5 Mistakes That Sabotage Your Company’s Bank Credit Score

Bank Loans Yes, there are many types of creditors from which you can get funding for your business. But here’s why good bank credit is one of the most important. Image credit: PeopleImages | Getty Images April 12, 2019 5 min read Opinions expressed by Entrepreneur contributors are their own. Bank credit is the full amount of borrowing capacity that a business can get solely from the banking system. It is a subset of business credit. Business credit represents the full and complete amount of money which a business can get from creditors of all sorts. That means the banking system, but it also means credit card companies, credit unions, suppliers (under what’s called trade credit or vendor credit or trade lines), and leasing companies.Here is a brief explanation of how this is all intertwined, and what you can do to make sure you maximize your bank credit.How bank credit works.A business can get more business credit fast, if it has at least one bank reference and an average daily account balance of at least $10,000 for the most recent three month time period. This setup will yield a bank rating of a “low-5.” This means it is an Adjusted Debt Balance of from $5,000 to $30,000. A lower rating, such as a “high-4,” or balance of $7,000 to $9,999 will slow down the approval process and could even mean automatic rejection.Related: What Does It Really Take to Get a Small-Business Loan?A bank credit rating is the average minimum balance a business maintains in a business bank account over a three-month-long period. A $10,000 balance will rate as a low-5, a $5,000 balance will rate as a mid-4, and a $999 balance will rate as a high-3, etc.A business’s main goal should always be to maintain a minimum low-5 bank rating for at least
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