Business Credit is an opportunity to get away from your personal debt, while managing your business. If you’re familiar with the Web Business Ownership Series segment with April Mason, you probably have bought the eBook and are well on your way to separating your business entity from your personal finances. If you haven’t, keep reading then head on over to the “Choose to Stop Being Broke” audio.
3 Benefits of Building Business Credit For Any Small Business
Any small business could stand to benefit from properly building business credit in it’s name. Many small business owners are unaware that their business can have it’s own credit file and credit rating separate from their personal credit files, and even fewer know how to establish and build business credit in their business’s name.
There are countless benefits to building corporate credit for your small enterprise, but I’ll focus on the 3 most important
Access to loans and lines of financing when the economy takes a turn for the worst. If you’ve properly built up your business’s credit file when an economic downturn takes place, you’re better positioned to weather the storm. Sometimes just having access to some “cushion” financing to get through the rest of difficult month can mean the difference between staying in business and going out of business.
Protecting your personal FICO score. The more credit lines and loans that a small business owner uses their personal credit to secure, the more drag it places on their personal FICO scores. This is can become a terrible situation if your FICO scores drop to the point of having the interest rates increased on your existing card accounts because now you seem risky to the lender.
Ready for expansion. Sure things may be tough right now, but by having properly built your company’s credit file, your enterprise will be poised ready to spring into expansion by having capital access to lines of financing from such companies as Home Depot and Lowes, who both offer generous lines to those that have built their corporate credit properly.
Building corporate credit can be one of the best things you can do for your small esterprise. Even though many lenders and loan officers would rather that you supply a “personal guarantee” for any company-oriented loans or lines of credit your company opens, the true freedom comes from having your business’s finances and credit rating stand separately from your own.