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Rebound: Credit is key for small businesses

Expert: it's never been easier to clean your credit
Posted at 6:42 AM, Dec 23, 2020
and last updated 2020-12-23 06:42:02-05

GRAND RAPIDS, Mich. — Small businesses make up an estimated 60% of unemployment in the United States, so their survival, especially during this unprecedented time, is imperative to a thriving economy. One financial expert says credit is key for owners trying to escape coronavirus with their business intact.

“No matter what business you’re in, you’re in the credit business. That’s the reality that COVID has taught us,” said Dr. Michael Grayson, a credit expert named by REI Wealth Magazine as the country’s leading expert on the subject. “It is actually possible to come out of COVID in better position because you’ve restructured your debt, there’s a lot of debt forgiveness right now.”

Dr. Grayson says the CARES Act, passed by congress as a relief bill in March, allows debt forgiveness or deferment programs that are easy for business owners to enroll in.

“[It] has a proviso that allows you to retroactively clean your credit if you’ve been affected by COVID-19,” said Dr. Grayson. “All you have to do is write to all of your creditors and say, ‘listen, under the CARES Act I understand that you’re offering a deferment program, I would like to be enrolled.’ There’s no credit check, there’s no qualification, all you have to do is simply ask.”

If you don’t yet have your business and personal credit separated, Dr. Grayson says it takes only a few simple steps. First, get a commercial phone number through your shipping company. After you have that, establish a separate phone line for your business – Dr. Grayson says your phone carrier should be able to help with that.

Then, register your business with the Secretary of State. Open 5-to-10 Net30 accounts and have several credit references ready. When you do, Dr. Grayson recommends getting your business credit score online at a site like Dun & Bradstreet.

With many companies taking out loans this year for paycheck protection or PPE, Dr. Grayson says those with better credit got a better deal. In fact, he says the number one reason businesses didn’t qualify for PPP loans, was bad credit.

“Money always runs out, no matter how much you start with. But if you have good business credit, you always have access to capital.”

Dr. Grayson also recommends separating your personal and business credit. That way, if your business goes under or experiences bankruptcy, your personal finances are intact.