The Business Credit Maze
Did you know that entrepreneurs who start their business as a sole proprietorship are actually hurting their chances of building business credit? Financing a new business by using personal credit cards means the entrepreneur’s personal credit is at risk. Not only is their credit at risk for late payments, the entrepreneur has often used their entire credit line so no more credit is available. Then what happens to the business if no more personal credit is available? It fails.
It is better to start a new business as a corporation or an LLC. This way the business can start building business credit with vendor trade lines and business credit cards without personal guarantee. When business or corporate credit is used correctly, it does not affect the entrepreneur’s personal credit.
This is just one part of the business credit maze that new entrepreneurs try to navigate. Few entrepreneurs know where to start in building business credit, their chances of obtaining business credit cards without personal guarantee are slim to none if they make mistakes while building business credit.
Getting help to navigate the business credit maze is the best option for the typical entrepreneur. Why try to do it alone when you don’t even know where to start. Even if a new entrepreneur starts building business credit correctly, it could be years before they see results. Getting professional help in building business credit means getting more business credit faster.