For many, the consequences are immediate: difficulty accessing future loans, such as mortgages and car loans, higher interest rates, and even a reduction in available credit. Those who once had strong credit scores are now finding themselves in subprime territory, creating an urgent need for a solution to rebuild their credit health.

How Student Loan Delinquencies Impact Your Credit Score

Before the pandemic, student loan payments were a routine part of many borrowers’ financial lives. However, with the onset of COVID-19, the government paused payments for more than three years, providing much-needed relief to millions of Americans. During that time, borrowers were not penalized for missed payments, and late payments were not reported to credit bureaus, effectively giving millions a grace period.

But this grace period ended in September when borrowers were required to resume payments. For those behind on their loans, the damage to their credit scores is now becoming apparent. Research shows that a missed payment on a student loan can knock more than 150 points off a FICO score for someone with average credit. For those with subprime credit, the effects can be equally severe. These borrowers may lose access to favorable interest rates, and their ability to obtain new credit can be limited.

Rebuilding Your Credit with CreditStrong

The good news is that you don’t have to wait for your credit score to recover on its own. CreditStrong offers a way to actively rebuild your credit score. Through their range of credit builder loans for every need and budget, you can take charge of your financial future. These loans are designed to help you create a positive payment history, which is essential for rebuilding your credit after a setback like missed student loan payments.

With a CreditStrong credit builder loan that fits your needs, you’ll make regular, on-time payments that are reported to all three major credit bureaus—Equifax, Experian, and TransUnion. As you make these payments, your credit score will begin to improve over time. This consistent payment history shows creditors that you’re capable of managing debt, which will help raise your score by up to an average of 86 points, and ultimately increase your chances of qualifying for loans in the future.

CreditStrong is not just about rebuilding credit; it’s about regaining financial confidence whether you’re facing delinquencies due to student loans or other financial challenges.

Managing High Credit Utilization with Revolv

In addition to student loan delinquencies, many borrowers also struggle with high credit utilization—another factor that negatively impacts credit scores. When you use a large portion of your available credit, it signals to lenders that you may be overextended and could struggle to repay your debts.

If you’re dealing with high credit utilization as a result of student loan delinquencies or other debts, Revolv offers a smart solution. Revolv helps you manage and lower your credit utilization rate by giving you tools to pay down high balances more effectively. Keeping your credit utilization ratio under 30% is one of the best ways to protect your credit score.

By managing your credit utilization alongside your efforts to rebuild through CreditStrong, you’ll improve both the quantity and quality of your credit profile, which will make it easier to regain access to credit in the future.

The post Student Loan Delinquencies and Your Credit Score: How To Help Rebuild appeared first on Credit Strong.

In this post, we’ll cover some key last-minute business tax filing tips to help you avoid chaos and complete your tax filing quickly, without sacrificing accuracy. Read on to discover how to file business taxes efficiently and confidently.

1. Get Organized Early with a Tax Checklist

One of the best ways to avoid last-minute business tax filing stress is by getting organized ahead of time. Create a detailed tax season April 2025 checklist, and include all the documents you’ll need—like profit and loss statements, receipts, payroll records, and 1099s. Having everything prepared and in one place will save you valuable time when it’s time to file.

An organized checklist will also help you ensure that you’re not missing out on important deductions or credits. The earlier you start, the more time you’ll have to gather everything you need without feeling rushed.

2. Consider Hiring a Professional Tax Preparer

If you’re feeling overwhelmed by business taxes, it might be time to hire a tax professional. An experienced accountant or tax preparer can guide you through the complex tax filing process and help you avoid errors. Working with a professional allows you to focus on running your business while they handle the paperwork and filing on your behalf.

If you’re worried about how to file business taxes quickly, a tax expert can streamline the process and ensure you don’t miss any important steps. They can also help you navigate potential tax law changes for tax season April 2025, ensuring that your business is compliant with the latest regulations.

3. Keep Track of Estimated Tax Payments

If you’re a business owner, you’re likely required to make estimated quarterly tax payments throughout the year. Failing to keep track of these payments can lead to surprises when filing your taxes in April. Review your quarterly payments, compare them to your actual tax liability, and make adjustments if needed.

Staying on top of estimated taxes can help prevent last-minute surprises and ensure that you’re not scrambling to make additional payments at the last minute. If you haven’t made payments throughout the year, you may be subject to penalties, so be sure to assess your situation ahead of time.

4. Take Advantage of Tax Deductions and Credits

Business owners can often reduce their taxable income by claiming various deductions and credits. Common business deductions include operational expenses, employee wages, marketing costs, and equipment purchases. Tax season April 2025 might present new opportunities for deductions based on recent tax law changes, so it’s important to stay up-to-date on eligible business expenses.

By planning ahead and consulting with a tax professional, you can maximize your deductions and credits. This will ensure that you minimize your taxable income and avoid paying more taxes than necessary.

5. File Early to Avoid Last-Minute Rush

To avoid the stress of last-minute business tax filing, aim to file your business taxes as early as possible. This gives you ample time to resolve any issues, request extensions if needed, and receive your refund more quickly. Filing early also reduces the risk of tax identity theft, as scammers often target those who wait until the last minute to file.

By tackling your business taxes early, you’ll avoid the last-minute rush, reduce stress, and have more time to focus on other critical aspects of your business.

And with your tax deduction, consider putting it towards CreditStrong for Business, the 0% interest business credit builder that builds business credit with your EIN instead of your SSN.

The post How to Avoid Last-Minute Stress: Tax Filing Tips for Your Business appeared first on Credit Strong.

Here are five key tax preparation tips to keep in mind this year:

1. Stay Organized with a Tax Season Checklist

One of the best ways to ensure you don’t miss any important documents or deadlines is to create a tax season checklist. Organizing your paperwork in advance will save you time and stress when it’s time to file. Start by gathering all the necessary forms, such as your W-2, 1099s, and receipts for deductions. Don’t forget to include important information for your dependents, such as Social Security numbers, if applicable.

By following a tax season checklist, you can make sure you’re fully prepared and avoid scrambling for documents at the last minute. A well-organized tax file will also make it easier for your tax preparer (if you hire one) to process everything efficiently.

2. Maximize Deductions with Updated Tax Rules

The IRS updates tax laws regularly, and staying informed about changes is essential. In 2025, several key deductions and credits may be different, so be sure to review the latest tax rules to maximize your refund. For example, the standard deduction has increased, which might impact your decision to itemize deductions. If you qualify for credits like the Earned Income Tax Credit (EITC) or Child Tax Credit, these can significantly reduce your taxable income.

Make sure you’re aware of any specific changes related to your filing status or income, as these could affect your final tax liability. One of the most valuable tax preparation tips is to take full advantage of available deductions and credits—especially the ones that are unique to the 2025 filing season.

3. Contribute to Retirement Accounts Before the Deadline

Contributing to retirement accounts before the tax filing deadline is an excellent way to lower your taxable income and prepare for your future. In 2025, you can still make contributions to your IRA, 401(k), or other qualified retirement plans up until the filing deadline (April 15). By contributing to tax-deferred retirement accounts, you’ll reduce your taxable income for the year, which could lead to a lower tax bill or a larger refund.

Even small contributions can have a significant impact on your taxes, so consider making the most of this opportunity if you haven’t already maxed out your contributions for the year.

