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5 methods startups are utilizing enterprise loans to scale shortly

August
7, 2021

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The opinions of entrepreneurs' contributors are their own.

The world of finance and economics is developing rapidly. The competition is getting more intense and the window of opportunity for opportunities is increasing. And this is exactly what helps new companies see the horizon as their new frontier.

As a startup owner, the stepping stones to your company's success include access to capital, opportunity, innovation, and better management of your company's finances. But have you ever noticed that all these prospects are right on your doorstep? This is where business credit comes in.

Now that you've spent some time building your credit score, it's time to turn your magic number into ways to make more money for your startup. There are several amazing ways that startups are using business loans to grow fast and earn more. It would be crazy not to dive into that flowing stream of income.

Startups with better credit scores don't rest on their accomplishments. Instead, they translate that hard work into ways to meet their financial goals.

Similar: How startups can take advantage of corporate venture capital opportunities in MENA

1. Rethink insurance premiums

Every startup is sure to take out insurance at the start of their journey. Once a startup has a high credit score, it has the opportunity to save a substantial amount with a lower premium.

That's because credit scores are used to calculate insurance scores. Most small businesses buy insurance with a lower credit rating. Once the credit rating rises, they renegotiate the premium with their insurance companies to pay a lower amount due to a higher credit rating.

2. Refinancing of commercial car insurance or car loan

A large number of startups use car insurance for their business vehicles. Your creditworthiness indicates whether or not you will pay your insurance premiums in a timely manner during the initial application process.

If they missed their payments or were in arrears, insurance companies would raise commercial auto insurance rates based on the company's credit report.

Likewise, if the business credit gets higher, such startups can re-visit their insurance agents to charge lower premiums, saving additional money.

The same goes for commercial car loans. An excellent credit rating leads to a significantly lower interest rate on repayments or down payments, which ultimately enables the startup to save more and scale quickly.

Related: 15 Strategies for Rapidly Expanding Your Business

3. Lowering the interest rate on loans and credit cards

Business loans also make use of the credit scores. A startup with poor or dwindling credit may be offered a loan at a much higher interest rate, or even be refused a loan altogether.

Startups whose corporate loans are higher can use them to get corporate loans at lower interest rates. You have to visit the market and sooner or later you will find a lender with an attractive low interest rate.

That's because everyone wants a good borrower. Credit companies always fall for startups with higher credit scores.

Such a startup can also enjoy little or even zero percent interest. Either way, you can save money and increase capital.

4. Credit cards with credit transfer

Most start-ups don't know anything about the "credit transfer credit card". If a startup is struggling to pay off debts due to rising interest rates and wants some time to pay it off, this is for them.

A prepaid credit card offers extremely low or even zero% interest on amounts transferred from another card to this card for an introductory period. But where does business credit come into play?

Here it is. If a startup's business loans are good after this introductory period, some banks will have to pay lower interest rates, while those with poor credit will have high repayment rates.

5. Conversion to award credit cards

Here comes the best part. To expand your knowledge a little, the best business credit card rewards are for startups that have very high business credit.

Any startup with an excellent credit score can choose the most rewarding type of business credit card to get the most of it. You can earn up to 5% cashback on selected purchases. And with loyalty cards, it collects more and more points, which its employees redeem for free trips, tours and stays in certain hotels.

How about a free business trip abroad? Sounds exciting, doesn't it?

graduation

A high credit score is like a VIP pass to the best deals. It feels like a home run for a startup. Better business credit leads to security, ease and expansion of business and easier management of finances in a new startup.

Save more, invest more, and in turn, scale quickly.

For an established startup, corporate loans help bridge the cash flow gaps, and new companies often have difficulty obtaining capital in various forms due to poor ratings.

At first, you may not find any significant benefits for your startup. Still, it's a stepping stone to your company's financial stability in the long run.

Related: How Startups Can Use AI-Powered Tools to Scale

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