that correspond to certain levels of business credit risk.

In addition, individuals can typically access their free credit reports about once a year from any source. And there is no shortage of online services that offer these free credit reports. However, a company can only access this information free of charge from a few sources that specialize in business credit reports. In addition, corporate credit scores are easily accessible to the public, albeit often for a fee, as opposed to personal credit scores that are only available to the individual and potential lenders.

While corporate credit scores are important for any company that wants to get access to finance or take out new lines of credit, your personal credit score as an entrepreneur is also important. Entrepreneurs often have to guarantee small business loans or be a designated party for another form of credit so that small businesses can get funding. Therefore, both personal and business credit score numbers are often linked. If you don't have a credit history for your business, you may just need to use your personal credit rating to get funding and get your business off to a solid financial start.

What are business credit scores used for?

Corporate credit scores are commonly used to determine a company's ability to repay a loan. The higher the credit score for businesses, the more secure a lender, financial institution, or third-party company can feel when making a financial transaction that requires a loan.

In particular, corporate credit scores are used by lenders to determine the following: <! – ->

  • Making Credit and Credit Decisions – A lender typically wants to see a summary of a company's credit rating before approving it for a loan or line of credit. You can also use this number to determine certain repayment terms and interest rates.
  • Doing business with another company – A business credit report can help a company determine whether another company is financially sound before entering into a long-term partnership or contract. Entering into an agreement with a company with a high corporate credit rating is often less risky than working with a partner who has in the past been late with loan payments or has failed to pay bills on time.
  • Extension of trading conditions to a customer – Some companies extend the conditions, e.g. B. 60 late payments or installments when entering into trade agreements with customers or customers. A high corporate credit value can give these companies the confidence that their part of the trade agreement will be respected. It can also help your company get favorable trading conditions for doing business.
  • Appeal to Potential Investors – If your company wants to seek capital from angel investors or venture capitalists, these people or companies may want to know that your financial history is solid before you support them. A business credit score that indicates low risk can give them additional confidence.
  • Setting Corporate Insurance Rates – Insurers often feel more secure when they give good prices to a company with a good corporate loan that has a solid history in repaying its debts. They often use a certain credit score for insurance, but it follows many of the same factors as a traditional business credit score.

Savvy small business owners also monitor their own credit report, score, and history so that they:

  • Avoid denial of credit – Keeping an eye on your business credit reports can correct inaccuracies and prevent your business from refusing credit or new lines of credit when you need them most.
  • Get Better Credit Terms – By creating a business credit history and improving it over time, you can qualify for a higher loan amount or better interest rates. Ultimately, this can help you to further improve your financial performance.
  • Lower insurance premiums – If you build a solid financial history with good credit, insurers are more likely to get better prices. This means you can get lower monthly payments for the coverage you need.
  • Stay Competitive – You may be able to win more contracts with quality providers and business partners if you are perceived financially as a solid company.
  • Access to Capital – If you can show solid financial history, investors are more confident to support your business. Monitoring your credit reports can help you determine the right time to look for outside funds.

How is a business credit score calculated?

A business credit score is calculated based on factors that include debt, payment history, and general risk. Each reporting office (Equifax, Experian, etc.) weights factors such as the length of business, punctual payment of bills, late payments and the amount of debt and available credit. However, each agency has its own assessment style and qualifications. The score you get from Experian may differ from that from Dun & Bradstreet.

<! – -> In the next section you will find a detailed description of how the various services calculate a business credit score.

Where do you get a Business Credit Score from?

You typically get a business credit score from one of the four major business credit reporting agencies: Dun & Bradstreet, Equifax, Experian, and FICO. Three of them provide a numerical credit score, and one, Equifax, provides three different numbers to give insight into different areas of a company's financial condition. Here's an overview of all the key options that are designed to help small business owners understand what each of these business credit ratings means.