4. Review Your Filing Status and Adjust if Needed

Your filing status plays a crucial role in determining your tax bracket and the deductions you can claim. In 2025, it’s important to review your filing status to make sure it’s still the best option for your situation. For example, if you’re married, consider whether filing jointly or separately will be more beneficial for you and your spouse. If you’ve had significant life changes like marriage, divorce, or the birth of a child, these may affect your filing status and tax outcome.

Taking the time to review your tax preparation tips based on your filing status can ensure that you’re not overpaying or missing out on valuable credits.

5. File Early to Avoid Last-Minute Stress

One of the easiest yet most overlooked tax filing tips 2025 is to file early. By filing as soon as you have all the necessary documentation, you can avoid the stress of last-minute filing. Early filing can also help you secure your refund faster, especially if you choose direct deposit. Additionally, filing early reduces the risk of identity theft and gives you ample time to address any errors or discrepancies.

Filing early also allows you to make any necessary adjustments or take advantage of last-minute tax-saving opportunities before the deadline hits.

Final Thoughts

Tax season doesn’t have to be stressful if you follow the right steps and stay organized. These tax filing tips 2025 will help you navigate the filing process, minimize your tax liability, and make sure you’re taking full advantage of all available deductions and credits. Don’t forget to use a tax season checklist to keep track of your documents and deadlines, and always stay up-to-date with the latest changes in tax laws.

And once you get your tax deduction, consider signing up for CreditStrong to put that money to work in raising your credit score!

The post 5 Tax Filing Tips You Can’t Afford to Miss in 2025 appeared first on Credit Strong.

Read on to learn more about how this small business credit scoring system works. You’ll also find tips to help you improve your company’s SBSS score so you can set your business up for success the next time it needs to borrow money. 

What Is the FICO® SBSS℠?

FICO Scores are well known (and frequently used) in the consumer lending space. But the company also creates a credit scoring system for business lenders, too. 

The FICO Small Business Scoring Service, also known as FICO SBSS, is a type of commercial credit score. FICO launched SBSS in 1993. Yet despite its frequent use, many business owners have never heard of the score.

Some lenders use FICO SBSS to evaluate the risk for small business applicants. If you want an SBA loan, for example, you’ll need a good FICO SBSS score for certain loan options.

The FICO SBSS works in a unique way. Most business credit scoring models ignore the business owner’s personal credit information. But FICO SBSS bases its score on a combination of factors from your personal and business credit reports. 

There’s a reason why small business lenders appreciate a credit score that evaluates both personal and business credit data. In many ways, your company is an extension of you. 

Do you make good personal financial decisions? If so, a commercial lender might believe those good practices could extend to your small business management habits, too. And, of course, the opposite may be true as well. 

FICO says that knowing more about an applicant’s risk empowers lenders. Lenders can make more informed decisions about whether to approve small business financing applications and how much to charge when they do. 

How Does SBSS Work? 

The FICO Small Business Scoring Service features a range of 0–300. Like most credit scoring models, a higher number means you’re more likely to repay your debts as promised. A score in the mid-to-high 200s typically indicates that you’re a good credit risk.

On the other hand, a low SBSS score could cause you problems in business credit decisions. In the small business lending space (and elsewhere), a low credit score communicates that you may be unreliable with your payments, and possibly a bad investment.

Like most credit scoring systems, the algorithm isn’t available to the public. That’s proprietary information. But here are some details about the FICO SBSS score that we do know:

• Lenders can use the score to evaluate applications for business loans, credit cards, and lines of credit up to $1 million.
  
• A flexible system lets lenders choose to score credit reports from a variety of major consumer and commercial credit reporting agencies including:
  • Business: Dun & Bradstreet, Experian Business, PayNet, and Equifax Commercial
  • Consumer: Equifax, TransUnion, and Experian
    
• FICO uses its LiquidCredit® Service to deliver the SBSS score lenders in a speedy and secure manner.
  
• A higher score could increase your loan approval odds, and potentially help you secure larger business loan amounts and better financing terms.
  
• You may be able to offset personal credit problems, at least to some extent, with strong business credit habits. 

How Is the Credit Score Calculated? 

FICO considers a number of factors from both your business and personal credit reports in order to calculate your SBSS score. Here are some examples: 

• Personal Payment History
• Business Payment History
• Credit Utilization Rates
• Business Age
• Financial Data (Business)
• Number of Employees
• Public Records (Liens and Judgments)
• Liabilities and Assets 
• Revenue
• Cash Flow

The scoring system considers the factors above and others to calculate an applicant’s credit risk level. It also gives lenders a lot of predictive flexibility.

• Lenders can mix and match which business credit report and consumer credit report it wants the scoring model to score.
  
• There are more than 100 model variations that allow lenders to evaluate specific market segments of potential customers (business leasing, term loans, etc.). 

FICO SBSS also has the ability to consider the personal credit of up to five owners of a company (anyone with 20% ownership or more). 

As you can see, there’s a lot of room for variance within the FICO SBSS scoring system. 

Because each lender can specify which factors it wants to be considered (and to what degree), you could potentially see a different score with one lender versus another.

Who is the FICO SBSS Score Used By? 

According to multiple sources, around 7,500 business lenders rely on the FICO Small Business Scoring Service to assess credit risk levels. Some lenders who use the score include: 

• U.S. Bank
• KeyBank
• Huntington National Bank
• Santander Bank
• PNC Bank
• HSBC

The Small Business Administration (SBA) also uses the SBSS score. SBA lenders must use the score to evaluate applicants for several of its loan programs — including SBA 7(a), which is loans over the amount of $350,000. 

There’s another point that’s worth mentioning here. Any credit score is merely a tool that lenders use to evaluate risk. But it’s the lender who sets the approval criteria you need to satisfy to qualify for financing, not FICO. 

Here’s an example to illustrate the previous point. 

• Many lenders set the number 160 as the minimum FICO SBSS score you need to earn before you’re eligible for a loan.
  
• Yet lenders who offer SBA-backed loans might be willing to work with you if you have a FICO SBSS score of 140 or higher (albeit with a manual underwriting process if your score falls below 155). 

How Do I Get My SBSS Score Up? 

The Fair Credit Reporting Act (FCRA) doesn’t apply to businesses. Unlike the consumer credit world, if a lender turns you down due to a low FICO SBSS Score, it doesn’t have to explain why it declined you, or even tell you which scoring model or credit report it used.

Despite this lack of information, there are a few strategies you can use to try to increase your FICO SBSS score. 

Focus On Building Good Personal Credit 

Lenders can tell a FICO SBSS scoring model to pull in data from any of your consumer credit reports — Equifax, TransUnion, or Experian. So, you’ll want to make sure your personal credit score is in good shape.

If you’re looking for ways to improve your credit score, this guide can help you get started. And if you need to build good credit in the first place, you might want to consider opening a few accounts, such as secured credit cards or a credit builder loan with Credit Strong.

Most of all, be sure to pay on time. Late payments arguably pose the most potential danger to your credit score.

The whole point of a consumer credit score (like a FICO Score or VantageScore credit score) is to predict whether you’ll pay 90+ days late in the next 24 months.

Establish a Good Business Credit History 

The FICO Small Business Scoring Service can also consider data from a business credit bureau like Dun & Bradstreet, Experian Business, PayNet, or Equifax Commercial.

So, if you want a good FICO SBSS score, you should also work to establish good credit with the commercial credit reporting agencies. This guide, Business Credit 101, can offer you some in-depth tips on how to accomplish that goal.

In the meantime, open accounts that report to at least one business credit bureau (such as a business tradeline, commercial credit builder loan, small business credit card, etc.). Then, focus on making timely payments. Better yet, you can pay early.

