Entrepreneurs and small business owners who have a separate legal entity for their business have a unique opportunity that no other individual or sole proprietor has.
It’s the opportunity to start business credit by establishing a business credit profile that is completely separate from a personal credit profile.
The main problem still facing today’s small business owner is fewer than 10 percent know about or truly understand how business credit is established and tracked-and how it affects their lives and businesses.
Statistics even show that over 65% off all small businesses use credit cards on a regular basis; but the problem is less than half of those credit cards are actually in the business name. The others continue to use the owner’s personal credit cards for business transactions.
Here’s what others are saying about the importance of starting business credit:
“The longer you delay establishing business credit,
the longer you delay taking advantage of business loans.”
“You should differentiate your personal credit from your business credit.”
“Before you apply, you should examine your business credit reports.”
One of the key advantages of having business credit is instead of putting your personal credit and assets at risk every time your company requires financing you would now be in a position to secure the financing you need with your businesses’ credit.
Here is the ‘Top 10 Reasons Why You Should Start Business Credit Now.’
- Any debt you accumulate for the business would only report to your business credit file not your personal credit file.
- Eliminate the co-mingling of funds–and this includes the “co-mingling” of credit profiles so you won’t jeopardize the protection of the corporate veil.
- Protect you and your family from personal liability when you get approved solely on your businesses’ credit file.
- Improve your personal debt to credit limit ratios by transferring the balances of business debt used with your personal credit to your business credit.
- Eliminate personal liability you have on your existing business debt by balance transfer from personal credit to your business credit.
- Increase your personal credit limit availability for you and your family.
- Improve the appearance of your businesses’ funding capacity and stability.
- Eliminate inquiries on personal credit when applying for business financing.
- Increase your businesses’ ability to obtain cash credit 10 to 100 times greater then you can obtain personally.
- Last but not least you SAVE MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.
Some other benefits include:
- Business credit cards have much higher limits than personal credit cards.
- Having the larger cash lines available for unforeseen expenses like expansion, equipment, operations or fulfillment
- Prevent the risk of damaging your personal credit
- You can build business credit even if you have bad personal credit
- Prevent the limits that lenders will impose on you for personal credit for you and your family’s needs
- Reduce your tax burden and improve accounting
Still not convinced you need to start business credit?
CLICK HERE to listen to a free Business Credit Seminar ($597 Value)
Every business will at one point require an influx of cash in order to cover operating expenses, expansion costs, legal fees, inventory or a range of other items the business may require in order to operate. The worst mistake you can make is seeking funding when your business needs it most. Lenders extend cash credit lines to businesses that don’t need the capital. Start digging your well before your business gets thirsty!
If you ask any business owner how they financed their business start up the answers usually are:
- Personal credit cards
- Tapped into home equity line
- Personal loan from the bank
- Personal loan from family & friends
- Private investors
One of the many risks that business owners face is using their personal assets as collateral or guarantee for business loans and financing. If the business owner defaults on a loan then, valuable items like a car, house, or bank account can be vulnerable to creditors’ claims.
Instead of jeopardizing your personal credit and assets every time your company requires financing, you can use the business’ credit rating to secure the financing you need with even more favorable terms and lower interest rates.
Start your business credit today!
To Your Success!
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Click here to visit his blog and signup free to get strategies, resources, and credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.
Marco Carbajo says
Thanks Penny, working on a few phone applications for this site so it will show up on mobile devices much better. Thank you for the input and I’m on it. 🙂
Marco Carbajo says
Great and thank you for the positive feedback.
All the best,
Marco Carbajo says
Your welcome Marvin, appreciate the feedback!
All the best,