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-   -   Why You Need Business Credit (http://www.smallbusinessbrief.com/forum/showthread.php?t=50863)

TCCDepot 15th May 2012 01:26 PM

Why You Need Business Credit
 
Businesses have recurrent financial requirements irrespective of their age. As a result, whether you have an old organization, or a new one, financial aid is one of the key worries. The best solution to this problem is to have a business credit for your venture. However, many people have no idea what business credit is and end up using their personal credits for meeting their business needs.

Raising personal loans for corporate use though is one of the most prevalent practices, but it may have implications later on. Personal loans are given against your personal assets or credits. Defaults in payment may mean bad credit score, low credit rating, blacklisting your name for any future credits, or may even result in the attachment of the guaranteed assets. Each credit inquiry by the financiers from the credit rating agency also leads to decline in your credit scores by around two points. All this creates the need for business loans, which are independent of owner's personal guarantee. And a perfect answer to all this is, corporate credit.

Corporate credit are unsecured loans, issued after verifying business legalities and assessing their future profitability prospects. Here comes the most interesting aspect of corporate credit. Business credit is independent of your personal assets and credits. Your corporate credit do not have anything to do with your personal credit scores. No matter how much corporate debt you have taken your personal credit score and rating stay unaffected.

In spite of this existing benefit, some business owners still do not go for corporate credit. The most probable reasons seem that either they are ignorant of the concept of corporate credits or they do not know how to build it. As a result, they keep themselves deprived of the corporate credit facilities such as low interest rates, no LTV (Loan to Value), and huge loan amount they can avail. Therefore, continuing to follow the old trend of using personal credits and hampering your personal credit report does not make sense any more with corporate credit around.

Establishing corporate credit is not too cumbersome and even if it is for some, then it is worth the efforts in the purview of its benefits. What else, even new businesses can build corporate credit? As mentioned above, the lenders just ensure that your business is a legitimate one and will most likely generate profits in the times to come.

To avail corporate credit, it is essential that you adhere to all the applicable government rules & regulations, and move on the right path. You must see to it that your business has a legal entity as an LLC or corporation. All its legal papers should be in place. If any government license or permit to operate your business are needed, you should obtain them. In order to authenticate your business's physical existence, you should have all, starting from a valid address of your company to its telephone numbers.

Therefore, corporate credit provides the working capital needed for your business in a much better and simplified way than personal credit. It is important to keep in mind that corporate credit takes time to build up just like any other credit. A patient approach, efficient use of funds, and timely repayment of loan are keys to the growing corporate credits.

Hope this is helpful ;)

phanio 19th May 2012 11:17 AM

Why You DON'T NEED BUSINESS CREDIT
 
Don't waste your time and the money you will pay someone else for a product that does not work.

I spent over 20 years as a commercial lender and not once did I or my colleagues ever pull business credit to be used in a loan underwriting.

Now, if you are seeking a $500 line of credit at office depot – then by all means build your business credit.

But, very few lenders or creditors report to business credit histories and if they don’t report – other lenders know that the information in those reports is inaccurate and incomplete.

If banks or other lenders don’t use it to underwrite loans – then why have it or waste time and money trying to get it.

And, most lenders have seen, over and over again, a business owner with bad personal credit trying to use business credit to get over on the lender (to get around their poor personal credit). You start talking about how great your business credit is and the red flags of the lenders start to go up.

Don’t believe me – do a little homework – call around to commercial banking departments or other private lenders and ask them if the use business credit to make loan decisions!

TCCDepot 19th May 2012 11:42 AM

Phanio, I'm not sure who you are but you should get your facts straight before you go bashing anyone's reputation. You have no idea about our organization. You are just trying to bash us because you know that business credit is a booming market that actually helps business owners, not u, the lender/bank.

Anyone that reads this, yes please, do your homework. The purpose of our company isn't to bypass bad personal credit. The goal of our company is to help business owners create a business credit profile which in turn creates a business credit asset. This allows you to protect yourself & your personal assets from any failures your business might have. The small business administration states that 85+% of small businesses close their doors within the first 5 years.

Over the past 12 years we have built a pool of various vendors (who at least report to one of the business credit bureaus) and banks. Most of the banks in our community were brought in because they lend to companies with business credit and will offer NO PERSONAL GUARANTEE, something Phanio couldn't ever do and wouldn't do!!!!

tgriffith 28th June 2012 03:15 PM

Of course business credit is important. Anything that helps keep the cash flowing through a company is of huge importance to that company's success. Traditional credit, accounts receivable financing, all valid, and all has as place in business.

david14beck 11th September 2015 03:45 AM

Understanding your business credit score can go a long way in ensuring that you make the right financial decisions in your business.
In short, strong business credit improves your finance capacity. For example, you will find it easier to acquire financing for your business. Subsequently, you can obtain a small business loan, for instance, without the need to rely on your personal credit.

edward222 16th September 2015 07:01 AM

Tip to become successful?

* Pay all your credit.
* Stay away from credits.


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