Things to Know About Business Credit 2

CREDIT CARDS VS BUSINESS LOANS

There are advantages and disadvantages to both the use of credit cards and business loans, and the wise entrepreneur will review the pros and cons in each situation before determining which is the better choice. Many of the choices will vary depending on the individual credit card or financial institution involved, so it is important to understand fully the conditions and terms of each means of credit.

Credit cards are generally easier to acquire. Not only are people accustomed to receiving credit card offers in the mail based on pre-screening of their personal credit reports, but sometimes fairly large credit limits may have developed over time with good credit habits in your personal life. New businesses will often receive business credit card offers through the mail, especially if they go through the procedure of establishing a merchant credit card account, in order to accept credit cards from their customers.

In reviewing the business credit card offers, you should be looking for the same things as you would in a personal credit card plus a few other things which are important for businesses. You will want to check rates, grace periods, annual fees and limits in order to allow yourself the best possible use of your money.

Business credit cards tend to have larger credit limits than personal credit cards and allow you to place more stringent controls on who may use the card. Credit cards allow you to track expenses better than do checks or cash payments, so many small businesses choose credit cards just to keep the record keeping for the business expenses at a minimum. With a credit card, you receive one monthly statement and make one payment monthly.

Business loans on the other hand allow you to borrow a larger amount and may be either secured loans such as for vehicles or equipment, or unsecured loans. Some financial institutions allow you to place business loans against account receivable or inventory. Business loans tend to be more difficult to obtain, although developing a good working relationship with your local financial institution may be helpful. A business loan may be set up as a business line of credit, which is effective for businesses who have fluctuating expenses or income. The line of credit can be accessed via cash, a credit card or sometime a check drawn on the line of credit.

Repayment is usually spread out over a longer period and interest rates for a business loan are almost certain to be lower than for credit cards.

The key factor whether you have business credit cards or business loans is that you are taking a proactive approach to building and maintaining the business credit you need. Probably a business will make use of each of the forms of business credit at different times and for different purposes. As long the the accounts are managed professionally, the use of either form can be effective in financing your business.

DUN & BRADSTREET

Dun & Bradstreet is probably the world's best known business reporting agency. It's data base contains information on the financial health and well-being of millions of companies. Currently the D-U-N-S numbers are assigned to over 100 million companies worldwide. Data Universal Number System was developed by D&B as a way of tracking companies and branches in various locations. The major divisions of the company are Risk Management Solutions, E-Business Solutions, Supply Management Solutions and Sales and Marketing Solutions. Dun and Bradstreet rankings are widely used by banks and financial institutions, credit companies, insurance companies, and wholesale distributors among others.

The most popular product of Dun and Bradstreet is the DNBi database which allows those who subscribe to the service to search for and receive business information and credit-worthiness information on other businesses. The service is widely used by companies who need to determine the level of risk when offering credit to other companies.

D-U-N-S numbers, the numbering system established by Dun and Bradstreet are used to identify businesses in most every country of the world. The information maintained in the Dun & Bradstreet listing includes such items ans trade and legal names, physical address, mailing address, geographical identifications, industry and product descriptions, employee numbers and sales revenue for three years, and many other statistics valuable for corporate researchers, marketing list compilers, directories, industry analysis, and merger and acquisition analysis among other utilities.

Before extending credit to a business, most merchants will review the Dun and Bradstreet rating to see if there is a listing yet, For this reason, new businesses should apply for a D-U-N-S number very early in the process. This will be one of the indicators that a new business is legitimate and not just a hobby for the owner.