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Understanding Credit And Financing

Host: Jeffrey K. Ernst, August 14th, 2015

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Growing a business can be very challenging. Entrepreneurs face different problems on a daily basis, and these issues can at one point, threaten the very core of the companies. The fact that securing financing to run and grow a business is just part of the story. In order for a business to thrive, numerous factors are to be considered.

Finding capital is becoming harder for a significant proportion of small businesses despite the several financing options to choose from. Even though there are more lending options for small businesses than ever before, a crucial step is missing in the process; and no one is paying attention, leaving business owners increasingly frustrated over their rejections for credit lines and loans.

According to recent surveys, a certain scenario shows up, the dream and the reality don’t add up. There is a struggle around bank financing and many small businesses suffer from this. A quarter of small businesses found it hard to plan for unforeseen expenses. The survey revealed that twenty percent of the small businesses had considered shutting down, primarily because of lack of growth, cash flow issues.

Education and empowerment around creditworthiness is a core issue, and can make or break a small business’s ability to get financing. Many business owners starting out are unaware of business credit, and may do significant damage to their credit without realizing it -- primarily by maxing-out personal credit cards and/or credit lines because they believe they have no other choice. This short-term approach leads to significant long-term damage.

It is very important to understand to the perplexity surrounding rejected funding. The small business owners surveyed who understood their business credit scores, the study reported, were 41 percent more likely to be approved for a business loan than those who did not.

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