Earning a good FICO SBSS Score can take time. Your best bet is to begin working on your business credit long before you think you’ll need it to apply for any type of financing. 

Bottom Line

A good FICO Score can open doors for you and your business. Solid credit can also help you save money. So, it’s worth the time and effort it takes to learn how the scoring system works, and then strive to earn the best score possible for your company. 

Credit Strong is a Division of Austin Capital Bank© 2024 Member FDIC.
FICO® is a registered Trademark of Fair Isaac Corporation

The post FICO® SBSS℠ – The Small Business Credit Score appeared first on Credit Strong.

Unfortunately, it’s not always easy to qualify for a business loan, business credit card, or other types of business credit. According to the Federal Reserve, 30% of businesses were denied financing after March of 2020. 

Yet there are things you can do to stack the deck in your company’s favor. Read on for an in-depth business financing guide. You’ll learn about the many different business financing options, the costs of borrowing, and how to determine the best choice for your small business. 

Business Financing Basics: Debt vs. Equity

Most business financing options fall into one of two categories — debt financing and equity financing. You can use either option to access capital for your business, and each has its advantages and disadvantages. 

Here’s a deeper look at the differences between debt financing and equity financing.

Debt Financing 

Debt financing is something you’re probably already familiar with as a consumer. If you have ever taken out a mortgage or applied for a car loan to purchase a vehicle, you have used debt financing.

With debt financing, you borrow money and repay it according to the terms of your credit agreement — usually with interest.

There are several advantages to this type of financing. First, you retain full control of your business. Any interest fees you pay may be tax deductible as well. 

On the negative side, debt financing can be expensive. Interest rates on a small business loan can range from 2% all the way up to an exorbitant 99%. Monthly debt payments can also impact your business’s cash flow.

As a business owner, you might have to sign a personal guarantee for the money your company borrows. This means that if your company can’t repay its debt, you could be personally liable for the balance, and your personal credit might suffer too. 

Equity Financing

Equity financing is the process of selling a portion of your company in exchange for business capital from one or more investors. If you’ve ever watched the television show Shark Tank, you have seen equity financing negotiations in progress.

On a positive note, there’s no debt to repay when you use equity financing to secure funding for your business. High interest rates and other borrowing fees aren’t an issue either.
business
The negative aspect of equity financing, of course, is that you no longer have full control over your company. In addition to sharing the profits your business earns, you also have a partner you must consult when you need to make future decisions. 

14 Types of Business Financing

Now that you understand the two main business financing categories, you can dig deeper into individual financing options. There are many different ways for your business to try to secure the funding it needs to launch, expand, or cover pressing expenses. 

Some financing options feature lengthy repayment terms. This might cause you to pay more interest in the long run, but it could lower the size of your monthly payment. 

Other financing methods might allow you to borrow money for your business, repay it, and borrow again by reapplying for a new account. 

Finally, some business credit choices may feature easy approval and fast funding while others might require a more in-depth application process. Of course, there are tradeoffs you’ll need to consider too. In general, easy and fast don’t equal competitive or affordable pricing. 

Below is an in-depth look at 14 types of business financing. You can use these details to determine which borrowing method is the best fit for your business. 

Traditional Bank Loans

Traditional bank loans are what many business owners think of first when it comes to business financing. You can find these types of loans at your local or online business bank or credit union.

Traditional bank loans include the following: 

• Installment loans or term loans that may require your business to repay the money it borrows over a fixed period of time.
  
• Your business receives the money it borrows up front in a single lump sum.
  
• Interest rates are typically fixed and don’t fluctuate up or down with the market.
  
• You may be able to secure an attractive interest rate, depending on your company’s creditworthiness and other factors. 

Business Lines of Credit

A business line of credit offers companies a more flexible way to borrow money over and over again. However, the interest rates with this financing option may not be as competitive as a traditional bank loan.

Business lines of credit: 

• Are like credit cards in the sense that you can borrow up to a set credit limit, make a payment, and borrow again as long as the account remains in good standing.
  
• Interest rates can vary based on the market.
  
• Your credit rating (business and personal) can play a role in the interest rate a lender offers your business.
  
• Your business might need to supply collateral to open an account. 

SBA Loans

Business loans backed by the Small Business Administration are some of the most attractive business loans available. But in return, they also feature strict approval criteria your business will need to satisfy. 

SBA loans are:

• Partially guaranteed by the federal government, lowering the risk involved for lenders.
  
• Available for a wide range of borrowing needs, from SBA 7(a) loans for working capital and more to SBA 504 Loans for fixed assets like equipment or property.
  
• Often one of the most affordable ways for eligible businesses to borrow or refinance existing commercial debt.
  
• Harder to qualify for and require a lengthy application and funding process (often spanning months). 

Commercial Real Estate Loans

Commercial real estate loans represent another traditional borrowing option available to business borrowers. If your business wants to build or purchase real estate property, this type of financing is worth considering. 

Commercial real estate loans:

• May be available for up to 80% of the value of the property you wish to purchase.
  
• You can use these loans to purchase or refinance business real estate, renovate existing commercial property, or build something new.
  
• Loan amounts may range from $50,000 to $5 million.
  
• Repayment terms can be as short as 12 months or as long as 30 years. 

Online Loan

An online lender may be more likely to approve your business loan request. However, this easy qualifying process can come at a cost. 

The Federal Reserve study mentioned above reveals that over half of the business borrowers that use online lenders report receiving high interest rates. Nearly a third were unhappy due to unfavorable repayment terms. 

Online loans:

• Are convenient and easy to apply for online.
  
• Are available from reputable lenders, but you have to watch out for bad actors.
  
• May give your business fast access to cash, especially compared with other funding choices.
  
• Often feature higher interest rates depending on the lender, your credit rating, and other factors.
  
• May come with steep origination fees, potentially as high as 8.9% of the loan amount.

Invoice Financing

Invoice financing, sometimes called accounts receivable financing, lets your business borrow against the value of unpaid client invoices. 

A key benefit of invoice financing is that it tends to feature easier approval criteria compared with other options. But lenders usually charge high rates and fees for this funding option. 

Invoice financing details:

• Your business may be able to borrow up to 100% of the value of outstanding invoices.
  
• The approval process is generally easy, without intense documentation requirements.
  
• May be an option even with less-than-perfect credit.
  
• Interest rates and fees can be extremely high. 

Equipment Financing

Equipment financing is another business funding option that typically features an easier approval process. Interest rates can vary widely depending on your creditworthiness and other factors the lender deems relevant. 

Equipment financing details:

• The equipment your business purchases serves as collateral for the loan.
  
• Interest rates could range from 8% to 30%.
  
• You may be able to secure financing with no down payment.
  
• You might be able to bundle the cost of sales tax and installation into the loan, if applicable. 

Merchant Cash Advance

Businesses that accept credit card payments may be eligible to take a merchant cash advance. 

The amount your business can borrow depends on your average daily credit card sales. Qualification tends to be much easier with this type of business credit, but once again the cost can be steep. 

Merchant cash advance details:

• You may have to pay high APRs between 15% to 80% (assessed in the form of “factor rates”).
  
• Lenders may approve your business with no collateral and bad credit.
  
• Funding is speedy, often arriving in your bank account within a couple of days.
  
• The lender may withdraw funds from your account to repay the advance on a daily or weekly basis. 

Note that a merchant cash advance should probably be a last resort due to the expense. 

Microloans

Microloans of $50,000 or less may be a worthwhile option to pursue for certain businesses. Veteran, minority, or female-owned businesses (among others) may be able to qualify for this type of business financing. 