Dun & Bradstreet

Dun & Bradstreet uses a score called PAYDEX. This number only measures the time it takes a company to pay off its debt. The score is between 0 and 100. If you pay all of your invoices at least 30 days in advance, your company may get a score of 100. Pay it on the due date and get a score of around 80. Late payments result in payment still further back. In order for your company to receive a PAYDEX score, you must first register with Dun & Bradstreet for a DUNS number. This is just an identifier for your company that you can use to track your transactions.

If you are considering a partnership and would like to review a company's creditworthiness in advance, you can order a report online for that company.


Equifax assigns three different ratings to companies. One describes your traditional credit history, including your long history of credit, the amount of debt and available credit, and the arrears. This number ranges from 100 to 992.

Equifax examines the payment history. This measures your ability to repay creditors on time. It is measured on a scale from 1 to 100.

Finally, Equifax assesses the risk of corporate failure. It takes into account your industry risk, your history and your financial standing. This score ranges from 1,000 to 1,880.

If you would like to see a potential partner's Equifax Business Credit Scores, order them here .


Experians Intelliscore is a single number from 0 to 100 that summarizes your company's overall credit rating. It takes into account your company history, payments, total debt and available credit. Businesses are not rewarded for early payments, only for avoiding delays or failures. Your business credit report can also take factors such as your industry risk and your personal creditworthiness into account.

If you are interested in getting an Experian credit score for another company, visit the website to order.

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FICO Small Business Scoring Service

Very large banks and lenders use FICO Business Credit Scores. You review thousands of small businesses every month.

The Small Business Administration uses FICO scores for SBA loans, for example.

The number of credit reports ranges from 0 to 300. And takes into account a variety of financial information. Much of it is also included in scores from other services such as Equifax and Experian. Your personal credit rating can also be part of this report.

This option is not popular for ordering individual credit reports. So if you need to do a credit check for your own company or potential partner, you should use one of the services mentioned above. However, there are third-party services that can help you access this information if you want to find out your chances of getting an SBA loan or similar funding options.

Other services

Apart from these four main ones, there are several niche and specialty credit agencies or services that provide background information about companies. This information can be used for credit decisions in certain industries or for other background information on companies. Some of these services include Seafax Cortera and Ansonia .

Read more at: What are the agencies for reporting business loans?

comparison table

Each of the four major credit bureaus takes different data into account and offers a different method of valuation for your company. To understand where your business or potential partner ends up on the various scales of credit reporting, here is a comparison chart.

Reporting Service Score Name Score Range Report Costs Update Your Profile? Sample report
Dun & Bradstreet PAYDEX 0 – 100 $ 189 Yes Sample Report
Equifax Equifax Business Credit Report 100-992, 0-100, 1,000-1,880 $ 99.95- $ 399.95 Yes Sample report
Experian Intelliscore 0-100 $ 39.95- $ 49.95 No Sample report
FICO SBSS-Score 0-300 N / A No Sample Report ]

How can I check my business credit score?

To review your business credit rating, select the reporting agency whose report you want to view, or select a third-party service that you want to order from. With some agencies you can check your own business credit report free of charge. In some cases, you can even request and update your company's credit information to correct mistakes and gain more control over what is shown in your credit report.

There are also third-party services and websites that small businesses can use to review their business credit reports. Some services offer alerts and help managers monitor events that can affect your score and business credit report. Here are some key options for reviewing your business credit reports:

