Thursday, 22nd August 2019 | Small business financing Canada,Business loans for bad credit
How to improve your business’s credit score
Your business credit score helps to establish your company’s health and trustworthiness. In many respects, it operates in the same way as a personal credit score—opening (or closing) pathways to products, financing, and preferred rates. Learn how working with iCapital can help accelerate this process.
Whether you’re just starting your business or in a position where you must repair a low credit score, building up your credit should be at the top of your list. Your business credit score helps to establish your company’s health and trustworthiness. In many respects, it operates in the same way as a personal credit score—opening (or closing) pathways to products, financing, and preferred rates. Learn how working with iCapital can help accelerate this process.
All about your credit score
Your credit score is a simple three-digit number arrived at from information gathered by the credit bureaus in Canada that is intended to give lenders, governments, and others a snapshot of how you use credit. The idea is simple: the higher the number, the better your score. In other words, a higher score means you’re less of a risk as a borrower.
How your credit score is calculated
Obviously, events like contact with a collections agency or bankruptcy will negatively affect your credit score, but there are other factors taken into consideration as well including the amount of debt you carry, how many times you’ve applied for credit, and how long you’ve had credit. This last variable can negatively affect new businesses. Establishing a good credit score is as important as repairing a bad one.
How to improve your credit score
One often-overlooked way to boost your business’s credit score is to use it—responsibly. This might seem counter-intuitive but consider this: if you don’t carry any credit at all, how can a credit bureau assess your risk as a borrower?
Applying for and using various credit products can be an extremely effective way to establish or repair credit. In any and all cases, you must adhere to the tenets of responsible use:
- Make your payments on time. Always.
Late payments reflect terribly on your ability to manage your finances. If necessary, set up automatic withdrawals or calendar alerts for your due dates. - If you can’t meet the entire debt, make the minimum payment.
Simply disappearing until you’ve got an entire payment is bad practice. Always pay at least the minimum. - Use your credit, but don’t max it out.
Having credit and not using it is not going to help your score. Use your credit on purchases you can afford, and then pay them off. Carrying a high debt load (or maxing out your line of credit) is a warning sign to lenders. - Consider your applications for credit carefully.
The amount of “hits” on your credit report can affect your score. Every time you apply for credit, a note goes on your account. If your report shows that you’ve been applying for numerous products it can be a warning sign to lenders. Select the products that work best for you and limit your applications.
Choosing your business credit accounts wisely
Chances are you’ve already got a business bank account and credit card—and if not, get on this. Beyond these basic tools, you might also want to consider applying for a gas card or an office supply store account. The best way to establish your company as a trustworthy borrower is to get credit and make your payments on time, and that’s where an iCapital product can really work in your favour.
When you take out an iCapital term loan or merchant cash advance, you select a repayment schedule. Usually, a small amount is automatically withdrawn on a daily or weekly basis until the financing is paid in full. The regularity and frequency of your repayments are a convincing demonstration of your solvency and responsibility.
A good business credit score is an important part of running a successful business. If your score is low—whether because you’re a new company or you have made financial missteps in the past—you’ll need a strategy to improve it. The careful selection and use of appropriate products are the best way to establish a healthy score.
Read Also
Cheat sheet: Canadian govenment support for individuals during the pandemic
Canadians in all corners of the country have been partially or severely impacted by the COVID-19 pandemic. If you are trying to find out what resources are available to you to help you, here is a summary of resources from the Canadian government as of June 2, 2020.
Avoiding layoffs, rehiring employees & creating new jobs
Canada Emergency Wage Subsidy (CEWS) - The Canada Emergency Wage Subsidy (CEWS) supports employers that are hardest hit by the pandemic, and protect the jobs Canadians depend on. The subsidy generally covers 75% of an employee's wages – up to $847 per week - for employers of all sizes and across all sectors who have suffered a drop in gross revenues of at least 15% in March, and 30% in April and May. The program will be in place for a 12-week period, from March 15 to June 6, 2020.
Increased Canada Child Benefit - An extra $300 per child was delivered through the Canada Child Benefit (CCB) for 2019-20. This benefit was delivered as part of the scheduled CCB payment on May 20.
Extra time to file income tax returns - The due date for filing individual 2019 income tax returns has been deferred until June 1, 2020. Any new income tax balances due, or installments, are also being deferred until after August 31, 2020 without incurring interest or penalties.
