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Don't let bad credit hold back your ambitions. Spot changes on your account quickly and improve your business credit score by checking your credit report.
Understanding, tracking and improving your credit score is easy with Capitalise for Business.
If you're looking to grow your company to the next level, deciding which path to take can keep you awake at night. Organic reinvestment of revenue, taking on company debt and raising equity are all viable options that can fuel growth; however, debt financing can be a powerful tool if you have a dependable business with current revenues that can cover the repayment of the loan.
Organic growth is a must for any successful company; however, it needs to match your aspirations and risk appetite if you're using it as the primary tool for expanding your business. Reef Knots, a friend's company that is a fantastic producer of men's ties and socks (and future maker of swimming trunks), has gone from initially operating out of a bedroom to two London shops in just three years. With no debt or shareholders, the success of the business is based on the founder's grit and revenue reinvestment. A great success story, but perhaps not the right growth strategy for many small businesses.
Raising equity makes sense if you have a company with a product or service that requires you to gain market share quickly. A large upfront capital investment or a big idea that can help you stay ahead of the competition are two examples where taking on shareholders could be necessary. Will the money allow you to double your growth rate in a sustainable way? That’s often what it takes to make adding shareholders worthwhile. Otherwise, you may sell too much equity in the beginning stages of your company and find your original investment highly diluted.
Having a collective boss looking for monthly and quarterly updates, projections and high returns on their investment can be highly motivating for some entrepreneurs (like myself), but it's not for everyone. By giving away some control of the business in exchange for capital, you are now accountable to others.
Debt is often viewed negatively, but if planned for and managed well, it can be leveraged to yield outstanding returns, while offering the flexibility and control you need to reach your business growth goals.
A fashion business spin-off from a successful company is setting up an e-commerce solution and requires funding through several routes. Capitalise is helping them get a startup loan, a secured overdraft and one of our partners is doing an equity raise through crowd funding. This could not have been accomplished if the fashion business waited until the need for funding was at the point of being critical.
With the rise of platform lenders and other sources of small business financing, there are more options than ever before to help small business owners achieve their growth goals – while still maintaining their vision for what they want their companies to become.
A recruitment firm for which I am a shareholder recently added temporary work to their permanent placement business. As a cash flow intensive business, the firm often requires funding through invoice financing, but had a negative view of such debt. Their perspective quickly changed when they realised the value of their permanent placement books was 1x profit while the value of their contractor books was 5x profit. Over time, the value of the business will be far higher if they choose to sell. Like equity, debt needs to be measured against the return it can generate, so planning is very important.
There are places you can go for credit insights. And places to look for funding. There are places where you’ll pay for advice. And places to track how your business is doing.
Or you can do it all for free, in one place, with Capitalise for Business.
At Capitalise, we work with a number of institutional lenders, including high street banks, alternative lenders and independent lenders. These lenders offer a variety of products so you're certain to find the most suitable solution for your business. Capitalise makes it easy to find, compare and select lenders who are most likely to give you an offer.
At Capitalise, we work with specialist lenders who can not only provide you with the funds your business needs, but have a proven track record supporting similar businesses within your sector.
A credit score is the measure of how creditworthy your business is. In other words, your score shows a bank or lender how much of a risk it would be to lend your business money. The higher your score, the more likely it is that your business can pay back any debt, for example the repayments on a loan. Credit agencies each have their own scale for calculating your credit score. Our credit agency partner, Experian, uses the Commercial Delphi Score with scores that range from 0 (the highest risk) to 100 (the lowest risk).
Your credit score is important because it’s a measure of the financial health of your business. Not only does it show your financial position today, but it can be the difference between a healthy and unhealthy position in the future. The higher your credit score, the more funding you can get to fuel everyday operations and ambitious next steps. Businesses with higher scores can negotiate better terms with suppliers and are more likely to win contracts with new clients.
Read more about credit scores and why they’re important here.
There are several factors that affect your credit score – both positively and negatively. These include how promptly you pay suppliers and whether or not you have any legal notices against your business. Your Companies House SIC code is also a factor and so is your filing history. Credit agencies will also consider the age, industry and location of your business as well as certain information about its directors.
The exact steps you need to take to improve your credit score will be specific to your business and the factors that are having a negative impact. But here are some general guidelines you can use to get started:
Read more about improving your credit score here.
Your personal credit score measures how creditworthy you are as an individual. In other words, could you personally pay back a debt? If you wanted an overdraft on your personal bank account for example, your bank would look at your score to decide whether you’d be able to make the monthly payments. Your business credit score is a measure of how creditworthy your business is. If you applied for a business loan, for example, the lender would look at your score to decide whether your business would be able to keep up the repayments.
You can check your credit score right now by signing up to Capitalise for Business. If you’re already signed up, you can check your score at any time by simply logging in.
With Capitalise for Business, you can access all your credit score insights starting at £19/month (plus VAT). Every time you log in, you’ll be able to see: