Businesses looking for funds should remember the importance of good credit

Even as the administration allocated $30 billion to help community banks fund small and starting businesses, entrepreneurs seem to be struggling to find startup funds. According to the Huffington Post, credit cards have become an increasingly prevalent tool in financing startups.

Alan Zell, a volunteer business counselor in Portland, Oregon, told the source he is concerned by the number of business owners using credit cards instead of loans to finance their businesses. A study from the Kauffman Foundation shows that every $1,000 increase in credit card debt incurred by a business increases the likelihood a firm will close by 2.2 percent.

Moreover, a bad credit score will reduce the probability that businesses will be able to secure loans when the investment climate improves. Several online incorporation services can help entrepreneurs get their credit back on track to increase their chances of finding investors.

Business incorporation might be another good way to secure funds. According to Inc.com, a C corporation in particular is appealing to investors. This business type might make lenders more eager to finance a startup, even in trying times.

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