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The plight of small businesses trying to get finance is a standard topic on financial websites and in the printed press. While much of the discussion tends to revolve around what the government and industry bodies can do to make it easier for small businesses to get credit, it’s worth remembering that small businesses can actually do quite a lot to make themselves more attractive to lenders. Here are six tips to help you achieve this.

Polish your credit report

If you look at advice for private individuals looking to get finance then you’ll have often read that it’s important for them to make their credit record look as good as possible. Exactly the same holds true for businesses, hence business owners should make a point of checking their credit records once a year (and before any credit application) for mistakes and missing information.

Keep taking care of your own credit score

This advice applies mainly to younger businesses, which have little in the way of a financial history. In the absence of company history, lenders will tend to look at the financial history of the people behind it. Personal credit records tend to get less important as a company develops its own track record, having said that, it never does any harm for individuals to keep their own credit track record in good order.

Link up with a more experienced partner

This can have all sorts of benefits, but for the purposes of this topic, the takeaway point is that having someone involved with the company who has a long history of commercial success and good financial management is a very good way to impress lenders and to convince them that you know what you’re doing.

Make sure you take care of your taxes

Let’s be quite honest, there’s a lot of business administration which is necessary but boring and organizing taxes is highly unlikely to come top of anyone’s list of favourite pastimes. Nonetheless, they are important, HMRC is one of the last organizations in the world you want to get into trouble with and it’s also well worth avoiding issues with your local council. Added to all of this, winding up in trouble with the tax authorities is hardly going to do you any favours when it comes to getting credit.

Be a good bill payer

In the simplest of terms any lender is going to look at how good you are at paying your bills as an indicator of how good you are likely to be at paying them. With this in mind, it’s a good idea to make payments using payment cards and ewallets (like PayPal) whenever possible as these have chargeback schemes in which the companies step in to resolve disputes between buyers and sellers, which are much quicker and easier than going to court. Outside of these schemes, if you have an issue with a supplier then, legally and in terms of protecting your credit record, you may find that your best course of action is to pay the bill and then challenge it in the courts, which can be a lengthy and expensive process.

Have full insurance cover

This may seem like an odd tip, but it is based on the fact that for small businesses in particular, cash flow is king and unexpected expenses can cause serious issues and, frankly, send your financial projections into a tailspin. When you have insurance, your liability is restricted to your excess. When considering your insurance cover, it’s a good idea to think about key man insurance because for many small businesses, their most valuable assets are the people making them happen.

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