Running a small business is hard work. You’ve got your hands full keeping up with pivots required during the COVID-19 pandemic, day-to-day operational tasks, and thinking of new ways to grow. With so much going on, you may not be thinking about risk management or business reputation when applying for credit.

You’re not alone.

According to Equifax’s recent Small Business survey, only 59 per cent of small business owners surveyed were aware that a business can obtain its own business credit report, with only 30 per cent knowing how/where to obtain one.

Of that 59 per cent who knew about a report, a little more than half (55 per cent) admitted that they knew theirs.

What is a Business Credit Report?

A business credit report provides a financial snapshot of your business to lenders, service providers and potential partners. They use this information to determine whether your business is a financial risk or a favourable prospective customer.

“Just as you as an individual have a credit history and score that is checked when you apply for a credit card, finance a vehicle, or purchase a home, that same principle exists with your small business,” says Jeff Brown, Small and Medium Business Leader for Equifax Canada. 

“In the case of a small business, payment history is reported from financial institutions, suppliers, collection agencies, courts, as well as the superintendent of bankruptcy. This information, which can be either positive and negative, is used to form the credit worthiness of your small business.”

What’s in it?

The Equifax Business Credit Report’s data sources include banks, credit unions, auto finance companies, industry credit groups, collection agencies, corporate registration and liens databases, courts, the Office of the Superintendent of Bankruptcy, and other lenders. These reports are then used to generate business credit scores. 

Our Credit Delinquency Score ranges from 100 to 600. The higher the score, the lower the risk and more likely that your loan application will be approved.

The report is also publicly available to anyone who wants to learn more about the financial health of a business — something to remember if you’re the one considering a purchase order with another supplier or shipping a big customer order so you know who you're doing business with, too.

In addition to your score, the report provides two indexes for decision-making: Payment Index (how timely you pay your creditors) and Credit Index (a measure of the overall business risk associated with selling to this customer). 

The report also includes other information of interest to lenders, investors or potential business partners, including:

• Business identification details such as company name, contact details, years on file

• Predictive risk scores that predict the health of a company over the next 12 months

• Industry and financial trade data including credit payment and financial history, line of credit information, and amount of outstanding debt

• Legal, lien and collection details including bankruptcy history, detailed bank reports, and useful data on any property being used as debt collateral

Where can I check mine?

You can check your Equifax Business Credit Report by purchasing a one-time copy of your credit report. You can also view a sample of our Business Credit Report to see the type of information your lenders will see.

How to improve your Business Credit Report

When considering new financial obligations for your small business, a critical step is ensuring that your current credit standing is in good order. Payment history plays a big part. Ways that you may improve your score is clearing any disputes on past payments, or possible collection and legal activity. 

Learn more about the confidence, challenges, and concerns of Canadian small business owners during the pandemic from our Small Business Month survey and report.

Are you interested in joining a future Small Business Insights webinar? Sign up to receive our latest insights, data and trends.

We want to help Canadians live their financial best. To learn more about how we can help you minimize risk and boost business growth, please contact your Equifax Account Representative. You can also reach us directly at 1-855-233-9226 and follow us on Twitter and LinkedIn.  

This article is published by Equifax Canada Co.® 2022 All rights reserved. No part of this article may be reproduced, copied or transmitted in any form or by any means, or stored in a retrieval system of any nature, without the prior permission of Equifax Canada Co. This article is for informational purposes only and is not intended to be legal advice.