New businesses need a reliable source of working capital to keep operations running, and to grow successfully. However, finding an affordable funding option when business credit ratings are low can be a challenge.

Building Business Credit Ratings

New businesses have an uphill battle when it comes to building credit. From the time a business has its name and tax ID, offers for lines of credit start pouring in. Unfortunately, most introductory lines of credit have low spending limits and high interest rates. Using introductory lines of credit can quickly tank ratings and make it more difficult to get adequate financing. Instead, new businesses should work with their vendors and suppliers. Both typically offer credit to business customers, which gives entrepreneurs an increase in purchasing power. The trick is to find vendors and suppliers who submit reports to credit agencies. If a vendor submits reports, those records of timely payments can go a long way toward building up business credit ratings. In a short period of time, businesses will meet the requirements necessary for larger financing.

Preserving Business Credit Ratings

Another option is to preserve business credit ratings while accumulating capital. Traditional loans may have been the “go to” solutions for financing, but many emerging entrepreneurs are trying to avoid debt and impacted business credit ratings. To accomplish this, businesses are taking advantage of invoice factoring services. Instead of applying for traditional loans, businesses are converting invoices into immediate and accessible capital without taking on debt. Factoring also allows businesses to preserve credit ratings. By eliminating staggered payment schedules and providing immediate revenue, new businesses can build up capital reserves for growth. Simultaneously, entrepreneurs can work with vendors and suppliers to build credit ratings through purchases. The end result is a business with a lot of accumulated capital for growth, and increased credit ratings so they can access larger financing programs for big internal projects.

If you have recently launched a business, and want to start accumulating capital for growth without taking on debt, contact the experts as FSW Funding. Our team will work with you to provide factoring services tailored to your needs, to help you reach your goals quickly for long-term success.