Is Access to Capital Holding Your Business Back?

An annual study on the economic outlook for small businesses is out, and it has sunny news for entrepreneurs, except for one dark cloud.

A whopping 81 percent of small businesses in Dun & Bradstreet and Pepperdine University’s 2016 Economic Forecast expect their companies to perform better financially this year than in 2015.

Two-thirds expect to hire at least one employee in the coming year; in fact, one-fourth of respondents say they plan to hire between three and ten employees. In addition, 51 percent of small business owners say they gave their employees a pay raise in the last 12 months, and more than 60 percent plan to give workers raises in the coming 12 months.

It's not just employees who are enjoying financial gains: 46 percent of small business owners say they personally made more money in 2015 than in 2014, and almost three-fourths expect to make more money in 2016 than they did last year.

However, there is one dark cloud on the horizon that could cast a shadow on small business owners' sunny prospects: limited access to capital.

Limited access to capital is one of the three biggest barriers to growth for 2016, cited by 28 percent of the small business respondents. Increased access to capital was named the number-one change that would spur job growth in the coming year.

The study didn't delve deeper into what specific difficulties the survey respondents are having accessing capital, so it's hard to offer suggestions for improvement. However, if you're having trouble getting the capital you need, one factor that might be holding you back is your business's credit history.

For a newer business, a limited credit history can be a big stumbling block in getting traditional business loans. To help build your credit rating quickly, start by making sure that your company's suppliers and vendors are reporting your payments to credit reporting agencies. Not all do this automatically, and if they aren't, even making payments on time will not help build your credit history, so you may need to specifically request your suppliers report the information.

You can also improve your credit history by making even small purchases using business credit cards that report to business credit reporting agencies and making your credit card payments in full and on time. Again, not all business credit card issuers will report to business credit reporting agencies; choosing a card that does will help you improve your credit rating.

Just as with your personal credit history, it’s also important to make sure your business credit history is complete and accurate. Every year, be sure to obtain a copy of your business credit history and review it for errors or omissions. If there's anything wrong, take steps to correct it before applying for a loan.

If you have legitimately run into problems that have negatively affected your business credit rating, it may take a while to improve your credit score. Be patient, and keep working at it. If problems occur in the future, don't hide your head in the sand. Creditors will always appreciate efforts to make things right. At the first inkling that you may have trouble making payments, reach out to your creditors to let them know, and see if you can work out some type of payment plan. This can go a long way toward maintaining and/or repairing your credit score.

Speaking of scores, your SCORE mentor can help you get your business credit rating and other financials in shape to obtain the business financing you need. If you don't already have a mentor, visit to get matched with one today.

Rieva Lesonsky
<p> Rieva is CEO of GrowBiz Media, a content and consulting company specializing in covering small businesses and entrepreneurship. She was formerly Editorial Director of Entrepreneur Magazine and has written several books about small business and entrepreneurship. <br /> <a href="" target="_blank" title="GrowBizMedia"></a> | <a href="" target="_blank" title="Rieva on Twitter">@rieva</a> | <a href="" title="blogs by Rieva">More from Rieva</a></p>


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