The Truth About Trade References

Have you been told you need to provide trade references?

You probably don’t know this but when you apply for unsecured business credit like a line of credit or loan…

There’s a chance the lender will ask for a few trade references.

So what are trade references?

Trade References are reports detailing the payment history between a business customer and its supplier or vendor.

Trade references (a.k.a. credit reference) may be supplied verbally (not typically recommended), in the form of a reference letter. Or, by reporting payment history to commercial credit reporting agencies such as Dun & Bradstreet, Experian or Equifax. See the example below…

If the vendor hasn’t been reporting your payment experience to the bureaus – it’s best to get it straight from the supplier/vendor in letter form so you have a copy to keep for your records and you can make another copy for the bank or lender.

Wondering if you can skip providing a trade reference?

The good news is – trade references aren’t as popular as they used to be and if you have well established business credit with plenty of payment experiences being reported – often lenders won’t ask for references.

With that being said, if the lender requested a trade reference – there’s a good chance you’ll get denied without supplying one.

Similar to the way employers or landlords use personal references to qualify potential candidates, trade reference also act as professional testimonials from a vendor or supplier vouching for a company’s reliability.

While quite simple – they’re very helpful when you don’t have a lot of credit history built up yet.

So if requested – don’t skip it. 

Inside Corporate Credit Secrets we’ll show you how to establish your business credit in the right order so it’s easy to get references fast. *We’ll even show you how to collect your first reference letters.

Learn More About Corporate Credit Secrets

Your liability protection could be voided by making this ONE MISTAKE. We’ll tell you the simple error to avoid in tomorrow’s email.

Your friends in finance,
Private Wealth Academy