Microloans details:

• Available through SBA lenders, nonprofit Community Development Financial Institutions, and some online lenders.
  
• Startups may be eligible for funding.
  
• Your business may qualify even with no credit or bad credit.  

Crowdfunding

With crowdfunding, you convince a large number of people to invest small amounts in your business. Collectively, the funds may add up to enough to help you reach your business goals. 

Depending on the type of campaign you design, you may offer investors equity in the company, rewards, or a debt to be repaid in the future. Meanwhile, some crowdfunding campaigns merely request donations. 

Crowdfunding points:

• Requires an excellent marketing strategy to succeed.
  
• Features popular online crowdfunding platforms that can be highly competitive.
  
• Involves fees that can vary based on the platform and type of crowdfunding campaign you select. 

Unfortunately, most crowdfunding campaigns don’t reach their financial goal.

Grants

Grants represent a desirable form of business capital that your company does not have to pay back. But your business project will need to stand out among a crowded and competitive field of applicants. 

Grant details:

• They are available from the federal government via the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs.
  
• Nonprofits, local community organizations, and private companies may offer small business grants as well.
  
• The research and application process can be tedious and time consuming.
  
• Beware of scams that charge fees.
  
• If your business operates in certain industries (i.e., scientific, technological, health advocacy, urban restoration, etc.), you may have a better shot.  

Family and Friends

The people who care about you may be willing to back your business goals with financial support. Often, this type of business funding falls into the equity financing category. However, some family members or friends might offer you a loan or a gift instead. 

Whatever the arrangement, make sure the terms are clear up front. Otherwise, you risk damaging an important relationship over money and business-related challenges. 

Angel Investors

Angel investing is a type of equity financing where you trade a portion of your company in exchange for business funding. While you don’t have to repay this cash infusion into your business, you do have to share both profits and decision-making capabilities. 

Angel investors:

• Tend to perform a detailed analysis before deciding to invest in a business.
  
• Are typically attracted to businesses with the potential for rapid growth.
  
• Can be difficult to locate, and may take a long time to negotiate with once you do.
  
• Often offer valuable advice and guidance that could help your business succeed.

Venture Capital

A venture capitalist is another type of investor that may provide equity financing in exchange for ownership shares in your business. 

However, unlike angel investors, when you work with a venture capital firm, you tend to receive business funding in rounds (i.e., Series A, Series B, etc.). 

Venture capital:

• Is typically only available to businesses deemed to be “disruptors” with the potential to grow fast and shake up their market.
  
• Often favors businesses in technology or finance industries or other companies poised for rapid growth.
  
• Will typically move your business through its seed rounds of investment with the goal of taking the company public.
  
• May offer the right company millions of dollars worth of funding. 

Factors Affecting Chances of Getting Approval

Anytime you borrow money from a business lender, your business needs to come across as a good risk. Lenders and banks only loan money to those they deem to be a sound investment. 

Below are some common factors that a lender may consider when you apply for business financing. These factors impact not only your ability to qualify for funding, but can also affect your interest rate, fees, loan amount, loan term, and more.  

Personal Credit Scores

As a small business owner, your business is an extension of you in the eyes of a lender. If you have good personal credit, it may reassure a lender that you’re likely to be responsible with your commercial credit obligations too. 

Good personal credit scores can make it easier to qualify for business financing, like loans or business credit cards. And, of course, the opposite is true as well. 

If you need help establishing good personal credit, a Credit Strong credit builder account is worth considering. There’s no minimum credit score requirement to qualify, and no upfront security deposit. 

Credit Strong accounts start with payments as low as $15 per month. With this option, you can open a $1,000 installment account and add up to 120 months worth of positive payment history to your credit reports with the three major credit bureaus. 

Business Credit Scores

Good business credit scores can be a tremendous asset for your company. When you work to establish and maintain good business credit, it tells potential lenders that your business is likely to repay its debts as promised. In other words, your company is a good credit risk. 

Most lenders rely on credit scores to evaluate loan applications. So, it’s wise to start building business credit as soon as possible. There’s just one problem. Finding companies willing to help you build business credit from scratch can be a challenge. 

Credit Strong Business is one solution that could help you establish business credit. This business credit builder account is a cash-secured installment loan that features easy approval criteria and has the potential to help you build your business credit profile. 

There is no upfront deposit required. And you have the option to select five or ten-year repayment terms. On top of the potential to establish good payment history (with on-time payments), account holders also enjoy free monthly access to their business credit score.

As you manage your business credit obligations well and the tradelines on your business credit reports age, you will put your company in a better position to qualify for funding.  

Cash Flow

Good credit can help you qualify for business financing, but it’s not the only factor lenders consider. A lender also needs to know that your company has sufficient cash flow to pay its monthly debt obligations. 

To assess your company’s cash flow and overall financial wellbeing, a lender may want to examine the following documents when you apply for financing:

• Business Bank Statements
  
• Business Tax Returns
  
• Other Financial Statements (Profit and Loss Report, Accounts Receivable and Payable Records, Etc.) 

Current Debt Levels (Balance Sheet)

A business lender may also want to review your current debts to make sure your business can afford to borrow more money. Your business balance sheet can help answer these questions. 

A balance sheet provides a potential lender with a bird’s eye view of your company’s financial health. It breaks down assets and liabilities in clear terms — aka how much your business earns versus how much it owes. 

Number of Years the Business Has Been Running

Your company’s time in business can also influence its ability to qualify for business financing. For certain types of business loans, your company may need a minimum of two years in operation underneath its belt. 

Yet even as a startup, your business may have some borrowing options. Just be prepared to provide more collateral, a bigger down payment, a personal guarantee, or to accept some other adjustment that brings the lender’s risk down to an acceptable level. 

Industry

In addition to all of the approval factors outlined above, the industry in which your business operates can also impact your ability to qualify for business financing. Businesses that operate in high risk industries may struggle to qualify for traditional business financing. 

With an SBA loan, for example, businesses that operate in any of the following industries are ineligible for financing: 

• Gambling
  
• Investment
  
• Lending
  
• Charities
  
• Religious Institutions
  
• Non-Profit Organizations
  
• Etc.

Determining How Much Financing You Need

You should also be prepared to tell a business lender how much money your company needs to borrow (and why). You may want to prepare a detailed report with cost estimates breaking down how your business will use the money it borrows when and if it’s approved. 

Try to answer questions like:

• What is the cost of the equipment or materials the company needs?
  
• How much additional payroll do you need to hire new team members for expansion?
  
• What amount does your business require to refinance existing high-interest debt? 

The amount of money you request will vary based on your borrowing needs. Over half of businesses that sought funding in 2020 requested more than $100,000 in financing, according to Federal Reserve data. Yet 15% of businesses asked for less than $25,000. 

Keep in mind that the maximum amount a lender is willing to loan your business may be more than you need. It’s generally not a wise move to borrow extra money just because you can. 

Understanding the Costs of Financing and Making a Choice

As you compare one small business financing option to the other, consider how much it will cost to borrow money. Pay attention to annual percentage rates, of course. But remember that fees, repayment terms, and monthly payments should all factor into your decision.

Take the time to rate shop and consider offers from multiple lenders as well. Interest rates and fees can vary widely. Spending a little extra research upfront to find the best deal could potentially save your business thousands of dollars or more in the long run. 

The post Business Financing Basics: Reviewing Your Options and Requirements appeared first on Credit Strong.

