Business credit
frees up more cash to reinvest in your LLC.
As a Limited Liability Company owner, you have the protection of a corporation, which means liability is restricted to each owner's investment. While a creditor cannot come after you for past due or delinquent loan obligations, it can report past due and delinquent credit accounts in your business' credit file. If your business' credit file contains potentially negatively credit information, take the necessary steps to restore it. Credit repair does not happen overnight, but within one to two months, you will see clear improvements in your business' credit file and score.
Instructions
1. Reduce your business' debt ratio. Determine your business' debt ratio by dividing the total amount of assets your business owns by the total amount of debts your business owns. Obtain these figures from your balance sheet.
2. Pay down outstanding debts, such as revolving accounts, lines of credit and loans, to within 30 percent of your credit limit. Minimize spending at the employee level to reduce costs and eliminate unnecessary spending. You want to stay within this 30 percent range at all times to effectively restore your LLC's business credit file.
3. Pay off higher-interest lines of credit first. The more your payment frees up credit for future purchases, the healthier your debt ratio will be. Creditors view a low debt ratio more favorably than a high one.
4. Contact creditors and request a reduction of interest rates and an elimination of past due fees. Play up the number of credit lines your business owns. For example, if you have multiple lines of credit with the same lender, ask the lender to minimize excess fees due to interest and penalty charges. Explain that your LLC is struggling financially and needs more of its payments to go toward principle.
5. Take advantage of unused lines of credit. Older lines of credit are more favorable than newer ones, so start using older, unused lines of credit for purchases, rental fees, inventory costs and equipment purchases.