  • Nav offers a free service with some restrictions and sells an upgrade. It contains information from Experian, Dun & Bradstreet and Equifax. To access your free business credit report, simply sign up for an online account. Or you can upgrade to a paid account to get your updated business credit reports and information every month.
  • Dun & Bradstreet Report Dun & Bradstreet offers you the option of acquiring a business credit report or accessing your own information for free. You can also sign up for free notifications to find out when information has changed that affects your D&B score.
  • Experian Credit Report With Experian you can purchase your business credit reports or sign up for regular monitoring. You can sign up to receive notifications when changes are made to your information, or simply access a one-time report and earn points for your business or another business.
  • Equifax Business Risk Monitor Equifax offers various products for displaying and monitoring your business credit report and valuation. You can sign up for account monitoring, receive notifications, view risk information, or access a cloud-based solution to manage your information.
  • FICO SBSS FICO's business credit scores are mainly used by large banks and financial institutions, so they are not really set up for one-time reports. However, NAV provides access to this information through its credit reporting platform.
  • is owned by Infogroup, which maintains a huge database of US companies. Annual reports include information from the company's databases and credit information from offices such as Experian. You can get a one-time report for just $ 17.95 or purchase a monthly plan to keep an eye on your business balance.
  • Credit signal With the credit signal, companies can access their Dun & Bradstreet results free of charge. The site also provides alerts and monthly monitoring plans. You can also purchase an updated plan to see which industries or parties are buying your business credit file.
  • CreditSafe uses its own mix of business data to give companies an idea of ​​their overall creditworthiness. The website examines company history, industry, location, structure, executive information, and financial information to create an assessment. You can then get a free one-time score for a fee or sign up for monthly monitoring.

Does every company have a credit history?

Not every small business has a credit score or a history like consumer credit. If you've ever wondered, "Does my LLC have a credit score?" The answer is: it can, but just as likely it can't. If your company has had its own accounts and financial transactions for a long time, you can probably access fairly reliable credit information about your company. However, here are some of the reasons why you may not have to measure anything important when it comes to your business loan.

A startup may not have a history because there are no dedicated business transactions. A sole proprietorship or a domestic company may not have a separate business credit balance. This is because the business owner did business under his own name. For example, a sole trader uses a personal credit card instead of a business credit card.

Another reason for the lack of public records is that the company simply did not have the type of transactions reported to a particular credit agency. For example, if you didn't use traditional funding to get your business off the ground, you may not have had to make monthly payments by a specified date. So they do not become part of the public record. Since this is the specific type of data that Dun & Bradstreet measures, it is unlikely that you have a long history in this area.

Companies usually also need to be legally registered so that credit bureaus can measure their payment history and financial transactions. Your company may need to be registered as a company or LLC. Or at least register for a Federal Employer Identification Number (EIN) so that the offices have the information they need to track your business loan and start calculating a credit risk score.

Some credit bureaus require that you register with them before measuring your business credit balance. For example, Dun & Bradstreet uses DUNS numbers to track business activity. If you haven't signed up for this key ID yet, you probably don't have a history of that particular office. And that means no public records that other companies and financial institutions can access to assess your credit risk and find out if you pay your bills on time.

If your company is brand new, you are unlikely to be able to measure a payment history of financial transactions. If you start using credit wisely, you can build those values ​​over time and improve your risk assessment.

If you have no or only a large credit rating, experts recommend creating one. There are steps you can take to achieve this, including paying debts, paying on time, and applying for credit cards and loans that you can repay as soon as possible.

Special Programs

Finally, many of the major credit bureaus in the United States have taken note of the exceptional circumstances that small businesses face as a result of the COVID-19 pandemic. Some have added free access to free reports so companies can keep an eye on their finances and make sure they stay on track in this time of uncertainty and potential loss of revenue.

At the time of this writing, Dun & Bradstreet Experian and Equifax offer at least some business credit information free of charge. So you can register and at least access your basic financial information without having to pay extra.

When you have your finances under control with access to corporate credit scores, you can take control of your finances. It helps get the funding you need. And it maintains beneficial partnerships to advance your business.


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What is a DUNS number used for?

What is a DUNS number used for?

If you ever plan to find small business finance partner, or just start a business, a DUNS number can help you make a big impact. However, some startup founders may have problems with the exact meaning of this term or its relevance to their business. <! – ->

If you have ever wondered what a DUNS number is used for? or why you need a DUNS number, we have the answers. Read on for a full explanation.

What is a DUNS number?

A DUNS number is a unique number that is used to identify a company. It has become the universal standard for tracking companies and their financial transactions around the world. When you receive a DUNS, your business has been validated by Dun & Bradstreet, one of the leading credit bureaus. This gives your brand credibility and allows your team and others who may want to do business with you to easily get more information, such as your business credit.

