Besides helping you secure loans and lines of credit, having a strong business credit score has many other advantages. One is landing government contracts.
According to the U.S. Small Business Administration, the market for selling goods and services to the federal government is worth hundreds of billions of dollars annually. The government makes these purchases from small business owners like you in many different ways:
For transactions less than $3,000, which are known as micro-purchases, the agencies typically pays with a credit card. However, for more expensive deals, there is an approvals process which varies based on the method.
For amounts between $3,000 and $150,000 – these contracts are exclusively open to small businesses – there is paperwork and approvals that must be completed. Don’t worry though, the process isn’t overly complex.
For sealed bids, which is the government’s competitive process for selecting contractors, the information on your business credit report may be more crucial. Although you may be able to offer the lowest bid, you’ll likely need to meet minimum credit score requirements, as well as prove your business is most suited for the job.
There are also contracts by negotiation, which is when the government issues requests for proposals, and consolidated purchasing vehicles.
⇒ Learn if you qualify for government contracts by clicking here.
At this point, you may be wondering if bidding on higher-value contracts is worth the effort of signing up for business credit monitoring, so you can make your business a worthy candidate. Well, in addition to getting an immediate boost in business with the contract, here are other big benefits:
First, you get long-term business. Government contracts tend to be for long periods of time, which means your business will have steady revenue for a while. Consequently, you can better budget for the future, as you’ll have at least one large source of income during slow periods.
Second, you can attract more high-profile clients. If you want to partner with other businesses or land additional clients in need of expensive, contracted services, a government contract can be a viable marketing tool.
Keep in mind the solicitation process for getting a higher-priced government contract is a long and complex process. You don’t want to complete a ton of paperwork to lose a bid because your business credit score needs some work.