Yes, it is possible. You can get a business credit card without a personal guarantee. Other small business owners are already enjoying this option. They’ve figured it out. No more hurting personal credit scores for their business.
They have built an outstanding business credit profile. Now they have the power of business credit backing their business cash flow management.
Learn how you can build useful business credit at Advanced Business Builder.
Benefits of Financing without a Personal Guarantee
You have to start with the knowledge of what a Personal Guarantee means. The following highlights from Investopedia
- A personal guarantee is an individual’s legal promise to repay credit issued to a business for which they serve as an executive or partner.
- Personal guarantees help businesses get credit when they aren’t as established or have an inadequate credit history to qualify on their own.
- Enforcing personal guarantees also mitigates the risk to creditors since they have a legal claim to an individual’s assets.
- Business owners should read the terms and conditions of any credit application carefully for language that highlight personal liability.
You are basically “on the hook” for the business debt. If something happens to the business, they will be coming after your credit and assets for payment.
Having a robust business credit profiles helps you pursue business credit cards, business loans, and other business financing without the need for a personal guarantee.
The best part of not having to personal guarantee is that the financing will not be shown on personal credit. This is a game changer. Business debt can cause chaos with personal credit. Throwing your Debt-to-Credit Ratio off. You see substantial swings in your credit scores when business items are on the report. You also receive more inquiries. This can low personal credit scores.
Small Business Cash Flow Management
One area of business management that is a struggle for many small business owners is Cash Flow Management. Most do not have a cash flow management strategy. This can be a fatal mistake. The worst move a small business owner can make is seeking financing without knowing how their business credit and personal credit scores look. They tend to end up with higher interest rates, more financing points, and shorter borrowing terms.
Have a plan. Build business credit under the business employer identification number (EIN). Schedule a free consultation with Advanced Business Builder. Learn how to borrow without a personal guarantee.