How to Build Business Credit Without a Personal Guarantee: A Guide for Entrepreneurs
I am writing to share with you some insights on how to get credit for your business without a personal guarantee. This is a topic that many people are interested in; as it can help you protect your personal assets, increase your purchasing power, and access more funding opportunities for your business.
“While your personal credit score is tied to your Social Security number, your business credit score is tied to an EIN. This helps you keep your personal financial information private while you build and maintain your business credit score.” - Bankrate
Jane is a successful entrepreneur who runs a catering business. She started her business with her own savings and a small loan from her family. She worked hard to grow her clientele and reputation, but she also faced some challenges along the way.
One of them was getting enough funding to expand her operations and hire more staff.
She applied for several credit cards, but she was always asked to provide a personal guarantee. This meant that she had to use her personal credit and assets as collateral for the debt.
She was reluctant to do this, as she did not want to risk losing her home or car if her business ran into trouble. She also felt that it was unfair that her personal credit history was affecting her business opportunities.
So, Jane decided to look for alternative ways to get credit for her business without a personal guarantee when she came across Spartan Coaching & Consulting, a company that specializes in helping entrepreneurs build their business credit profile. She contacted them and signed up for their services.
We helped her:
Incorporate her business
Get an EIN
Open a business bank account
Register with the major business credit bureaus
Get a D-U-N-S number
Apply for a business credit cards that only report to the business credit agencies
Apply for vendor accounts that are reported to the business credit bureaus.
We also helped her monitor her business credit reports and dispute any errors or inaccuracies.
Within a few months, Jane was able to build a strong business credit profile that reflected her business’s performance and potential.
She was able to access more funding options, lower interest rates, better terms, and higher credit limits for her business. Then expanded operations, hired more staff, and increased her revenue. Further, Jane was also able to protect her personal assets and credit from any business liabilities.
As you might imagine, she was very happy with the results and thanked Spartan Coaching & Consulting for their guidance and support. She realized that building business credit without a personal guarantee was not only possible, but also beneficial for her business and personal goals.
Some Basic Understanding(s):
A personal guarantee is a promise that you make to a lender or creditor that you will repay the debt if your business fails to do so. It means that you are putting your personal credit and assets at risk for the sake of your business.
While this may seem like a necessary evil when you’re starting out, it can also limit your growth potential and expose you to unnecessary liabilities.
A Solution:
We recommend that you build your business credit as soon as possible.
Business credit is separate from personal credit and does not require a personal guarantee. It is based on your business’s payment history, revenue, age, size, industry, and other factors.
By building a strong business credit profile, you can access more funding options, lower interest rates, better terms, and higher credit limits for your business.
How do you build business credit without a personal guarantee?
Here are some steps that you can follow:
- Incorporate your business or form an LLC. This will create a legal separation between you and your business and help you establish a business identity.
- Get an Employer Identification Number (EIN) from the IRS. This is like a social security number for your business and will help you open a business bank account and file taxes.
- Open a dedicated business bank account and use it for all your business transactions. This will help you keep track of your cash flow and avoid mixing personal and business finances.
- *Register your business with the major business credit bureaus: Dun & Bradstreet, Experian Commercial, and Equifax Commercial. These are the agencies that collect and report information on your business credit activity.
- Get a D-U-N-S number from Dun & Bradstreet. This is a unique identifier that will help you build your business credit profile and access government contracts.
- If your personal credit is 700 or better, apply for a business credit card that does not require a personal guarantee. There are some cards that only check your business credit and do not ask for your personal information. You can use these cards to make purchases and pay bills on time, which will boost your business credit score.
- Apply for vendor accounts that report to the business credit bureaus. These are accounts that allow you to buy goods or services from suppliers and pay them later, usually within 30 to 60 days. By paying these invoices on time or early, you will create a positive payment history for your business.
- Monitor your business credit reports regularly and dispute any errors or inaccuracies. You can get free copies of your reports from each bureau once a year or sign up for a monitoring service that will alert you of any changes or updates.
By following these steps, you can build a solid business credit profile that will open up more opportunities for funding and growth.
You can also leverage our software, The Business Credit Builder, which will guide you through the process step-by-step and help you access real usable, no-personal-guarantee credit for your business.
If you have any questions or need any assistance with building your business credit without a personal guarantee, please feel free to contact us anytime. We are here to support you and help you achieve your goals.
Thank you for choosing Spartan Coaching & Consulting as your trusted partner in success.
