I’m sure you’ll agree that the number-one benefit to using vendor credit lines is that it provides your business with thousands of dollars in products and services it needs upfront while allowing your business to defer the payments for later.
But what you may not know is vendor credit lines also build a company’s business credit file. This is one of the things I advise my clients to do to show how their business handles its financial responsibilities. When you apply for business financing, a lender will pull your business report to determine its creditworthiness. If your report shows a positive payment history with multiple vendors, you can increase your chances of getting approved for financing.
However, one of the costly mistakes small business owners make is using vendor credit lines without having their positive payment history reported on their business credit files.
Before my clients apply for a credit line with a vendor there are three critical factors we verify:
- High credit