Mortgage payment deferral - Homeowners facing financial hardship may be eligible for a mortgage payment deferral of up to six months. The deferral is an agreement between you and your lender. Typically, the agreement indicates that you and your lender have agreed to pause or suspend your mortgage payments for a certain amount of time. After the agreement ends, your mortgage payments return to normal and the deferred payments—including principal and accumulated interest–are added to the outstanding principal balance and subsequently repaid throughout the life of the mortgage. To know if you are eligible for a mortgage payment deferral or to learn what options are available, contact your lender.
Temporary 10% wage top-up for low-income essential workers - All provinces and territories have confirmed, or are in the process of confirming, plans to provide wage top-ups for essential workers. This government funding includes up to $3 billion in federal support to increase the wages of low-income essential workers. Each province or territory will determine which workers would be eligible for support, and how much support they will receive.
Special goods & services tax credit payment - A one-time special payment through the Goods and Services Tax credit for low and modest-income families. The average additional benefit will be close to $400 for single individuals and close to $600 for couples.
Extending the Work-Sharing program - The maximum duration of the Work-Sharing program has been extended from 38 weeks to 76 weeks for employers affected by COVID-19. This measure will provide income support to employees eligible for Employment Insurance who agree to reduce their normal working hours because of developments beyond the control of their employers.
There are also over a dozen support initiatives for students, recent graduates, seniors, and indigenous peoples. These can be found on the Canadian government website.
Blog
Ready to re-open: Best practices for restaurants
As the number of COVID-19 infections declines across Canada, provincial governments are beginning to implement phased reopening. This hopeful step has restaurants across the nation beginning to prepare, be it mentally or physically. Given that this is new territory for everyone, what should the preparations entail? Read on for the best practices you should follow to ensure everyone’s health and safety as you reopen your restaurant.
1. Document a reopening plan and train your staff
A safe and seamless re-opening depends on communicating and implementing the very best safety measures across your entire operation. Lessening restrictions depends on tightening precautions and that will require the participation of all management and staff. Don’t leave things to chance. Even “obvious” measures might be overlooked in the chaos of a relaunch. Write down your plan in detail, including all safety precautions, and communicate your expectations to everyone in your organization. Revise and brief your staff as required.
- Write down your plan
- Train all staff on safety measures
- Revise and re-train as necessary
2. Make a physical distancing clear and easy
If you had an incorrect idea of what six feet (or two metres) was before COVID-19, you’re not alone. People don’t typically measure their personal space this way and it can be hard to gauge distance on-the-fly. Before you welcome customers back into your restaurant, use tape to mark six-foot intervals on your floor and indicate the flow of traffic with arrows. If possible, move furniture like booths or table apart and install physical barriers or close off those areas that are too close together. Post signage at the door and inside reminding people of physical distancing requirements and restrict the number of people allowed inside at once.
- Post signs
- Mark floors and traffic flow
- Move or block off seating areas
Most kitchens are fairly tight quarters to begin with. Minimize physical interaction by setting up staggered task stations as possibly creating additional shifts to reduce the need for so many people in the kitchen at one time. Mark intervals on the floor as a reminder, and make sure customers and delivery drivers are kept separate from the cooking areas.
- Mark floors
- Create staggered stations
- Restrict access
3. Go minimalist
Once customers return, there are a few adjustments you can make to enhance safety. If possible, prop open exterior doors for fresh air and interior doors to reduce surfaces that require touch. Remove menus, flowers, condiments, and cutlery from the tables and instead provide them once customers are seated. Use technology for remote ordering and table selection, and reduce person-to-person contact with electronic payment.
- Prop open doors
- Remove table-top items and provide on an as-needed basis
- Use technology
4. Keep it clean
Those in the restaurant business should already be familiar with sanitation protocols but during COVID-19 these protections will have to be intensified. Here’s a step-by-step checklist that should help you establish and maintain a spotless restaurant.
- Do a deep and complete clean of the entire establishment prior to re-opening
- Clean the credit card machines, cash register, headsets, or other shared equipment
- Establish and record an updated cleaning schedule especially for high-traffic areas like the washrooms, counters, and door handles
- Clean tables between every seating
- Remove and sanitize condiment containers, menus, or other tabletop items between customers
- Make hand sanitizer available at the door, on tables, and at the cash
- Use only approved disinfectants
5. Health and hygiene
Alongside the signs about physical distancing, post a notice explaining that customers showing signs of COVID-19 (fever, runny nose, or cough) may be refused entry to your establishment.
