What's Myth vs. Reality in Business Credit?

Myth 1:

I don't deal with big banks or suppliers. I'm a small business, and I prefer to deal with other small businesses. They don't care what's in my business credit profile.

Reality 1:

Just because you may deal with a small lender doesn't mean there isn't a big bank behind the credit the small lender extends to you. From large corporations to the family grocer, business deals decided on a trusted smile and a handshake are few and far between. After you submit your application to a small lender, behind the scenes your credit factors may be assigned numerical scores that allow your application to be processed automatically, without the direct involvement of your credit manager.

Given the relative size of small business loans, many financial institutions that process large numbers of applications typically use automated decision-making processes. Some of the most popular decision-engines in use today use cut-off scores to accept or decline the lion's share of applications, relying on manual evaluation only in those cases that are inconclusive. Therefore, even though your neighborhood bank officer thinks you are creditworthy, he may be unable to decide whether, and on what terms to extend you credit.