Small businesses need credit to meet their financial needs. Whether it’s about buying office equipment, paying salaries, or managing day-to-day operations, you need cash. As you rely on your clients to pay you on time, a lot depends on what kind of relationship you have with your suppliers. Besides, your credit history reflects your efforts into maintaining an impactful company credit report in India.
Getting credit is no big deal, but you have to make a consistent effort to ensure you don’t fall short of funds. Let’s discuss how you can get credit for your business and keep going ahead with your plans.
Talk to Your Suppliers
If you boast cordial terms with your suppliers and clients, you can ask for payment terms from them. In a supplier-based scenario, you can ask them to give you credit that you can use to buy goods and pay them later. The duration is usually between 30–60 days. For a client-based scenario, you can request prepayment from them.
With that said, your product or service has to generate enough demand that your clients are happy to prepay for their orders. Take note that when you can get credit or cash from your suppliers and clients, you don’t have to struggle to get external funding.
Enter Into a Service Agreement
The best way to get credit is to enter into a service agreement with your service provider. You pay as you go. It could be paying for service every month. For example, if you want to buy customized finance software, you can enter into a service agreement with a managed service provider (MSP). You can pay them every month or as you upgrade.
Make sure you pay for the services on time so that it does not have a negative impact on your business CIR.
Find Trusted Lenders
It is the easiest way to get credit. As a small business, you may need credit for various reasons. There are lenders in the market who offer credit facilities to small businesses. You can approach them and share how much you need.
While it may sound easy to get credit from a lender, you have to ensure that you pay your EMIs on time. It also depends on the payment policy stated in your contract. If you don’t pay your lenders on time, you may get listed as business credit defaulters.
Search Potential Investors
If you’ve got plans to expand your business, it’s better to search for potential investors who are willing to fund your business. Read about how to work with an investor. Learn about business credit management too. When your business is backed by a solid investor, you don’t have to worry about minor glitches at work.
With all that said above, you must put effort into making your business scale heights through ethical business practices, such as paying your dues on time, avoiding unnecessary purchases, and keeping a check on your business credit report.