However, the good and bad news is you’re not the only one affected by student loan forgiveness ending. Let’s consider a few other options you can use to start rebuilding your credit.

Ways to Rebuild Your Credit

1. Secured Credit Cards

Secured credit cards are a great option for individuals with limited credit history. You’ll need to provide a deposit, which serves as your credit limit. By using the card responsibly and paying off the balance on time, you can begin to rebuild your credit score. However, secured cards often come with higher interest rates and limited credit limits, which may make it harder to significantly boost your score quickly.

2. Become an Authorized User

If you have a family member or friend with a solid credit history, you can ask them to add you as an authorized user on their credit card account. This allows you to benefit from their positive credit history. While this method can improve your score, it often requires trust in the person whose account you’re joining, and it might take longer to see substantial results.

3. Credit Builder Loans

Credit builder loans are designed for people with no or poor credit. They allow you to take out a small loan, which is placed in a savings account until it’s paid off. These loans report your payment history to the credit bureaus.

4. Pay Off Debt Strategically

If you have existing debt from student loans, credit cards, or other sources, paying it down strategically can help. Focus on high-interest debt first, or target credit cards with high balances to reduce your credit utilization ratio. However, without an established credit-building plan, this method alone may take a long time to significantly improve your score.

5. Regularly Monitor Your Credit Report

It’s essential to keep track of your credit report to catch any errors that could be impacting your score. You’re entitled to a free credit report once a year from each of the three major bureaus, and reviewing it regularly will help you spot any issues before they affect your credit.

How long does it take to rebuild 100 points of credit?

If you have missed payments or collections: It might take 6–12 months to see a 100-point increase as you improve your payment history and reduce your outstanding debt. If you’re using a credit-building product and focusing on lowering credit card balances and paying off debts, you might see a 100-point increase in about 3–6 months, especially if you were starting with a score in the lower 600s or high 500s.

If you’re ready to rebuild your credit and improve your financial future by an average* of 86 points then, MAGNUM by CreditStrong — the largest credit builder in the nation, offers a great solution. It should be noted that MAGNUM is not intended to build savings and is an option for those who have cash, but not credit.

MAGNUM is also Ideal for:

• Immigrants who have cash but haven’t yet built a substantial U.S. credit history.
• Divorcees who may have had credit affected by joint accounts and need to rebuild their individual credit score.
• Borrowers who are facing the financial burden of student loan payments and need an effective way to lower their credit utilization and rebuild credit.

How MAGNUM Helps Rebuild Credit After Student Loan Forgiveness Ends

The end of student loan forgiveness is not just a financial challenge—it’s an opportunity to improve your credit if you know how to manage it. Here’s how MAGNUM can help:

1. Reports to All Major Credit Bureaus
   MAGNUM reports your on-time payments to the three major credit bureaus helping you build a strong credit history. If you’ve been affected by student loan payments and higher debt, MAGNUM will show your commitment to repaying loans, which will gradually improve your credit score.
2. Focuses on Building Your Credit, Not Savings
   Unlike other credit-building programs that combine savings with credit building, MAGNUM is designed to focus solely on improving your credit score. This is especially beneficial if your primary concern is repairing or rebuilding your credit after the resumption of student loan payments. No distractions, just a direct path to better credit.
3. Low Interest Rates and Affordability
   MAGNUM offers low-interest rates, so you don’t have to worry about accumulating expensive interest while working to rebuild your credit. With the added financial pressure of student loans, MAGNUM’s affordable terms make it an ideal choice for anyone looking to improve their credit without risking further debt.
4. Reduces Credit Utilization
   Credit utilization, which accounts for 30% of your credit score, is likely to rise as you take on more debt due to resuming student loan payments. MAGNUM helps reduce your credit utilization by providing a flexible credit line that you can pay off monthly, which will directly improve your credit score.
5. Perfect for Those With Limited Credit History
   If you’re an immigrant, a divorcee, or simply someone who has struggled to build U.S. credit history, MAGNUM is a good solution. MAGNUM helps establish or rebuild credit without needing an existing credit history, making it ideal for individuals who need to start from scratch or improve their current standing.

There’s no hard credit pull, check out what MAGNUM plan is right for you and get started on rebuilding bigger credit today!

*Individual results may vary

The post How to Rebuild Big Credit After Student Loan Forgiveness Ends appeared first on Credit Strong.

In this article, we’ll discuss the impact of the end of student loan forgiveness on your credit score and show you how you can quickly lower your credit utilization rate, improve your credit score, and put yourself on a path toward better credit opportunities.

Why Your Credit Score Could Drop After Student Loan Forgiveness Ends

When the student loan forgiveness programs end, many borrowers will face the reality of resuming student loan payments. This can lead to several financial challenges, including:

• Increased Debt Load: Resuming payments on student loans increases your overall debt, which in turn raises your debt-to-income ratio. If your debt load becomes too high, it can negatively affect your credit score.
• Higher Credit Utilization: Many borrowers may have relied on credit cards or personal loans to cover expenses during the pause in student loan payments. This could lead to an increase in credit utilization, which plays a major role in determining your credit score.
• Missed Payments: If you miss payments, even once, it can cause your credit score to drop by 50-100 points or more. This can make it harder to get approved for loans, credit cards, and other financial products in the future.

On average, people affected by the end of student loan forgiveness could see their credit score drop by 30-50 points, especially if their credit utilization spikes due to increased debt.

Why Credit Utilization Is So Important

Your credit utilization rate is the amount of your available credit you’re currently using. This figure accounts for 30% of your credit score. Ideally, you should aim to keep your utilization below 30%, though lower is always better. If your utilization rate exceeds 30%, it can indicate to lenders that you may be relying too heavily on credit, making you a higher-risk borrower.

For many, a drop in their credit score is a result of high credit utilization, especially after taking on additional debt to cover resumed student loan payments. When your credit utilization is high, your credit score suffers, and you may find it more difficult to qualify for better credit limits or lower-interest credit cards.

How Revolv Can Help Lower Your Credit Utilization and Improve Your Credit Score

If high credit utilization is one of the reasons your score is dropping after student loan forgiveness ends, CreditStrong’s Revolv product can be an ideal solution. Here’s how Revolv can help you improve your credit score and achieve better credit card limits:

1. Fast Impact on Credit Utilization
   One of the best ways to quickly improve your credit score is by lowering your credit utilization. Revolv helps you do this right away. As a revolving credit product, it acts like a credit line that provides flexibility to reduce the percentage of your available credit that you’re using. This is important because when you lower your credit utilization rate, your credit score will improve almost immediately.
2. Better Credit Card Limits
   Lenders and credit card issuers pay close attention to your credit utilization rate when deciding whether to offer you a higher credit limit. By using Revolv to lower your utilization rate, you’ll increase your chances of getting approved for better credit card limits, which in turn helps you build a healthier credit profile.
3. Helps You Stay Within the Ideal 30% Utilization Threshold
   If you’ve been using a significant portion of your credit limit, Revolv will allow you to keep your utilization rate below 30%. Staying under this threshold signals to lenders that you are managing credit responsibly, which is crucial for improving your credit score over time.
4. Credit Building and Reporting to All Major Bureaus
   Revolv reports to all three major credit bureaus—so every on-time payment you make helps to build your credit. The more consistent you are with your payments, the more your credit score will improve, making it easier for you to qualify for better loans, credit cards, and even mortgages.
5. No High Interest Charges
   Unlike credit cards that carry high interest rates, Revolv offers a low-interest credit line designed to help you build credit without the fear of falling into a high-interest debt trap. The affordable terms mean that you can focus on paying down balances without worrying about accumulating costly interest charges.
6. No Hard Credit Check
   Revolv doesn’t require a hard credit check to apply. This means that your credit score won’t drop further when you apply, which is ideal if you’re trying to rebuild your credit after the end of student loan forgiveness.

