Founder and CEO of credit centeran award-winning high-tech and high-touch SaaS lending platform that helps companies scale.
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Business credit is an important tool for any business, large or small, to obtain financing and grow. In the past, corporate credit was often linked to the personal credit of the business owner, and it was difficult for the company to establish its own credit. In recent years, however, there has been a trend to separate personal credit from business credit. This allows businesses to build their credit history and get loans based on their financial situation.
So what does the future hold for business credit? Here are some predictions.
Increased use of alternative data
Traditionally, business credit has been based on financial data such as credit card and loan history. But in the future, alternative data may increasingly be used when deciding whether to grant business credit. This could include data about a business’ social media presence, customer reviews or even data about a business’s supply chain.
Using alternative data can help lenders get a more complete picture of a business and its creditworthiness. It could also make it easier for businesses with lesser financial histories to access credit, as alternative data can provide a more complete picture of a business.
Greater use of fintech
Fintech, or financial technology, is changing the way businesses access credit. For example, online lending platforms make it easier for businesses to apply for loans and obtain financing faster. Most of the time, these platforms use advanced algorithms to decide whether to lend money based on a person’s creditworthiness. This is faster and more efficient than traditional methods of borrowing money.
In the future, we may see a wider application of fintech in commercial credit. This could include the use of blockchain technology to simplify the credit process and increase transparency, as well as the use of artificial intelligence to make more accurate credit decisions.
more personalization
One trend we may see in the future of business credit is increased personalization. This may include loan products and lines of credit tailored to the needs of the business and its financial situation.
For example, a business with a history of timely payments and a solid financial foundation may receive a higher credit limit than a business with a poor credit history. Personalization can also include using data to tailor loan products to a business’s specific industry and market conditions.
Increased collaboration between lenders and businesses
In the past, the relationship between businesses and lenders was often adversarial, with businesses feeling like they were at the mercy of their lenders. In the future, however, there may be a shift towards more collaborations between businesses and lenders.
This could include lenders working with businesses to develop bespoke financing solutions, as well as providing businesses with resources and support to help them improve their creditworthiness. By forming stronger partnerships with businesses, lenders can help businesses access the financing they need to grow and succeed.
Pay more attention to credit education
Finally, we may see a greater focus on credit education in commercial credit in the future. Many small business owners may not fully understand how business credit works or how to improve their credit. By providing businesses with the knowledge and resources they need to understand and manage credit, lenders can help businesses make smarter credit decisions and obtain the financing they need to grow.
Overall, the future of business credit looks bright, with a focus on using alternative data, fintech, personalization, collaboration and credit education to help businesses secure the financing they need to succeed. By using these tools and resources, businesses can build their credit history and obtain the capital they need to grow and thrive.
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