New business formations continue to outpace pre-pandemic levels, but lack of funding cited among many failures
It is a positive sign for the U.S. economy that small business starts have been trending upward, with rates higher than pre-pandemic levels. However, new business survival rates have been stubbornly consistent, with half of all new businesses closing shop within five years.
The top reasons for new business failure are related lack of access to financial capital. Financial capital can be more easily acquired with a better business credit score, which requires having a business credit profile on a commercial bureau, and the business’s account payment experiences represented on its credit profile.
One way business creditors and service providers can help their customers is through data contribution to a credit bureau. Through this action, a new commercial bureau file is established, or another trade payment experience is added to an existing profile. This will improve the credit score for these businesses, enabling them to get easier access to financial capital and other business services, which is what small businesses need to remain healthy and grow.
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Small business owners begin their journey with the hope that hard work will pay off, but some things are beyond their locus of control. Commercial creditors and service providers should assess bureau data contribution as an investment in their business customers, as adding to the credit profile for these customers will increase their chances for success.