Why Revolv Is the Best Choice for Those Looking for Better Credit Card Limits

When your goal is to lower your credit utilization and improve your credit score, Revolv stands out as the most effective and affordable solution. Here’s why Revolv is a game-changer:

• Direct Impact on Credit Utilization: Revolv immediately lowers your credit utilization rate, which is one of the quickest ways to improve your credit score.
• Improved Credit Limits: By lowering your utilization, you increase your chances of receiving better credit card limits from lenders.
• Low Interest Rates: Revolv offers low interest rates, meaning you can manage your credit without falling into debt.
• Credit Reporting: Revolv reports to all three major credit bureaus, ensuring your positive payment history helps boost your score.
• Flexible and Accessible: Revolv is designed to be accessible to individuals with varying credit histories, helping everyone improve their credit on their own terms.
• Build savings: Supercharge your credit profile with Revolv with optional monthly savings contributions. Every optional monthly payment goes to your savings, and if you don’t want to make a payment that month, you can simply set it to $0 beforehand.

Conclusion

With student loan forgiveness coming to an end, many borrowers will face a drop in their credit scores, particularly due to high credit utilization. But CreditStrong’s Revolv offers a simple, effective way to combat this problem. By using Revolv to lower your credit utilization rate, you can see quick improvements in your credit score, opening doors to better credit card limits and financial opportunities.

The post How to Quickly Improve Your Credit Score After Student Loan Forgiveness Ends appeared first on Credit Strong.

As student loan forgiveness programs come to an end, many borrowers face an additional serious concern: the potential drop in their credit scores. For many individuals, student loans have been a major factor in their credit history, and without the relief of forgiveness, they could see their credit scores suffer. However, there are several ways to rebuild your credit.

In this article, we’ll explore the ways student loan forgiveness ending could impact your credit score and show you several strategies for improving your credit.

Why Your Credit Score Could Drop When Student Loan Forgiveness Ends

Student loans are often one of the largest debts many people carry, and with the end of student loan forgiveness programs, borrowers will have to resume payments or deal with new repayment terms. This sudden shift can negatively affect your credit score in several ways:

• Missed Payments: If borrowers miss payments when the loans resume, they can face significant drops in their credit score. Missing even a single payment can cause a decline of 50-100 points depending on your prior credit history.
• High Credit Utilization: Some borrowers might need to use credit cards or take out other loans to cover student loan payments, leading to an increased debt load. High credit utilization—especially above 30% of your available credit—can lower your score significantly.
• Increased Debt Load: With student loans back in action, your debt-to-income ratio may rise, and this could hurt your credit score, especially if it’s already high. Credit bureaus pay close attention to your overall debt level.

In fact, studies show that borrowers may see their credit score drop by 30-50 points once student loan payments resume. This drop can make it even harder to secure loans or credit in the future, worsening the situation for many.

Multiple Ways to Improve Your Credit Score

While the end of student loan forgiveness can make things feel bleak, there are several strategies to rebuild and improve your credit score over time. Some common methods include:

1. Pay Your Bills on Time
   Timely payments are one of the most important factors in determining your credit score. Even if you’re struggling with student loan payments, prioritizing bills like utilities, rent, and credit cards can help prevent further damage.
2. Reduce Credit Card Balances
   High credit card balances can hurt your credit score due to credit utilization. Work to pay down your credit card balances and keep them under 30% of your credit limit.
3. Become an Authorized User
   If you have a family member or friend with good credit, ask if they would be willing to add you as an authorized user on their credit card. This can help boost your credit score by piggybacking off their positive credit history.
4. Use a Credit Builder Loan
   Credit builder loans are designed to help individuals with low or no credit to improve their scores. These loans typically require small monthly payments, which are reported to credit bureaus to show consistent, positive payment behavior.
5. Check Your Credit Report Regularly
   Errors on your credit report can drag down your score. Regularly checking your credit report can help you catch inaccuracies and dispute them with the credit bureaus. You’re entitled to a free credit report every year from each of the major credit reporting agencies.

Why CreditStrong’s Instal Program is One of the Best Solutions for Rebuilding Your Credit

While all of the methods above can help improve your credit, CreditStrong’s Instal program offers an effective and affordable solution, especially for those affected by the end of student loan forgiveness.

Here’s why Instal is a great tool for rebuilding your credit while building savings for the lowest price:

1. Affordable and Flexible Payment Plans
   Unlike high-interest credit cards or loans, Instal offers affordable monthly payments that fit your budget. No need to worry about overextending yourself financially—this program was designed to be accessible and flexible.
2. Build Credit and Savings Simultaneously
   What sets Instal apart is its dual benefit: as you make payments, you’re building your credit and saving money at the same time. The money you pay goes into a FDIC-insured savings account, which you can access once the loan is paid off. It’s a powerful way to grow your credit while also building your financial security.
3. No High-Interest Rates
   Many credit-building loans come with high-interest rates, making it hard to break the cycle of debt. Instal has low interest rates, meaning you can focus on making consistent payments without worrying about getting trapped by high-interest charges.
4. Reports to All Major Credit Bureaus
   The Instal program reports to all three major credit bureaus helping you rebuild your credit score over time. This means that each on-time payment can increase your creditworthiness.
5. No Hard Credit Check
   One of the key benefits of the Instal program is that it doesn’t require a hard credit inquiry. This means your score won’t drop when you apply. It’s an excellent option for people who need to rebuild their credit without hurting it further.

How Instal Can Help You Overcome the Student Loan Setback

With student loan forgiveness ending, many borrowers are faced with financial uncertainty. However, CreditStrong’s Instal program is a powerful tool to help you bounce back.

By enrolling in Instal, you can:

• Rebuild your credit score with on-time payments reported to all three credit bureaus.
• Save money through the program’s unique savings feature, building a financial cushion for the future.
• Avoid high-interest rates that come with traditional credit-building options, making it easier to stick to a budget.
• Regain control over your financial future and improve your chances of qualifying for loans, credit cards, and mortgages in the future.

Conclusion

While the end of student loan forgiveness programs can cause a serious drop in your credit score, it doesn’t have to be the end of your financial journey. By employing strategies like paying bills on time, reducing credit card balances, and checking your credit report, you can improve your score. If you want to start rebuilding your credit for the lowest price, Instal by CreditStrong offers a comprehensive, affordable, and effective option.

If you’re ready to take charge of your credit and financial future, Instal can help you make the most out of this challenging time.

The post How Student Loan Forgiveness Ending Could Affect Your Credit Score appeared first on Credit Strong.

When a business owes taxes to the federal government and fails to pay them, the Internal Revenue Service might file a tax lien against the company. If your business is behind on its taxes, it’s best to find a way to avoid a tax lien if you can. 

Tax liens can make it difficult, sometimes impossible, for your business to borrow money. Far more concerning, a tax lien might be detrimental to your entire business operation and could have severe ramifications for your finances as a business owner. 

What Is a Business Tax Lien? 

A business tax lien, at its core, is a legal document. The document gives the government a claim against all of your business property. 

When a business has unpaid tax obligations, the government can use a tax lien to preserve its rights to seize assets that might help satisfy that delinquent debt. Everything from your business bank accounts to equipment to real estate holdings and more could be at risk. 

