According to the Federal Reserve the lending to small business those companies with under 50 million in annual sales is getting easier for the first time since the latter part of 2006. The big banks and financial institutions are loosening the purse strings but smaller banks are still locked down and it can be very difficult to obtain small commercial financing.

The divide between lenders and borrowers is a huge blockade to help the economy recover mostly because of the new definitions of what is considered “creditworthy”.  A good creditworthy small business just a few years ago can now be considered high  risk and no longer a candidate for financing that would insure or help the growth of that company.

Wells Fargo is reporting an increase of 37% to small business with annual sales under 20 mil but Bank of America numbers are virtually unchanged with the vast majority of smaller banks locking down the money vaults.   Some big banks are practicing what is considered a second look policy to review and help approve loan requests that might be otherwise a denial.

Credit worthiness is defined by criteria such as balance statements and P&L’s, accounts receivables, banking statements and Dun and Bradstreet credit ratings to name a few.  For many smaller businesses the personal credit of the principles come into the picture as personal guarantees become necessary.

Many small business owners are sitting on the sidelines as they struggle to maintain a plus on the profit column, prevent any further layoffs and pray the economy turns around so they can get back to a less stressful life.  Many have had to forgo paying personal credit items on time to keep their businesses afloat and in today’s lending climate “looser” lending standards are not helpful to these business owners.

For many small business owners and self employed the credit scores and overall good credit picture is critical to any successful negotiation when obtaining business credit.  Now more than ever if you’re thinking the use of a credit line will be necessary for your business down the road then now is the time to start a little credit repair to help clean up any bad credit and keep pushing those credit scores higher.

You can read more to see  if credit repair is right for you.

In almost all cases there are steps you can take to help push those scores up a bit. But a word of caution, don’t wait till you need a credit line to start the process as it can take some time depending on the severity of the credit profile.