The inflationary environment that small business owners are encountering right now, means that their businesses are spending more for everything and this has a direct effect on credit approvals.
Nearly half of small businesses (45%) identified rising costs as the biggest challenge facing them today. Business owner personal credit usage is compounding the ever increasing ‘credit crunch’ for small businesses.
If business owners aren't passing on these increases to their customers, they will soon see their businesses making less money. It's a notorious fact of running a small business, that when business profit margins are narrowed, owners don't pay themselves as much as they have been, or for that matter, don't increase their salaries. This means that the business owners load up their personal credit cards when they don't continue to pay themselves their accustomed amount -relative to inflation.
Why am I mentioning this? The lending environment right now is extremely tight for small businesses and credit worthiness comes to play in this. Why is this a big problem right now? Businesses applying for commercial credit for normal working capital needs and for expansion are being denied, not necessarily for the underwriting guidelines of the business, but because the personal credit scores of the owners are suffering. This widens the credit gap for small businesses to access funds for their businesses.
The solution is for business owners to ‘make more money’, which is much easier said than done. But to also account for their personal financial matters as it relates to their personal credit scores.
Paying more attention to paying down personal credit lines, instead of keeping cash in their small business checking account, may better serve them. Especially if they are seeking business credit in the current or near future.
If you own a small business and want guidance on how to obtain the most affordable capital for your business, request a quote here.
US Capital Source makes the application process seamless and available to every Business owner.
Submit all the necessary information to a number of potential lenders in one place! We eliminate the need to fill out multiple applications and allow you to compareloan options from different lenders. Reduce the risk of errors and time to secure a loan, as all the necessary information is collected in one application.
By submitting all the required information in one place, businesses can speed up the loan application process and receive a loan decision much faster so you can start to grow your business, more quickly.
Interest rates and repayment timeline tailored to your chosen offer. Help finance the expansion of your business.
With relationships across the country, US Credit Source is able to provide quick Lines of Credit less than two points above WSP Prime
Access working capital quick and on short-terms so you can pay back your financing sooner. Use what you need, when you need it. US Credit Source has various options for all Business Owners
Upgrade your Business with financing for Business Equipment. Equipment keeps the busy running and US Credit Source has access to fast capital for all your equipment financing needs
Receive invoice factoring and provide your business with a source of working capital to fund operations and growth.
A Government Grant program under the CARES Act. US Credit Source has helped thousands of Business Owners receive employee tax credit from 2020 and 2021