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    5 Replies Latest reply on Oct 20, 2008 6:34 PM by Lighthouse24

    What Could Excellent Credit Do for Your Business?

    biz4u2008 Newbie
      The old adage that it "takes money to make money" is true. Unfortunately, many business owners also find that it "takes credit to get credit.

      Good credit is the lifeline of your business. Sure, it's a must for obtaining funding for launching or expanding your business. But that's only the beginning. Here are just a few of the many benefits of good business credit.

      It can save you money. Lenders offer better interest rates to businesses with good credit.
      You can obtain business credit without the need for a personal guarantee. This reduces your personal liability and protects your personal assets.
      It can help you stay ahead of your competition. You can pass your interest savings onto your customers or keep a larger margin of profit for yourself.
      You can make decisions with confidence and get the money you need, which can reduce stress on you and your company.

      If you're like the vast majority of entrepreneurs, your personal finances, credit history and financial security are in serious danger.

      And the most shocking fact is that it's all because of your business.

      That's right. The very wealth-building vehicle you're counting on to make you rich could actually rob you of every penny you have.

      The Most Devastating Financial Mistake Entrepreneurs Make

      You see, most investors, business owners and other entrepreneurial types end up financing the growth of their businesses using their personal credit.

      They buy business-related items with their personal credit cards.
      They "borrow" the money they've socked away in retirement, education and savings accounts - and "invest it into the business.
      And once their borrowing limits are maxed out - they may even persuade their spouses or other family members into using their credit to continue financing the business.

      Sounds familiar, right?

      The bad - and perhaps unexpected - news is it's a recipe for disaster.

      Here's how using personal credit to finance your company's launch, operation and/or growth can get you into serious financial trouble.

      Problem: When you use your personal credit card to buy business items, you instantly slash the amount of credit you have available to get the things you and your family need and want. And if you, like many Americans, regard your credit cards as the financial cushion that will carry you through emergencies, like an illness that makes it impossible to work, wasting your credit on business expenses might destroy your safety net.
      Problem: When you invest your savings into your business, you might see a return on your investment. But if your business goes under (a strong possibility, when you consider that the Small Business Administration reports that 95% of businesses close their doors within 5 years of opening), you'll lose EVERYTHING.
      Problem: When you use your personal money and assets for financing, you risk damaging your personal credit in two ways. One, getting the financing requires a personal credit check. And every time an inquiry is made, your credit score takes a hit. The lower your score drops, the harder it is to secure financing - especially with the most favorable terms. Second, the more credit you have personally guaranteed for your business, the less lenders will be willing to give you for personal use. Signing that loan for your business could prevent you from getting a mortgage on the new house you plan to buy a year from now.
      Problem: And when you persuade your spouse to start using his or her personal credit to finance your business, you dig a deeper hole for your family to crawl out of. If your business fails - as 95% of business do in the first three years, according to the Small Business Administration - your family will be wiped out financially.
      Problem: If your business fails and YOU used your personal money and assets you risk losing what you have worked years to build.

      My business is growing and glowing,because i realized that running a business that has it's own credit profile,seperate from my personal credit profile helps me sleep alot better at night.Building established business credit will open up financial doors you thought only the big rich and successful companies only could acheive.Well i'm introducing a great program to the members of Bank of America small business online community that will help your business stand on it's own credit and also provide you with a wide range of services "Such"as business line of credit,merchandise & Equipment lines of credit with major retail and wholesale suppliers and more to help your business build credit.To find out more info and to get started checkout the web address listed on my profile.Remember it takes money to make money and a whole lot of credit to get credit.
        • Re: What Could Excellent Credit Do for Your Business?
          Lighthouse24 Ranger

          ". . . most investors, business owners and other entrepreneurial types end up financing the growth of their businesses using their personal credit."


          ". . . it's a recipe for disaster."

          Only if it it's a bad investment decision (e.g., an unprofitable business).

          It's sort of like saying (a) most overweight people go on diets, and (b) tens of thousands of people starve to death every year from lack of food. Both are accurate, but one doesn't really have anything to do with the other.

          I wholly agree that it's essential to keep business and personal finances separate, and that there's a need to establish credit as a business entity -- which is the main point you are making, I think. I just don't believe it's realistic to suggest that regular entrepreneurs can effectively launch a new business and NOT put their personal credit and finances at risk to some degree. That's the essence of entrepreneurism -- being absolutely convinced that there is no better thing in which we (or anyone else) could invest money than the business we own and manage.

          Can you please site the specific SBA publication that says 95 percent of businesses fail within the first three years (quoted in the second-to-last "problem" that you mention near the end of the post)? The percentages I've seen are high, but nowhere near THAT high. Have new data/stats been released?

          Thanks, and welcome to the community.
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          • Re: What Could Excellent Credit Do for Your Business?
            financial180 Wayfarer
            I have been helping businesses over 25 years, I can help you reach your goals.
            Please give me a call at 949.246.5055 or email me at

            -Rob Goldstein
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