How to Build Business Credit With No Personal Guarantees
Building business credit is important for ensuring you have cash and funds available to keep your business running. Obtaining credit from lenders and creditors can be challenging, especially if you are just starting out. Applying for credit may require a formal review of your business plan and you may need to submit your personal information for an evaluation of your personal FICO score. If you have strong personal credit and have built an attractive business credit profile, though, you can obtain business credit without any personal guarantees.
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Instructions
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Make sure your company is formed under the right entity. Your business will need to be a Limited Liability Company (LLC) or Corporation in order to obtain a business line of credit.
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Organize your financial statements. Make sure you have all of your financial statements correct and in order, and consolidate all permits, licenses and other information related to your business. You will need this information as part of your credit application process and most of these can be found in your business plan.
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Register your company with the three major credit bureaus: Experian, Equifax and Dun & Bradstreet (see Resources below). Make sure your business is registered with these credit companies so that potential investors and creditors can identify your business entity with ease.
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Maintain an active business credit profile. Make regular payments, avoid missing bill due dates, and keep track of your existing credit accounts. Having a strong business credit profile reduces the need to apply for more credit with a personal guarantor.
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Learn about vendor approval requirements. Some vendors and businesses do not require a personal credit check when they want to determine your creditworthiness. Read the terms and conditions of your vendor's policy in detail so you can find only the companies that will review your business credit profile.
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Tips & Warnings
Making sure your business credit profile is up to date and accurate can reduce the need for a personal guarantor during your application process.
Establishing business relationships helps you build your credit profile and opens up more opportunities for partnerships in the future.
Keep track of your personal FICO score so that you can use it as leverage if you need to.
Avoid opening too many credit accounts such as credit cards when you're first starting out--too much open credit can limit your ability to obtain more credit or a loan.
Your business must have a credit score with the three major business credit entities.
