Business credit also referred to as corporate credit, is the ability to obtain financing under the name of a corporation or business rather than an individual person. Now I’m happy to tell you how business credit can make a difference in more ways than you can imagine but first you have to realize that the only way you can benefit is by taking action. Start digging your well before you get thirsty! applying for business credit
Don’t put your business in a position where you are desperately seeking funds to survive and/or expand. You will find that banks and lenders are much more likely to extend credit to a business in large amounts that don’t need the funds when they apply. The best time to build busness credit is when you don’t need the money!
The advantages of having established business credit range from simple operational issues, all the way up to allowing your company to withstand scrutiny from a potential client or potential business partner who may gauge how reliable and proficient your company is by how well your business credit profile reads.building business credit
From an operational standpoint, business credit allows you to do several things such as purchase supplies, pay debts, maintain facilities, hire additional staff, compensate for a downswing or upswing in business without depleting your vital cash assets. If you establish business credit you’ll have the ability and the financial resources available to respond to market demands or growth.
Another advantage includes the fact that many lenders and lease providers base their interest rates on what the business credit profile and rating is for your company. Having established credit can lead to incredible savings in interest rates and much more favorable lease and loan terms.unsecured business loans
So let’s suppose that you need $50,000 for a piece of equipment for your business. Without a strong business credit rating, your bank will use your personal credit only. If you get approved, you’ll have an interest rate of let’s say 18%. With a D&B report, you can lower your rate to maybe 10% and you don’t have to guarantee the loan with your personal assets. So these are just a few of the examples on how business credit can benefit your company
Finally, instead of putting your personal credit and assets at risk every time your company requires financing you would now be in a position to secure the financing you need with even more favorable terms and lower interest rates without a personal guarantee. That is a major difference from how you may be running your business today!unsecured funding
Some other ways that business credit can make a difference include:
•Business credit cards have much higher limits than personal credit cards.
•Your corporation has the ability to obtain 10 to 100 times the credit then you can obtain personally
•Having the cash lines available for unforeseen expenses like expansion, equipment, operations or fulfillment
•Prevent the risk of damaging your personal credit
•Prevent the limits that lenders will impose on you for personal credit for you and your family’s needs
•Reduce your tax burden and improve accounting
•Last but not least you SAVE MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.