how to build business credit
Yvette Salas
By: ysalas
Read in 8 minutes

How to Improve my Business: Credit Score and Financing

Surely your business’ cash flow has been affected as well as your credit score because you destined the little money you have to try to keep your entrepreneurial dream alive in the face of the COVID-19 crisis, with all that this implies.

It has been difficult, we know. 

The good news is that little by little things are retaking their course and changing into what we call “the new normal.” The bad news: your current financial situation could affect your chances of obtaining a loan in the future, which has become, today, more than ever, a survival tool for small businesses.

But don’t worry. 

The better news is that you still have time to make significant changes to your finances to turn this situation around. To do so, you must know how to build business credit. Thankfully, Camino Financial is here to help you do it! 

Remember that with us, no business is left behind. 

Take note and apply the following tips to improve your financing possibilities: 

1. Deposit your cash sales

Nowadays, many of the transactions that are collected in cash are not being deposited. 

I know what you might be thinking: there are mobility restrictions, and that prevents you from going to the bank. It is also true that cash is tight, and you may be paying materials and supplies with it. And yes, cash is king… I totally get you doing things this way.  

But if you don’t record those entries in your business account (the bank account from which you operate your business), they won’t show in a cash flow analysis. And those operations showing is essential in any present or future loan application.  

Think about it! Today, more than ever, lenders need to check your daily activity to confirm that your business is increasing its sales. So showing all your transactions on your account is crucial to access new capital.

No bank account? Check:

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How to open a bank account in the US without an SNN

2. Don’t over-leverage your personal credit

I know that it’s difficult to avoid it if it’s to survive, but be careful, you do not want to accumulate debt that sooner or later you will have to pay. If you overuse your credit card, you will enter the compound interest effect, which makes it more challenging to pay the debt on time.

Also, remember that debts that you can’t pay on time are recorded in your history and could affect your credit score. That, in the end, is not a good thing if you are looking to access a loan, especially in periods of low income and a slow recovery in the economy. 

Never forget that a tool in any business owner’s repertoire is knowing how to build credit fast.

Don’t let it happen to you!

What affects your credit score? 5 Behaviors with a negative impact

3. Keep an ample working capital stock on your books 

Ideally, lenders would like to see 30 to 90 days of working capital for your operating expenses. It might sound contradictory to tip # 1, but make sure you have cash on hand, at least for this destination, and for your daily operation.

Many lenders will require you to have a balance sheet that shows how your sales (income) are recovering. Make sure you have cash in your business bank account at all times.

Glass jar for money on background. concept: investment accounts

Learn the importance of working capital

4. Don’t let your books go red

Two of your priorities today must be the correct management of your cash flow and the design of strategies so that the business continues to have income, and the numbers continue to be black most of the time.

Red numbers will scare any lender because they show that cash flow is not well managed and that you are spending more than you are entering. Maintain a positive balance in your account at all times. That is, with sufficient funds and without overdrafts.

Take note!

borrow money. concept: collateralHow to increase cash flow in your small business

5. Keep Your Business Records, and Annual Reports Up to Date

Due to COVID-19, many agencies are closed, which makes it difficult to renew the Good Standing certificate. Therefore, some businesses have allowed their registration to expire. However, most agencies offer alternatives to keep the registry up to date, either online or by mail. 

Make sure you are aware of this and anticipate natural delays in the renovation process. This way, when you are asked for this document when requesting a loan, you will have it on hand and ready to deliver it.

It’s also convenient to have other financial documents up-to-date, such as past tax returns, bank statements, business financial statements, a list of your business’s current assets, other debts, and the plan for how you’d use the money.


Hand handing over folder with business licenses.

Learn how to keep your records and your commercials updated with the Secretary of State

6. Make sure that the identity documents of all business owners are up to date

The documents issued by the Government have a legal status and function as a means of verifying who the owners of the business are. Therefore, it is worth reviewing its validity to avoid unpleasant surprises that may delay the application of a loan.

Two business people shaking hands while sitting in meeting room. Middle eastern businessman shake hands to businesswoman. Portrait of happy smiling latin man signing off deal with an handshake. concept: best credit unionsHow to Get an EIN (Employer Identification Number)

What is an ITIN? 5 Steps to Apply for an ITIN

Strengthen your business 2, Yvette Salas, Camino Financial

Now You Can Strengthen Your Business

Accessing a loan for your business can be the difference between maintaining operations during and after the COVID-19 crisis or lowering your curtains temporarily or even permanently. That’s why it’s vital that you know how to build business credit and improve your finances: to be able to apply for financing.

However, to be a subject of this help, you must polish your finances, keep your books in order and up to date, and make wise decisions that will lead your business to success once again.

When the coronavirus pandemic ends, business owners must be prepared, know, and understand their business finances, and maximize every opportunity. And for this, Camino Financial is the ideal ally.

If you want to know more tips to help you cope with this pandemic even stronger and more profitable, subscribe to our newsletter.


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