Clues to the Rules for Credit

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Securing credit can be a headache for a small business owner, especially when she is trying to make her business global.  With payments lagging in a recessionary economy and exchange rates in constant flux, small business owners need to smooth out cash flow with credit lines and loans. For those eyeing opportunity, credit can also be the key to strategic expansion or repositioning in this changing economy.

Earlier this year, Digital Insight and Emergent Research held a roundtable on small business credit to identify just where small businesses could turn for credit.  The attendees concluded that credit unions and community banks are among the most committed to small business lending.  Yet, as the roundtable report indicates, the standards of those lenders are high, and lending depends on a solid financial story from those seeking loans.

So what makes your story stand out from all others?

At last week’s Intuit Town Hall Tweet Chat on Small Business Credit (#intuitth), experts in small business lending discussed this issue. The advice from the session maps a solid path for credit applicants and was consistent with the roundtable research.

To secure lines of credit or loans, you must first establish a personal relationship with your banker. Building confidence and commitment by investing in that relationship can make or break a deal.

Second, be armed with well-organized, comprehensive financial data.  Prepare more than you expect to need, just in case that extra question gets asked.

Lastly — and most important — know the story behind your numbers.  Be able to breathe life into your business plan, depict your customers in detail, show your industry expertise and be an authority on the region and culture in which you operate.

In a credit-tight market, your knowledge of your business and your market makes a difference in how one views your credit risk.   Tell your story to the lenders evaluating your loan request.  If you do not paint your own profile, the banks will do it for you…and they’ll do it without knowing who you and your business really are.

Posted by:  Carolyn Ockels

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