How to Get a Credit Line Without a Personal Guarantee
If you are a new or established business, you may be wondering if it is possible to get a credit line without a personal guarantee of your own assets and income. The answer is yes, in some cases. Some business credit card companies, like Advanta, will process a credit card application using only the business's name as a guarantee. Information about your business credit line is not reported to your personal credit report. There are a few things you need to do for your business credit application to be approved this way.
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Instructions
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Register your business with the state as a corporation. There are a number of low-cost services that you can use for incorporating yourself (see links below). Once you are a corporation, your business becomes a separate entity from you, the individual.
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Apply for an employer identification number (EIN) for your corporation. You will use this number in place of your Social Security number when you process applications regarding your corporation.
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Check your mail. After a couple of weeks, you will probably start to receive applications for business credit cards. Look at the interest rates, rewards and other program offerings and decide which business credit cards you will apply for.
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On the credit card application, look for the section that asks for information about your business structure. Select the option for "corporation." Write in your EIN where it asks for your Social Security number or taxpayer ID. You may be asked for verification of your corporate status from the creditor to process your application without a personal guarantee from the owner. The creditor will also probably check your business credit report to see how your business has been with payments in the past.
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Tips & Warnings
Generally, whenever you put your personal Social Security number on an application, that constitutes a personal guarantee. If anything goes wrong with the debt, the creditor can go after you personally.
Don't think that you are off the hook from paying back your debts if you go out of business. There are business credit bureaus that report information about business entities (see more information by clicking "More About Business Credit" below).