<! – -> A DUNS is a nine-digit number. Once your company has assigned them, the number will not change over the life of your company. Basically, the number is only used as a unique identifier for your company if creditors, suppliers or potential partners want to receive further information. It's like a social security number for your business credit or financial information.

The term D-U-N-S number stands for Data Universal Numbering System. In addition to identifying your company, your DUNS number will also be linked to your Dun & Bradstreet business credit report. You will receive a copy of your PAYDEX score when you register. This is Dun & Bradstreet's credit rating system that tells creditors how likely you are to make payments on time. This is similar to your personal credit FICO score, except that it applies to your business credit rating. The score ranges from 0 to 100, with anything between 0 and 49 indicating a significant risk, 50 to 79 a moderate risk, and 80 to 100 a low risk.

How do you get a DUNS number?

You will receive a Dun & Bradstreet DUNS number that companies offer this option for free. The site guides you through the process and only asks you for basic information about your company.

The first step is to check that your company doesn't have one yet. Anyone can check a DUNS number for a company. Use the DUNS Search Number Tool .

If you can't find anything, you need to apply next. You need the following information to apply: <! – ->

  • Company Name
  • business address
  • Telephone number
  • Name of the business owner
  • Year of foundation
  • Legal business structure
  • Number of employees

Apply for a DUNS here .

How much does a DUNS number cost?

A DUNS number is free. It is free to apply for and receive a DUNS number. However, the free process can take a month. But if you're in a hurry, you can pay to get your new DUNS number faster. Dun & Bradstreet offers several options including:

  • Free DUNS trial – This may take 30 days. You apply online and your DUNS will be sent to you.
  • $ 229 Expedited Package – You will receive a DUNS within 5 working days. You also get a credit file.
  • Federal Government Contractor – You can receive DUNS free of charge within one day. Apply using the government contract form for DUNS .

<! – -> Apply here for a DUNS .

Is a D-U-N-S number the same as an EIN?

No, the two are different.

Your EIN, which stands for Employer Identification Number, is a tax ID issued by the Internal Revenue Service. The EIN is used to identify the tax accounts of employers and other companies. In addition, companies with a number of employees or companies registered as C-companies, partnerships and LLCs must have them from the federal government.

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Your DUNS, on the other hand, is a number that identifies your company for the purpose of providing credit information and tracking your financial and payment history. Companies do not have to register for a Duns number. It is simply a universal numbering system that is widely used worldwide.

Why do you need a DUNS number?

You need a DUNS number as this is required to receive your Dun & Bradstreet business credit report and to apply for government grants or cooperatives. It is also very useful to get funding for your company, sign supplier contracts, or partner with other companies.

7 things you can do with a DUNS number

Small business owners want to get a DUNS number because it helps them get corporate finance and opens the door to new business opportunities. Here is a list of 7 things you can do with a DUNS number:

1. Set up a business loan

Just as you need to create a personal credit history to be approved for credit or credit cards, you need to build credit for your business. A D-U-N-S number is the first step in this process. Once you set this number, your company's financial transactions will help build this story and establish credibility for your company.

2. Track your credit report

Your credit report is not only helpful when you apply for a loan. It can also help you ensure that your business information is correct. With a universal data numbering system like DUNS, you can easily access updated information about your company and correct errors before they adversely affect your company.

3. Funding received

Once you have a positive credit rating for your business thanks to your D-U-N-S number, you can apply for credit, credit cards, and other forms of finance to help your business advance. This is not essential and there are other credit bureaus. However, DUNS is a widely recognized numbering system that is often useful in these transactions when it is not required.

4. Apply for government contracts

The federal government requires that contractors and anyone applying for federal grants have a DUNS number. You will receive your application quickly if you apply specifically for this purpose.

5th appeal to potential partners

Any company or individual can obtain a company's credit rating using its D-U-N-S number. Therefore, it is a popular solution for companies who want to ensure that their partners and customers are financially stable and credible before signing agreements.

6. Develop apps

Apple requires iOS developers to use a DUNS number when creating their account in the App Store. This basically just standardizes the process of registering and submitting apps.

