Business Credit Vital to Getting a Business Loan According to Latest SBA Study

December 1, 2006; 02:19 AM

In a recent survey conducted by Business Credit Services - a Nevada based consulting firm, 86% of small business owners were unaware there is a credit report for their business in addition to their individual credit report.

In addition a recent survey conducted by The Small Business Administration (SBA) Office of Advocacy reveals the importance of business credit reports and scores to banks who issue business loans. The report by the SBA is entitled, A Survey Based Assessment of Financial Institution Use of Credit Scoring for Small Business Lending.

The use of business credit scoring for small business loans is a relatively recent phenomenon, but the potential benefit to small business owners is growing. As a result of this research the SBA came to the conclusion, "… there are indications that (business) credit scoring may be providing more borrowing opportunities to small business. … The survey confirms that banks implement the use of credit scoring for small business loans in a number of different ways - while a majority of banks depend on the credit score of the owner as the key credit metric, other banks utilize the business score, and still others use both. "

Based on these results, it is more vital than ever for small businesses to build a business credit profile and score to increase their likelihood of obtaining business loans in the future. This step will enhance and establish business cash sources, as more banks add business credit scoring to their list of qualifications for a small business loan.

Outside of banking institutions, the use of business credit has been around for years. Dun and Bradstreet D&B (NYSE:DNB) is the oldest business credit reporting agency, established in 1842, and now has over 100 million records. D&B collects data on businesses worldwide. D&B sells this information to companies making their own decisions to issue credit to other businesses. D&B also develops marketing lists from this data for companies to purchase for marketing campaign development.

Two other companies Equifax and Experian are building a very strong presence with their business credit reports as well. The names that Experian (Experian Business - parent company Experian Group, listed on the London Stock Exchange EXPN.L) and Equifax (Equifax NYSE:EFX) have built the last several years will start to spill over into the business credit field as well.

In 1999, David Gass, founder of Business Credit Services, Inc, began research on business credit in preparation for his book, "Building Business Credit for Business Owners," which was released in February 2001. As a result of that research, Mr. Gass has developed a new system for small businesses to build business credit and scores separate from their personal credit. Because of the unique way by which this system speeds the acquisition of credit for small businesses, he filed a patent with the United States Federal Patent and Trademark Office. Since 2001, over 10,000 small businesses have gone through Mr. Gass' program and developed credit solely under their business name. His latest books, "Success Steps to Business Credit" and, "Success Steps to Business Financing" are scheduled for release in early 2007.