Your employees will need to maintain extremely high health and hygiene standards. These best practices will help your day-to-day operations:
- Stagger start times
- Implement health check screening at the start of every shift and send sick employees home
- Fully train all staff on how and when to wash hands, how to maintain physical distancing, and to avoid touching their faces
- Provide lockers or sealed bags for personal items
- Provide PPE and gloves when applicable
- Make hand sanitizer available at the door, on tables, and at the cash
- Establish a point person for every shift to ensure all protocols are being followed
Restaurants and other businesses across Canada are starting the slow process of re-opening. Check this Restaurants Canada Reopening Tracker to determine the rules for your region and then proceed following these best practices for a successful and safe transition.
Management
How Canadian businesses are reinventing themselves during the pandemic
With limits on travel and social interaction, and the evolving needs and desires of customers, virtually every business is experiencing some sort of disruption to everyday operations. There’s no shortage of stories about struggling small businesses but it’s not all bad news. There are many stories of resilience, adaptability, and creative thinking that have allowed some to pivot and thrive. Read on to learn about small business successes from coast to coast.
Retailers
While online retailers may have seen a spike in sales, brick-and-mortar stores have had to adjust—and fast. For Toronto home goods store, Spruce, this has meant providing free local deliveries. “We chose to close the storefront for the safety of my employees and the community,” says owner Kim Alke, “but I take orders through my website and do contactless deliveries twice per week.” Glass Bookshop in Edmonton has taken a similar tack with free deliveries in the community and has seen sales shoot up, partly because reading is one of a dwindling group of safe activities but also likely due to the fact that co-owner Matthew Stepanic brings along his corgi, Bob, on book runs.
If pivoting to deliveries isn’t the right answer, maybe changing the product is. After initially shutting down, Toronto’s Bathing Belle designer swimwear shop reopened to sell cloth masks under a buy one-donate one model where each purchase triggers a donation to a long-term care facility in the city.
Gyms and fitness Studios
For gym and fitness facilities, going online is the only answer for safe classes. A quick response to the pandemic is what saved 3rd Degree Training in Stratford, Prince Edwards Island; within 24 hours of closing their physical location, the company began offering new daily workouts broadcast from the instructors’ garage to Facebook Live.
Toronto’s SAOR Studio made the same immediate shift to digital training and nutrition support—and went a step further. “We made our six-week training plan free to everyone and have had 1,500 people download it so far,” says founder Nathania Harrison. “We also lent all of our equipment like weights, tension bands, gliders, and yoga blocks to members so they could build their own studio at home.” They also expanded their merchandise and set up a simple ordering page on their website to boost their revenue stream.
Manufacturers
You might expect manufacturers to face fewer COVID-related challenges but that wasn’t the case for Stonex, a seller of natural stone that had previously used a traditional showroom to display and sell their products. Unable to invite customers into their showroom like before, they innovated, building stone sample boxes similar to the fabric swatches used by tailors and dropping them off curbside. Alongside toilet paper and non-perishable food items, hand sanitizer quickly became a scarce resource across Canada. Some alcohol producers, like Victoria Distillers from Sidney, British Columbia began using a by-product from their process to produce sanitizer for their community.
Even retrofit hand sanitizers need labelling and as soon as the COVID-19 epidemic hit, Lorpon Labels stepped up with free design and packaging. However, they quickly realized that their equipment—which could cut acetate—could be used to manufacture personal protection equipment. In cooperation with a foam injection company, the label company temporarily retrofit their operations to produce protective equipment.
Restaurants
Although home delivery options have long existed for restaurants, restrictions on sit-down traffic and the sudden surge of home cooks have taken their toll on this industry. Most establishments can’t survive on take-out and delivery alone. Luckily, there are some very creative thinkers in the biz.
Chaeban Ice Cream, a popular artisanal and all-natural ice cream shop in Winnipeg, was forced to close due to the COVID-19 restrictions. Undeterred, owners Joseph Chaeban and Zainab Ali used their time off to come up with an all-new business model: The Chaeban Ice Cream Club. Their subscription service offers no-contact monthly ice cream deliveries to their customers’ door.
Ordering delivery is a good occasional treat but you can’t beat the freshness and taste of a just-cooked meal. This—and a desire to share Thai culture and cuisine—was behind Kasorn “Mo” Meepan’s COVID strategy. In response to the restrictions on dine-in eating, the owner of Sala Modern Thai Kitchen & Bar made the bulk of her menu available of ready-to-cook meal kits, bringing her customers food and the new skill of Thai cooking.
The plight of Canada’s restaurants has received massive amounts of attention, with many places worried that they won’t survive this period of economic instability. In a bid to support favourite establishments, we can all participate in the national #takoutday campaign which encourages purchasing a take-out meal each Wednesday (or purchase any day of the week).
For Canadian small businesses, the stakes of this pandemic are high but with some creative thinking and the willingness to support each other, we can make it through together.
Management