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How to become a better borrower

by OnDeck Australia,   Dec 12, 2017


There are more business loan options available than ever before with the rise of online lenders such as OnDeck. Nonetheless, accessing finance is still a challenge for many small business owners. Therefore, it is essential that small business owners spend the time to become savvier borrowers by understanding business credit. Doing so could also help you become a better business owner, as you develop greater knowledge of your finances and financing options.

You don’t need to become an expert in everything regarding small business finance, but you should focus on understanding how to secure capital for your business. To do so, you need to understand what makes one financing option different from another. Moreover, you should understand how you can take control of the options available to you and your business.

While there is no guarantee, here are three tips that we recommend to help you get on your way to becoming a better borrower and savvier business owner:


1. Know Your Credit Score

Over 90% of businesses don’t know their business credit scores*. You can avoid your business becoming part of that statistic by understanding more about your business credit score.

Your business credit score is a 3-digit score that is provided by the credit bureaus. To many business owners, this number may seem arbitrary and appear to have little meaning. However, it is important to understand what this number means, and what you can do to change it.



Equifax gives a range of credit score ratings – from below average (less than 509) to excellent (833 – 1200). This score helps lenders evaluate the health of your business. OnDeck do not rely solely on your business credit score, but it is still key to the lending decision. Any lender (OnDeck, a bank or otherwise) will consider your business credit score when deciding whether or not to lend money to your business. If your business credit score is on the lower side, it could be due to negative payment habits. These could include late or defaulted payments, previous or current liens, court judgements or bankruptcies. Ultimately, this could negatively impact your ability to receive funding.

It is advised to check your business credit score, so you stay on top of the health of your business. However, constantly checking it could have an adverse impact on your business credit score itself.

OnDeck’s online Know Your Score tool is powered by Equifax. It gives you the ability to check your credit score without leaving a footprint, or affecting your credit rating. All you need is your ABN, time in business and annual revenue. The Know Your Score tool is free and there is no obligation to take a loan once you’ve checked your score.



Using credit responsibly and having a solid credit history can help you build your credit profile.

2. Get Intimate with your Credit Profile

Your business credit profile is a step deeper than your credit score. As a newer business, it is important to establish your business credit profile and utilise opportunities to make your profile stronger. Much like your business credit score, your business credit profile is important to lenders when evaluating your business loan application. It includes general information about your business, credit relationships and payment histories on any current loans and/or business credit cards. If you believe any information on your credit profile is incorrect, you can contact Equifax to resolve these issues.

As a business owner, it might seem logical to avoid using credit. However, using credit responsibly and having a solid credit history can help you build your credit profile. Alternatively, avoiding credit altogether can make it more difficult for a potential lender to judge your business’s actions in the future, based on what your business has done in the past.

Establishing trade credit relationships (or payment terms) with your suppliers and vendors is one of the easiest ways to start doing this, as good credit practices with your vendors helps demonstrate your ability to manage credit. Once you’ve established a track record and a responsible history, potential lenders are able to see that you’re likely to make timely repayments on a loan.

Another suggestion is using a business credit card. Though, this implies that you avoid using your personal credit cards for business needs when possible. Keeping your personal and business needs, and respective credit cards, separate, can help you build up your credit profile and become a better borrower. 


3. Dive Into the Numbers

Bookkeeping is something that business owners are seldom excited about. It’s not usually the reason business owners’ jump into their entrepreneurial dream. Yet, it is crucial for a small business owner such as yourself to understand the financial side of your business. Whether you do your own accounting, or outsource it to someone else, understanding your finances can help you evaluate your financing options more effectively. Ultimately, this can then help you become a savvier, more knowledgeable borrower.


Although these tips aren’t a guarantee of success, they will likely open more doors for your business. Moreover, they can help you determine which small business loan makes the most sense for your business. Armed with this understanding, you’ll be in a better position to evaluate your loan options and determine which might be the best fit for your business, and become a better borrower and potentially even a better business owner.


*MYOB Pulse Survey 2016

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