One reason financial institutions give for not approving credit applications from small businesses is that they do not have records of their transactions. It is common to find businesses that have been trading for many years but do not keep books.

This situation is made worse in the case of many Small Business Owners. Just as the businesses they run do not have records, they too do not keep records of their financial transactions. This chaos in their personal affairs Invariably spills into the running of their businesses, and stands as a big minus when they apply for credit on behalf of their businesses, particularly when they are required to support the loan applications with personal guarantees.

Here are five simple steps you can take to remedy this condition, and boost your credit worthiness as a Small Business Owner?

1. Cultivate the discipline of saving. Saving money will help you live a frugal but prosperous life. It will help you develop and maintain the habit of not spending all the money that you earn. It will help you understand the importance of budgeting your income and expenditure, and enable you to meet your basic expenses while setting aside portions of your earnings to be invested in maintaining and growing your business.

To this end, a continually updated listing of your banking and investment accounts will greatly ease your effort to track your savings.

2. Keep Spending Records. It so often happens that the average Small Business Owner is hardly sure about where his or her money goes. Or, he or she feels that you the spendings are much more than they ought to. Not to worry. It is time to start storing your purchase receipts in one big envelope.

When you buy big-ticket items, keep the receipts. Once a month, sit down, record your spendings according to categories and total them to produce your spending for the month.

You may choose to do this on a simple spreadsheet.

3. Keep Tax Records. You must organise your records if you plan to get the deductions you are entitled to under the tax law. You should create files or folders for your income, expenses, deductions and any other bits and pieces of information that will make it easy for you to file your taxes.

4. Keep Maintenance Records. Have you ever wondered how much you spend on maintaining your home and your car?  You will never know, unless you record it. It is helpful for you to keep a schedule to routinely maintain your home and car, so that you don’t have to wait for break downs that will cost you more to repair.

It pays to stay on top of your maintenance tasks. A simple way to do this is to create a log and start tracking the work you do on your home and your car.

5. Have a good filing system. Keep the documents you need on file, and prune them at least once a year. Keep vital documents like
birth certificates, marriage certificates, school records, insurance policy, deeds, stock certificates, etc. under lock and key in a fire-proof safe or in an offsite safe deposit box.

Now that you know how to get organised with your records, go to work. It will enhance your personal and business finances, and improve your credit worthiness.