Ignoring the wrong advice about business loans can have serious consequences for entrepreneurs. Taking the Bad Advice on How to Build Business Credit can significantly delay the process of building business credit, hindering the growth of your company. Therefore, this article will provide information on what advice to avoid and what is accurate when it comes to financing your business. By following the right guidance, you can establish a strong credit history for your company in a shorter period of time.
“You Don’t Need to Build Business Credit”
One piece of advice to avoid is the belief that a company credit score is unnecessary. This is not true because having a good business credit score is essential for obtaining financing for your company. Just as having good personal credit is important for you to get money, a strong business credit score is important for your company to get financing. If you want to Build Business Credit with Bad Personal Credit, it can be difficult to get credit as an individual. The same goes for your business: if you don’t have established business credit or have a low business credit score, it may be difficult to get funding to grow your business.
Certain types of financing, including Cashflow Financing, Term loans, SBA loans, Corporate Credit Cards, Gas Cards, and Auto Financing, take business credit scores into account. Credit lenders use business credit ratings to determine how much they will lend you and the interest rates and terms you will be offered. If your company lacks a business credit history, you may be required to provide a personal guarantee, which could put your personal assets at risk
“You Don’t Need a Business Entity”
Freelancers are increasingly common in today’s gig economy. Even if you are a freelancer, it is important to have a business structure in place. For example, if you are a real estate agent working for a brokerage, you may not need to set up a separate organization. However, many agents in this field are finding that establishing their own business entity can be beneficial in terms of reducing liability, increasing credibility, and enabling them to obtain credit funding.
“Just Go Open Some Business Credit Cards”
It is not a good idea for a new company to apply for multiple business credit cards at once. There are many different credit card options available from various suppliers, such as Chase or Bank of America. Some credit cards require a personal guarantee or Build Business Credit in 30 Days check, which can put you personally liable for any credit card debt. Other credit cards have specialized rewards programs for specific industries, such as travel or automotive, or offer promotional interest rates for up to 18 months. Credit Line Hybrid, for example, offers 0% financing, the ability to stack credit cards, up to $150,000 in capital, cash advances, and the ability to build business credit with credit reporting agencies.
“Personally Guarantee All Your Credit Lines”
Personal guarantees, which make you personally responsible for any credit card debt, should be avoided whenever possible. While some types of funding, such as SBA loans and term loans, may require a personal guarantee, there are many Build Business Credit with Poor Personal Credit financing options available that do not. Instead, you can consider asset- or collateral-based funding solutions that require you to pledge an asset as collateral. This could include stocks, bonds, 401Ks, commercial real estate, inventory, or equipment. These assets do not affect your personal credit. By starting with small vendor accounts and building payment experiences with major retailers, you can improve your business credit profile and eventually qualify for bank credit cards and auto financing.
“You Can Do It On Your Own”
One piece of Bad Advice on How to Build Business Credit is the belief that you can build business credit without seeking the help of specialists. Consulting with experts who are knowledgeable about a task you are unfamiliar with will often lead to better results than trying to do it on your own. If you work with a business credit specialist who has helped many borrowers and entrepreneurs build their credit profiles, you can significantly speed up the process of building business credit and get better results, more credit approvals, higher limits, and better terms.
