Small Business Owners

On my Small Business Edge podcast, I get to interview smart people who help small business owners and entrepreneurs run better companies. In this episode, I spoke with Rose Zhong, VP of Finance at Fundbox, a company dedicated to creating better financial options for small business owners. Below are excerpts from our conversation. To hear the entire podcast, click here.

Brian Moran: Welcome to our podcast Rose. We are excited to have you join us today. Let’s start with you telling us a little about Fundbox and what you do there.

Rose Zhong: Thanks for having me on your show Brian. Fundbox builds technology products to help solve payment and credit problems for small businesses. My role specifically as VP of finance is to oversee the financial decisions and capital raising for our company, which includes accounting, financial forecasting, capital markets, and strategy. I also work closely with our executives, engineers and other departments as well.

Brian: What are some of the biggest mistakes that you see today with business owners when it comes to access to credit and their credit reports and scores?

Rose: Small business owners need to remember that, even though their company is a separate entity, most lending institutions will still look at personal FICO to underwrite a loan and offer credit to a small business. It’s important to maintain good personal credit.

Another mistake small business owners make is not being prepared for the unexpected. Most companies can relate to delayed invoices or emergency expenses. The business owner needs to have access to credit when these things happen to keep their companies afloat.

Brian: I wholeheartedly agree with your points. What about business owners learning to say “no” sometimes so they don’t put themselves at financial risk?

Rose: Yes! Learning to say “no” in business can often help companies from spreading themselves too thin and increasing their exposure to potential financial obstacles. A great opportunity is not great if it means that you can’t pay your employees this week.

Brian: What else can business owners do to maintain good credit scores and make their companies attractive to financial lenders?

Rose: Lenders like to see strong, healthy relationships between companies and their customers or clients. To the extent that you can maintain a steady stream of receivables from different clients on a consistent basis, that’s strong data point for lenders. Another step business owners can take to maintain good credit is by keeping a low debt-to-income ratio. If your debt level is at or near the same level as your income, it’s highly unlikely lenders will give your business credit.  

Brian: Should business owners be concerned about rising interest rates when it comes to financing their business needs?

Rose: I think interest rate moves will always have an impact on most areas of our economy. If your business isn’t directly impacted, then find out if the changes affected your customers or their customers (if you are a B2B company). By keeping your finger on the pulse of what’s happening in your world, you can start to predict when a curve in the road ahead is coming. You can then prepare for the changes (e.g. a downturn in the market) by making sure you have access to the credit your business will need. You should also make sure that your receivables are being paid in a timely manner. It’s much harder to get paid when your customer’s business slows down or they aren’t getting paid.

Brian: Thank you Rose for spending time with us on “The Small Business Edge Podcast with Brian Moran.” For our readers, if you’d like to listen to the entire discussion on credit for small businesses with Rose Zhong go to www.smallbusinessedge.com/podcasts.