Increase Your Purchasing Power
A strong business credit profile can be a valuable asset for the long-term success of any small business by helping to:
-
Establish Legitimacy – Having a good business credit score may help a small business to be seen as a real and creditworthy entity. It offers third-parties, such as financing providers, vendors, and suppliers, an idea of how trustworthy or credible a business is in terms of their finances. Just as a good personal credit score helps an individual, a higher business credit score indicates that a business is more creditworthy.
-
Provide Access to More Capital – Building good business credit can open up opportunities for accessing capital. Financing providers often evaluate a business’s credit history, financials, and growth potential to determine the amount of financing they offer and payment terms. Having strong business credit increases the chances of securing financing at more favorable terms.
-
Leverage Vendor Relationships – Having good business credit can help a business owner establish relationships with reliable suppliers and negotiate better trade terms. Timely payments and a positive payment history can lead to larger discounts and more flexible payment arrangements, which can be advantageous for managing cash flow.
So when customers told us building business credit was important to them – Capital Funds listened. That’s why we report customer performance to Experian Business Credit. For small businesses with solid payment history, this is a unique opportunity to get revenue-based financing, while also building their business credit. That means small businesses can work with Capital Funds as a deliberate step towards strengthening their purchasing power.
How does Capital Funds report customer performance to Experian?
Once a customer has received working capital from Capital Funds, we report on the customer’s performance against the terms of their contract on a monthly basis to Experian Business Credit, who in turn calculates business credit scores. Our part is simply reporting whether each customer is in good standing or poor standing.
-
Good Standing – Either making payments or committed to a payment plan with our Account Servicing team. If a customer’s revenue decreases and they notify us, as outlined in their agreement, we will adjust their payments to align with their revenue. Should a customer take advantage of this revenue-based financing benefit, they will still be reported as good standing. For small businesses with good payment history, this is a unique opportunity to get revenue-based financing, while building business credit.
-
Poor Standing – Not made a payment for 30 or more calendar days and not committed to a payment plan with our Account Servicing team. As long as the customer communicates with us on a payment plan and adjusts their payments to align with their revenue, they’ll remain in good standing.
We consider a customer engaged if they are communicating with our Account Servicing team, providing requested information (e.g., bank statements) according to their agreement, and generally working with us towards a resolution. Experian Business Credit operates using its own algorithm to calculate credit scores. We are simply reporting whether a customer is in good or poor standing with Capital Funds.
Why can Capital Funds report customer performance?
When a customer receives revenue-based financing, they are incurring an obligation to provide us with a certain amount of their future revenues. And as a funder, Capital Funds has the right to share information with credit reporting entities, as indicated in our standard customer contract. It is not only companies that extend credit that report to credit agencies. There are many different types of companies that provide information to credit reporting agencies that don’t grant credit themselves, such as utility companies, employers, landlords, and more.
But remember, to effectively build your business credit, it’s important to establish a good track record with multiple vendors or suppliers who report your performance to credit reporting agencies – not just one. There is no guaranteed method to improve your business credit. However, there are steps you can take to help your business credit report reflect the best possible score for your situation. Visit the Experian Business Credit website to learn more about how to build your business credit score.