There is one topic that comes up at every event related to financing or funding a new small business endeavor- the importance of the 5 Cs of credit analysis. Until a business is established enough to have a line of credit separate from the business owner’s finances, this means the 5 Cs of PERSONAL credit worthiness. It is common misperception that credit and debt for the business is separate from that of the owner but that is not true. A high debt to income ratio, poor credit score, late payments- all these items on a credit report will impact the potential business owners ability to secure funding. The Minority Business Development Agency of the U. S. Chamber of Commerce does a good job of describing the 5 Cs that will be considered by any lender in this article.
There are ways to fix personal credit issues for the small business owner. One of the most important is continually monitoring (and reporting errors) on personal credit reports. For other fixes, consider this article written by Ty Kiisel for Forbes.com in 2013.
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