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February 2008 — Vol. 86, No. 1

SMALL BUSINESS

5 steps to maintain a positive business credit file

SBA, D&B provide credit management resources

 

Small business owners now have a new resource to help improve their chances for profitability by understanding the importance and use of business credit. The U.S. Small Business Administration (SBA) and Dun & Bradstreet (D&B) have joined together in a nationwide partnership to give small business owners step-by-step guidance on how to manage their business credit.

“This new partnership between the SBA and D&B will help small business owners optimize their business credit profile, which can potentially lower [the] costs of credit and improve cash flow,” says David Kieselstein, D&B’s senior vice president for small business.

The SBA and D&B advise business owners to take the following five steps to establish and maintain a positive business credit file:

  1. Start a business credit file. To establish business credit, you may need to obtain a D-U-N-S® Number, a unique business identification number.

  2. Establish a credit history. Put all expenses in your business name and use a commercial bank account, rather than personal funds, to pay bills. This approach will allow you to build a history of payment behavior that will help establish favorable credit terms.

  3. Pay bills on time. Commercial credit scores are influenced by paying bills on time as well as other factors, such as outstanding debts and company revenues.

  4. Monitor and understand your business credit file. Monitor your credit file before any change occurs that might affect relationships with suppliers, customers and banks.

  5. Monitor customer and supplier credit. You can improve cash flow by knowing the credit standing of your business partners before agreeing to payment terms.

Training resources

Through their partnership, the SBA and D&B are also providing training resources, including a Webinar, CD-ROMs and informational brochures, on how to properly establish and protect business credit. The resources and information are available at www.sba.gov.

D&B’s Web site also has a dedicated portal — www.dnb.com/sba/eupdate — for small business owners.