The purpose of the filing is two-fold. A tax lien: 

• Puts pressure on a tax debtor to resolve its delinquent tax bill.
  
• Moves the government to the front of the line, ahead of any other creditor’s claim on your assets. 

When the IRS files a federal tax lien against your company, a ticking clock starts. You have ten days from the date of filing to pay your full tax obligation or the lien will go into effect. 

In addition to the IRS, a state may file a tax lien against your company as well. So, it’s in your company’s best interest to stay current on tax payments at both the state and federal levels. 

How Can a Business Tax Lien Affect Me? 

As a business owner, a tax lien can make life difficult in several ways. For starters, once a tax lien is in place, the government can escalate matters and use a tax levy to seize funds from your bank account, take possession of your property, and more. 

A tax lien could also have a negative impact on your business credit. The business credit bureaus may include tax lien filings on commercial credit reports. 

When a business credit reporting agency adds a tax lien to your company’s credit report, it may lower your business credit score. And if you’ve been working hard to build good business credit, a blow like a tax lien could be especially painful. 

There’s another credit complication to consider too. Unlike consumer credit reports, anyone willing to pay for your company’s information can buy a copy of your business credit report and see the IRS lien or state tax lien filed against your business. 

Even if you’re lucky and the tax lien doesn’t show up on your business credit report, it’s still a public record. That means there are other ways creditors and investors might detect it. 

As a result, you may not qualify when you apply for business financing in the future. And on top of future lenders being hesitant to do business with you, tax liens could be a turn off to potential investors, vendors, and business partners too.

How to Get Rid of a Tax Lien

In 2020, the IRS filed close to 300,000 federal tax liens. 

The easiest way to fix a federal tax lien is for your business to pay the IRS the money it owes. If your company can’t afford to pay its tax obligation, you might consider applying for a business loan or 0% APR business credit card promotion to finance the debt over time.

Once you pay off a tax lien, the IRS will file a release within 30 days. This removes the government’s claim on your property. 

However, if you don’t have the money to pay the government and you can’t (or don’t want to) finance unpaid tax debt with an outside lender, there are other options you can consider. 

Discharge of Property

You can fill out a request on behalf of your business to discharge the lien from certain property. If you’re eligible for a certificate of discharge, it might permit you to sell property or refinance a loan to free up funds you can use to pay the government. 

The IRS website provides information about the different hoops you’ll need to jump through in order to qualify for a lien discharge — including the completion of an application (Form 14135). You can also reach out to the IRS Collection Advisory Group for more information. 

Subordination

Another potential move you can make is to apply for subordination that lets certain creditors move ahead of the IRS. Subordination could make it easier for your company to qualify for a business loan or other financing it could use to resolve its outstanding tax liability. 

IRS Publication 784 provides details you’ll need to follow if your business wants to request a Certificate of Subordination. And there’s also a video entitled “Selling or Refinancing When There Is an IRS Lien” that can provide more insight to guide you.  

Withdrawal

You might be able to convince the IRS to withdraw the tax lien against your business entirely. Withdrawal does not mean you no longer owe the debt. However, it removes the public record filing and signifies that the government won’t compete with other creditors for your assets. 

To apply for a withdrawal, you’ll want to complete Form 12277. You’ll also need to meet eligibility requirements, including: 

• The satisfaction and release of your tax lien.
  
• Being in full compliance with the IRS (business tax returns, individual tax returns, etc.) for three or more years.
  
• Maintaining a current status with all of your estimated tax payments and federal tax deposits.

There is a scenario where you could qualify for a tax lien withdrawal before paying the full debt. But you’ll need to (a) owe $25,000 or less, (b) sign up for a Direct Debit installment agreement (c) make at least three direct debit payments in a row, and more to be eligible. 

How Can You Prevent a Business Tax Lien? 

The IRS often waits until it has sent out five collection notices before filing a tax lien against your business. And if you owe less than $10,000 in back business taxes, your company might not be on the receiving end of a tax lien at all. 

Just be aware that these rules are not set in stone. Your experience could differ. 

The best way to avoid a business tax lien is for your business to pay off its full outstanding debt to the government. But there are some cases where entering into a payment plan might be enough to keep matters from escalating. 

Note that if your company’s outstanding tax balance is $25,000 or higher (but not more than $50,000), you may need to agree to a Direct Debit arrangement. This installment agreement gives the IRS permission to draft funds directly out of your business bank account. 

Can Tax Liens Also Be Filed Against My Personal Assets? 

The federal or state government can file tax liens against both business and personal assets in some situations. Your business entity structure has a lot to do with whether or not your personal assets are protected, though there are other factors at play as well. 

• Sole proprietors in particular are vulnerable when the government files a tax lien against their business. As a sole proprietor, you and your business are essentially the same from the IRS’ point of view.
  
• Corporation and limited liability company (LLC) owners typically enjoy more personal protection where business tax liens are concerned.
  
  LLCs that file an election to be treated as a corporation (Form 8832) may be exempt from personal property levies (though not always).
  
  LLCs without the corporate election might face levies on personal property, but there are some items that the IRS will typically leave alone.
  
  And if the IRS can find grounds to “pierce the corporate veil,” you might lose the personal liability protection that incorporating can provide.
  

Because there are scenarios where your personal property could be at risk, it’s wise to seek legal advice when you’re facing a business tax lien. You can check with your local bar association if you need a recommendation for a reputable tax attorney in your area. 

What If You’re Not Able to Pay? 

Falling behind on your business taxes can be incredibly stressful. Even bankruptcy might not wipe out your tax debt or resolve a federal or state tax lien filing.

However, you may be able to work something out with the IRS or state government even if resolving the full bill or making big payments seems financially out of reach. 

Some options you might want to consider are asking for a discount or setting up an affordable payment arrangement. If you’re fortunate, you might be able to get the IRS to accept an Offer in Compromise — a type of settlement that could resolve your tax debt for pennies on the dollar. 

Keep in mind that ignoring the government shouldn’t be your go-to approach when your business owes a tax bill it can’t afford to pay. In fact, trying to avoid your business tax debt will only drive up the balance and limit your options. 

Remember that as a delinquent taxpayer, your best bet is to consult with an attorney with experience in tax law. A tax attorney can review your situation, discuss potential solutions, and help you determine the best course of action to protect your business. 

The post What Are Business Tax Liens? And How They Affect Your Business Credit appeared first on Credit Strong.

Let’s start with a way these two are similar. A business checking account is FDIC insured in the same way that your personal bank accounts are with the same limit of $250,000 per depositor. This includes savings accounts. 

But there are more differences you’ll need to be aware of. 

Difference #1 – You Need Business Documentation to Open A Business Checking Account

Opening a personal checking account only requires you to show two forms of ID with the most common ones being a driver’s license and a debit card. That’s easy for most people to do. 

As any business owner is familiar with, you likely filed so much paperwork it made your head spin. From registering your EIN with the IRS, registering your business name with the state, and filing for the licenses and permits you need just to do business officially. It’s a lot. 

Many of those same documents are needed to open a business checking account. Without the right documentation, getting your business account opened can be delayed or the bank may request extra documents at a later time.

You’re a busy person, so let’s avoid all that. 

Get prepared to open your business checking account by gathering these documents: 

• Social Security Number for Sole Proprietorships
• EIN for LLCs, corporations, or partnerships
• Valid Driver’s License or Passport
• Business Licenses
• Articles of Organization (LLCs) or Articles Incorporation (Corporations)
• Partnership agreement with the business name and names of the partners
• Certificate of Assumed Name or Doing Business As (DBA) if your name differs from the name you’re doing business under.

