Building Your Business Credit
Business Credit is credit obtained in a Business Name. With business credit, the Business builds its own credit profile and credit score. With an established credit profile and score, the business will then qualify for credit. This credit is based on the business’s ability to pay, and not the business owners. Since the business qualifies for the credit, in some cases there is no personal credit check required from the business owner.
You must actively work to build business credit.
But it can be done easily and quickly – much faster than building consumer credit scores. The vendor credit tier is a big part of this process. If you try to do the steps out of order, you will be turned down repeatedly. Fortunately, we know the steps to take. And we know the order in which you need to take them.
There are a ton of benefits that business credit provides, including that a credit profile can be built for a business that is completely separate from the business owner’s personal credit profile. This gives business owners DOUBLE the borrowing power as they have both Personal and Business credit profiles built.
Business credit scores are based only on whether the business pays its bills on time. A business owner can obtain credit much faster using their business credit profile versus their personal credit profile. Approval limits are much higher on business accounts versus personal accounts which are yet another benefit. Per SBA, credit limits on business cards are usually 10 – 100 times higher than consumer credit.
The business can use its credit to qualify for retail credit tier cards like Staples, Lowes, Sam’s Club, Costco, BP, Wal-Mart, even MasterCard, Visa, and AMEX. The business can also qualify for credit lines and loans.
Business credit can quickly be obtained regardless of personal credit quality. Plus most business credit can be obtained without the owner taking on personal liability, or a personal guarantee. This means in case of default, the business owner’s personal assets can’t be pursued.
Even though most don’t know this, when a business owner applies for financing, their business credit IS reviewed. Not having established business credit will get an owner DECLINED for financing. There are no regulations that require lenders to notify the business owner of their reason for denial, so most never know.
One last benefit: business credit determines the rate and term someone pays and how much they’ll get approval for.