Colorado Shelf Corporations

Terrible Business Credit Advice to Avoid

Listening to the wrong advice on company loans is a critical mistake that any entrepreneur may make. Following bad advice can add years to the process of establishing business credit, thus stalling your company’s growth. As a result, this article will discuss which advise to avoid and which information is correct about business financing. Following the appropriate guidance will allow you to establish years of company credit in a matter of months



“You Don’t Need to Build Business Credit”

The first piece of bad advice is that you do not need a company credit profile score. This is incorrect because business credit is a vital tool for obtaining financing for your company. Business credit is just as crucial to your business as personal credit is to you acquiring money. If you have no or bad personal credit, it is quite difficult to obtain the credit financing you require as an individual. The same idea applies to your company. If you don't have any established company credit or have a low business credit score, it might be tough to obtain funds to expand your organization. Certain forms of financing factor in business credit scores, including Cashflow Financing, Term loans, SBA loans, Corporate Credit Cards, Gas Cards, and Auto Financing. Credit lenders utilize business credit ratings to calculate how much you should be accepted for, as well as the interest rates and conditions you will be charged. If your company lacks commercial credit, you will be required to issue a personal guarantee, which may put your personal assets at risk


“You Don’t Need a Business Entity”

We live in an era where the gig economy is exploding. More freelancers are available now than ever before. Even if you wish to do freelance work, you must have a business organization formed. For example, you may be a real estate agent and work for a brokerage without establishing a separate organization, but many agents in that field are realizing that they can establish their own entity and reap significant benefits. Having a separate corporate entity reduces liability, increases credibility, and allows for credited funding.


“Just Go Open Some Business Credit Cards”

Applying for multiple business credit cards at once is a bad idea for a new company. To begin with, many different suppliers, such as Chase or Bank of America, offer several card possibilities. Many credit cards need a personal guarantee or a credit check. Personal guarantees imply that you are personally liable for any credit card debt, which should be avoided at all costs. Other credit cards have more robust point and incentive systems in specialized industries, such as tourism or vehicle maintenance. Other credit cards offer no interest rate promotions for up to 18 months. Credit Line Hybrid, for example, offers 0% financing, credit card stacking, up to $150,000 in capital, cash out advances, and the ability to build company credit with business credit reporting agencies


Open as Many Accounts as Fast as Possible

Business credit bureaus have easy access to business credit records, which show how quickly you acquired and utilized credit for your company. Credit lenders will not provide business finance if you have received credit in a short period of time with little use. After evaluating your business's credit history, Equifax, Experian, and Dun & Bradstreet will recommend credit limits to credit issuers in order to determine how much money your company should be allocated. If you want to get the most money possible, you must first grasp how corporate credit bureaus calculate fundability. You will acquire more credit if you apply for credit that your company will actually use on a regular basis, rather than applying for large quantities of meaningless credit.


Don’t Buy Anything With Your Credit

Entrepreneurs spend over a million dollars on Facebook and Google Ads alone each year. If business owners used business credit cards to pay for these advertisements, they could develop credit while also reporting to the business credit bureau reporting agencies. These credit reporting agencies lend greater credit lines and loans to customers who spend more money. Using your business credit to buy more will lead to more financing opportunities in the future.


You Can Do It On Your Own

The final piece of bad advice is that you can build business credit without consulting with specialists. The reality is that cooperating with knowledgeable experts on any task that you are unfamiliar with will yield greater outcomes than attempting to perform said task on your own. If you speak with a business credit specialist who has assisted thousands of borrowers and entrepreneurs in creating their credit profile, you will be able to condense years of business credit building into a matter of months. Consequently, you will get better results, more credit approvals, bigger limits, and better terms.


Personally Guarantee All Your Credit Lines

While it is true that many types of funding, such as SBA loans and term loans, may demand a personal guarantee, you should avoid personal guarantees whenever possible. Personal guarantees imply that you are personally liable for any credit card debt, which should be avoided at all costs. There are many credit financing options available that do not require a personal guarantee. There are numerous asset or collateral-based funding solutions available if you are willing to pledge some type of asset as collateral. Collateral options include stocks, bonds, 401Ks, commercial real estate, inventory, and equipment. These assets do not jeopardize your personal credit. You may easily improve your business credit profile and create revolving credit cards with collateral by following the necessary steps. By starting with small starter vendor accounts like Uline and Granger, you can gain payment experiences with major retailers such as Amazon, Walmart, Home Depot, Lowe’s, and Best Buy. Eventually, your business can acquire bank credit cards like VISA, MasterCard, and auto financing