When getting ready to sell a business, asking a business broker Spring valley about the business’ credit score is very important. The question most people ask relate to whether a bad credit score can keep a business from selling and if the credit history of their business is transferrable. The purpose of this post is to answer these and more questions about credit score.

What is a business credit report?

Just like personal credit score, businesses have a credit score. This is what helps other companies to evaluate how well the business handles payments with lenders, suppliers and other companies. Your business broker in San Diego will also tell you that that information is very important when applying for a loan or bringing in a new business partner. It can also be an issue when selling a business.

Nav American Dream Gap survey revealed that 45% of small business owners are unaware of their business’ credit score. 72% of the respondents in the same survey said they have no idea where to get information on the credit report. If you have no idea where to start, your business broker Spring Valley can help.

How Credit History Affects a Business Sale

Your business’ credit history is not just a big deal when applying for a business loan or a new line of credit. If you are getting ready to sell your business, you have to ensure the credit report of your business is in good shape. There are two main reasons why this is important.

  • Business credit history is transferrable

What this means is that your business’ credit information will remain the same even after the transfer of business ownership. A business does not get a new start, in terms of credit score, after it is sold. If your company has a poor credit score or other credit issues, the business will continue having problems securing a new partner or finding funding. This can be a turn off for buyers. The worst part is anyone can check the credit report of your business without your permission.

  • Poor credit score will hurt the ability of a buyer to secure financing

When selling a business, most buyers will have to secure financing to buy your business. Prior to approving a buyer for a loan, the lender will review the credit history of the business a buyer wants to purchase. If the credit profile is weak, it will be harder for the buyer to get a loan.

Selling a business is not a walk in the park. There are so many things you have to consider. Working with a business broker Spring Valley will ensure nothing surprises you. The broker will also ensure that you sell to the right buyer, close fast and keep as much money as possible. Find an experienced business broker in San Diego to work with.

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