7. Register as supplier

Many large retailers require their suppliers to have a D-U-N-S number. If you register to deliver goods to these companies, this number will help them find standardized information about your company more easily.

8. Apply for SSL certificate

An SSL certificate is proof of authorization that companies can use to make their websites more secure. A D U N S number does not have to be requested, but can speed up the process by providing credible information quickly.

Image: Dun & Bradstreet

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How To Polish Your Appearance When Meeting With Investors

How To Polish Your Appearance When Meeting With Investors

As a small business or aspiring entrepreneur, meeting with investors is both stressful and exciting. These are people who could give you the funds you need to build the business of your dreams – or who could ruin your hopes of raising initial capital. <! – ->


Looks great when you meet with investors

Assuming you have a good business plan and industry knowledge, one of the best ways to increase your chances of success is to improve your appearance at a presentation. Investors often judge the entrepreneur just like the company they set up. It is therefore important that you leave a good first impression.

The question is how?


<! – -> You can start with personal hygiene. Spend some time making your hair as professional and presentable as possible. In most cases, traditional and conservative looks are ideal. You should make sure that you are shaved smoothly (without being obsessed with it) and avoid this look out of bed in any way possible.


Your choice of clothing can also play an important role in forming investors' first impressions. Again, traditional and conservative looks are usually a good choice. Dress up for a formal business environment and make sure that all of your clothing fits you well. You want to avoid eye-catching colors, but should feel free to present your personality with a tasteful selection of accessories or a personal favorite piece of clothing.

body language

You can also get a better initial picture by mastering your body language .

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For example:

  • Eye contact. Eye contact is a sign of trust and can show people that you are invested in what they have to say. Make eye contact with everyone you meet as soon as you meet and smile at them while you are at it. Alternate eye contact with other people in the room during the presentation. Make eye contact with the person you speak to during the Q&A and / or discussion section of the interaction.
  • attitude. Your attitude can also say a lot about you. When standing, try to stand up with your shoulders back. When you are sitting, stay straight and lean forward slightly to show interest. It is also important not to wriggle or succumb to nervous habits – this may result in you not appearing safe or unprofessional.
  • handshakes. Consider perfecting the art of handshaking. A strong, confident handshake can ensure that people leave a strong impression of you. Give the other person's hand a firm grip (but not aggressively) and pump twice to get the best results.
  • facial expressions. Also think about your facial expressions. No matter what happens, you want to look natural – if you caricature your own face, you may look insincere. However, it is usually a good idea to smile regularly and respond with a fascinating look to investors' concerns and questions.


Your voice is technically not a "look", but it can help you make a better first impression on investors. When speaking, use your naturally speaking voice (i.e., do not try to raise or lower it too much), but speak from the diaphragm to project your voice and speak slowly and confidently. If you stammer, if you use too many filler words, or if you rush through your speech, it may be difficult for you to reflect. <! – ->


If you have documents that you would like to share with your investors, e.g. For example, a business plan or financial model, you should spend some time making it look good. It's a good idea to have your work professionally printed and bound, and then go through it permanently to make sure it is error-free. Also, make sure to bring some extra copies with you so you can make sure you have enough for everyone in the meeting.

Bonus Tips

These additional tips can help you further perfect your look.

  • Learn more about your audience. Take your time to learn more about the investors you meet with. Are they particularly conservative and traditional or more modern and relaxed? How do they dress in their own business applications? Try to specifically address your audience.
  • Think positive. You can of course appear more confident and "composed" if you have positive thoughts . Accept the best in people, believe in your own ideas, and try to banish negative thoughts before they creep into your mind.
  • Relax. If you are particularly nervous before your investor meeting, the advice to “relax” can be even more nerve-wracking. But it is important that you have your nerves under control. Take a deep breath, meditate, and try to get rid of distractions.

<! – -> As such, your appearance cannot completely increase or decrease your chances of success. In combination with a solid business plan and a clever presentation, a well-thought-out, polished appearance can contribute to success.


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