Some banks and credit unions require additional documents on your business depending on the industry you’re in. Some may even require less documentation. It’s best to check out the bank’s website to see what their specifics are for opening a new business bank account.

Difference #2 – You Need to Consider Transaction Limits

There are some things business bank accounts are just better at handling. One of them is transactions. The fact is, personal banking wasn’t designed to handle the increased transactions that come with running a business. 

On any given day, you might need to:

• Place an order for coins
• Make large cash deposits
• Process payroll for employees
• Accept debit and credit card payments
• Make payments to vendors or suppliers
• Deposit or write a large number of business checks

Those things can be difficult or not possible to do if you’re still operating out of a personal checking account. Most banks won’t allow you to accept debit and credit card payments to your personal account at all, effectively limiting the number of sales you can make. 

Operating out of a personal account is out of the question if you’re running a cash-heavy business. If you make large cash deposits regularly or make large exchanges for coins, you’ll run into roadblocks when trying to do that from your personal checking account.

With a business account, you’ll encounter transaction limits you didn’t have with your personal checking account. Certain business accounts may limit the number of business checks you can process each month or limit the number of ATM or teller transactions you can make. 

On a personal side, you’re able to make as many teller transactions, ATM deposits, and payments as you want. 

Business accounts are typically limited on the number of free transactions each month. And a transaction fee is charged if you’re over the transaction limit during the billing cycle. So it’s important to find business checking that works for the number of transactions you need. 

Difference #3 – The Fees and Requirements Are Often Higher

One of the biggest differences between business bank accounts and personal checking accounts is the fee structures and the requirements to avoid those fees. 

Many brick-and-mortar banks have business checking requirements including higher minimum daily balances of around $500 to $1,000 with a basic business checking account. 

You’ll also see monthly maintenance fees or a higher opening deposit than you would see on your personal checking account. 

It’s not the most conducive for a new business without tons of revenue yet unless you absolutely need some of the services and features they offer. 

You might be able to avoid those monthly maintenance fees with some banks if you already have your personal accounts with them. Some financial institutions allow you to meet the minimum balance requirements by linking your personal and business accounts. 

You can also minimize fees by opening other qualifying accounts with the same bank. For example, when you open a business credit card or business savings account alongside your business bank account, it might waive the monthly fee depending on the bank. 

There’s also the option of choosing an online bank if that meets the needs of your company. Many digital business banking options offer free business checking accounts with minimal fees. You might even come across some with unlimited transactions. 

Some even have no minimum opening deposit while still providing great benefits like accounting integrations, invoicing tools, and access to the same ATMs as traditional banks. This can be a great option for e-commerce business owners or other online storefronts. 

Difference #4 – There Are Often Other Business Services to Consider

Your personal account likely comes with features including:

• Online banking and mobile banking
• Bill pay
• Personal checks
• A small APY on your deposits
• Use of a debit card for purchases and payments

That pales in comparison to the tools and services you can get with a business bank account. Many banks with business checking account services also offer:

• Invoicing capabilities to make collecting and tracking customer payments easier.
• Financial statement reports to see what your business expenses and profits are.
• Employee debit cards to handle purchases your employees need to make for the business. 
• Enhanced overdraft protection.
• Quicker Wire transfers with some banks.
• Access to treasury management services for cash-heavy businesses.
• Access to merchant services to accept debit and credit card payments.
• Integrations with bookkeeping software and other third-party business programs.
• Fraud protection features.

Many of these services aren’t free, but there are benefits to having them through the same financial institution where your business checking account is.

Yes: your business account can also help protect you from fraud in some cases. Positive pay, which is available at some banks, uses a list of your business checks to verify outstanding checks that might not match others on your bank account. 

The same feature isn’t available for personal checks. Operating out of a personal bank account could leave you open to fraud. As of 2018, US businesses reported a loss of an average of 5% of their gross profits to fraud, so it’s important to have the tools to combat it. 

Other Business Checking Considerations

A Business Bank Account Helps Separate Your Small Business Finances

Co-mingling your business and personal expenses can get messy. When you can’t tell where your finances end and where the business finances begin, it can be difficult to determine how well you’re doing. 

And if you’re having a hard time finding that information then so will your lenders, tax professionals, and accountants. Having separate accounts for your business allows you to easily manage and maintain your finances at a glance. 

Most banks make it easy to keep track of your success by integrating with common bookkeeping software like Quickbooks and Freshbooks. So your financial statements can be sent over to whoever needs them in just a few clicks. 

It can also be helpful to further separate your business finances between a checking account and a savings account to plan for the future. 

It doesn’t just end at organizing your finances. Separating your accounts can add to your credibility as well.

Imagine what your customers are thinking when they love your products or services, but have to send their payments to a personal bank account or through transferring apps like Cash App or Venmo. 

It can come across as unprofessional, and they might not trust the security of sending their payment to an individual instead of a company. 

The last thing you want is to have customers withdrawing purchases. Savvy shoppers know that making a payment to a personal account is a potential security risk. And they’re not wrong. It’s hard to keep your accounts safe these days and scammers seem to be everywhere. 

The business banking benefit of having access to merchant services allows you to accept a wider variety of payments than you could with your personal account. And it’s much more secure. 

How many more sales could you gain if you accept credit card and debit card payments? How many extra customers would you have if you used a more secure form of payment collection?

Reinvest in your business and boost your credibility by opening a small business checking account. 

It Will Help You Qualify for Business Financing

Keeping a relationship at one bank comes in handy when you start considering a business credit card or a business loan to help cover expenses. While the checking account doesn’t help build business credit, a credit card or business loan with on-time payments will. 

The business checking account helps you establish a good record with your bank when you manage your account well. When they can readily see the details of your business finances, your bank can use that to help qualify you for financing options. 

When you’re looking at expanding your business, the right financing can be essential. Some financial institutions may even offer special terms for their existing business checking account customers. 

It Streamlines Accounting and Tax Reporting

When all your financial statements, expenses, and revenues are in one place, it makes tax time so much easier. Especially if you opted for quarterly tax filing. With a few clicks, you can involve your office manager, accountant, or tax pro to get your financial to-do list done. 

Get quick access to information about your quarterly revenues for potential investors. Pull financial statements to do a progress check on your business. Easily identify your biggest business expenses and make a plan to cut extra spending when needed. 

When you streamline your business accounting, you spend less time sifting through transactions to find the information you need. I’m sure your accountant will thank you too. 

Things to Consider When Looking for a Business Bank Account

When you go to open your new business account, you’ll find plenty of options available. With all those options, you’ll need to know what to look for: 

• Account opening bonuses
• Minimum balance requirements
• Account transaction limits
• Monthly service fees
• ATM fees
• Minimum opening deposits
• Interest on your balances
• Cash deposit limits

Things like account opening bonuses and a healthy APY on your balances are nice to have, but they’re not necessary. 

You’ll want to pay special attention to the minimum balance requirements, transaction limits, fees, and opening deposits as those can determine how much you’re paying for the account overall. 

You might also want to consider how you prefer to do your banking and whether it’s online or in person. That alone can narrow it down significantly. 

In summary, differences between a business account and a personal account are far more than their similarities, but for good reason. Business accounts offer you the security, credibility, and organization that any good business needs to be successful.

Be sure to consider what your business needs when you open your account and be mindful of how you can maximize the benefits you’re receiving without drowning in fees.

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