Here are top reasons by our experts at CL King and Associates to start building business credit in your company’s name:
Protect your personal credit ratings – With corporate credit your business debts and financial obligations would report only on your company’s credit reports.
Protect the corporate veil – By separating personal and business credit, you eliminate the risk of co-mingling funds-and this includes the “co-mingling” of credit.
Limit personal liability – By building a creditworthy company, creditors and lenders will be less likely to require a personal guarantee to secure financing.
Conserve cash flow – Many suppliers, businesses, and vendors will extend credit to your business with net 30 to 60 day terms. This allows you to conserve cash while obtaining the products and services your business needs.
Limit accumulating personal debt – You can obtain financing for your company without supplying a personal guarantee. Funding programs like accounts receivable financing, trade credit, and merchant cards protect you from facing a lot of personal debt.
Maximize financing opportunities – Many lenders, creditors, and suppliers will only extend credit to businesses that meet their corporate compliance guidelines. This includes a business credit listing and ratings with the major agencies.
Build a business asset – A business with established credit history and available credit is attractive to potential buyers and investors. It improves the appearance of your businesses’ funding capacity and stability.
Limit inquiries – With business credit you stop relying on your personal credit to obtain financing, which limits the amount of inquiries being pulled on you personally.
Receive larger credit limits – You can obtain 10 to 100 times greater credit limits from lenders as an established creditworthy business then you can as an individual.
SAVE MONEY! Businesses obtain more favorable rates on lines of credit compared to an individual. For example, you may 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.
As a startup you will eventually need an influx of cash to cover an unforeseen expense so start establishing business credit in your company’s name today.
Quit jeopardizing your personal credit and run the risk of closing your doors due to a lack of funding.