If you’re a small business owner or if you’re thinking about opening a small business, understanding financing and credit are so important. It is crucial that you understand what you are doing when you are running or thinking of running a small business. Our guest today, Gerri Detweiler, is an absolute expert on all of the things that you need to know. Even though these are the not-so-fun things about running a business, Gerri actually makes it fun and enjoyable to talk about them. She and I are talking about some of the things you need to know about credit and financing.
If you’re in need of financing, there’s a few things you should know. 2020, crazy year that it was, changed a lot about financing. The usual processes are taking much longer, and lenders are much stricter with their requirements. They are asking for higher credit scores, higher revenue levels, and more time in business than they did previously. You should know that they will look at your business credit scores, and in some cases, your personal credit scores too. Be aware of these things and make decisions with them in mind.
So many of you have wonderful dreams, and you give up so much for them. When you want to fund these dreams, there are other ways to go about it besides second mortgaging your house. Before you do anything crazy, make sure you have a business mentor that you can talk to about your ideas! An easy thing you can try is crowdfunding. There are a lot of other options too, and you should definitely look at all of them before acting.
When handling your finances, you need to keep them clean and organized. Get a separate business bank account and credit card and do not ever use them for things other than business. Keep your personal and business finances separate. Trust me, it will save you from huge headaches. Also, try not to use your account overdrafts. Lenders may look at your accounts and see overdraft usages as risky behavior.
You should try to look at your finances at least once a month. Take time to reconcile, or ensure that your records are accurate, every month. Checking your accounts every month is super beneficial because it helps you learn a lot about your business and what has happened to it on the financial side. If you don’t take time to look at it, you could miss lots of opportunities or problems. All of this stuff is so important, so I hope you take time to listen to the podcast to learn even more!
What to expect when applying for financing
Ways to fund your business
How to position your business for financial success
Things you should look at consistently
“As soon as possible, you want to set up the systems so that you can build credit and use credit in the name of your business and move away from the personal financing of your business.”
“I never try to shame people because you don’t always know what you don’t know.”
“I recommend that business owners make sure that they stay on top of both their business and personal credit.”