Small businesses account for 99% of companies in the U.S., and nearly three-quarters of them are sole proprietors. This means their success is very much tied to the individual who owns or runs the company. Couple that with the fact that 20% of companies do not survive their first year in business and only half make it to their fifth anniversary.
Working with small businesses can be rewarding and profitable, but you may also be taking an unnecessary risk in extending them credit if you do not check out their financial status first. While checking a business credit report helps with established companies, many newer businesses have yet to build a commercial credit history.
You overcome this challenge by getting a Business Owner Profile report so you can make better decisions about extending credit or placing orders by understanding their personal credit history.
What Is Included in a Business Owner Profile Report
A business owner profile report will help you evaluate an owner’s personal credit history and how quickly they pay their bills.
A small business owner report includes:
- Name and home address of the owner, including two previous addresses
- Business information, current and last employer
- Summary of any legal filing, delinquent payments, and number of credit inquiries
- Consumer credit scores
- Summary of their trade experiences
- Any outstanding loans
- Listing of current accounts and tradelines that are delinquent
- Any disputes of credit information by the owner
- Information about specific legal filings, such as tax liens, judgments, or bankruptcies
- Inquiries from the past two years
For consumer credit scores, you can choose among, VantageScore®, FICO®, and FICO® NextGen.
You also get detailed trade information, including account status. You will be able to see if any accounts are current, 30/60/90 days late, or considered delinquent. Trade payment information may include:
- Business category
- Loan type
- Date the proprietor opened the account
- Date the proprietor closed the account
- Current balance on the account
- High balances on the account
- Scheduled monthly payment
- Date of the last payment on the account
- Amount past due
- Transaction relationship (individual, joint)
Two-Year Payment History
With a small business owner report, you can also see payment history at a glance with a graphical representation that shows you the number of accounts that are past due and for how long, bankruptcy or foreclosures, collections or charge-offs, and current accounts with zero balances over the past 24 months.
What Is Included in a Business Owner Background Report?
You can also get more comprehensive information using a Business Owner Background Report.
The business owner background report provides deeper insight into an owner’s background by identifying relationships with current and former business interests. For example, you might uncover that their last business went bankrupt or that other business ventures they own are failing.
The business you are working with may appear fine, but if they are overextended in other businesses, it could impact their ability to pay you or deliver goods on time. A business owner background report will provide the information you need to make better credit decisions by evaluating an owner’s risk and liabilities across all of their business interests.
When applying for credit, a business owner background report helps you identify:
- Patterns of poor management performance in the past
- Whether applicants are currently affiliated with the business or other businesses
- Liabilities and commercial credit performance across an owner’s total business portfolio
- If applicants have been associated with businesses you have had problems with in the past
- Conditions or relationships that might suggest an owner or principal is linked to fraud
You can also get a comprehensive look at the total balances and potential credit line exposure over all the businesses that are associated with the principals’ current business interests. If you are concerned at all about commercial collections, you can also identify other business assets and alternate locations for collections and/or skip tracing.
A business owner background report will improve your risk assessment by providing an expanded view of a business principal’s business and fraud risks.
Small Business Owner Report
Whether you choose a business owner background report or a business owner profile report, assessing your credit risk is an essential step in protecting your cash flow. A small business owner report helps you see how they manage their finances as well as their business and can detail additional business interests and gauge how they are performing.
Request a consultation with a business credit expert to learn how using business owner reports can help you mitigate risk and protect your business.