Financing Your Business with Credit Cards
These days, many entrepreneurs are turning to credit cards for business. The great thing about business credit cards is that it keeps the personal and the business account separate. This ensures that business owners can protect their personal assets in case their business closes down.
Applying for a small business card will give the company access to numerous business funding and this may include loans or cards. However, how can you establish your business’ own credit rating when you are just starting out? Most lenders will base their decision on your personal credit rating. This will be the lenders’ guide to gauge the level of risk in lending to a business you own.
But what if you have a bad credit score? What can you do to increase your chance of getting small business credit card? Just follow these simple tips:
Tip 1) Make an effort to increase your personal score before you hunt for business cards. If you start paying off on time for three consecutive months, it will make positive changes on your low credit score by up to 2 to 4 points. To know various ways to improve your score, you may need the counsel of a financial adviser.
Tip 2) Consider creating a corporation to get business credit cards. This business structure will automatically mean that your business is separated and not an extension of you. Note that if you are building your business under your name and you have yet to file any documents with the government, lawyers or accountants then your business finances is considered as your personal finances. So make sure that you got your paperwork covered to keep business and personal finances separate.
Tip 3) Do not settle for a PO box, get a physical address. Indeed, merely using PO box will get in the way of you getting cards for business. In addition to a physical address, consider setting up a business phone line as this may also give positive impression on lenders. It also ensures that you can be reached anytime.
Tip 4) If you did everything you could but you are still unable to qualify for business credit cards, look for people you know who have excellent credit rating. Ask them if they are willing to co-sign application for you. Despite not being able to have a business application for credit co-signed, but you can as an individual. Get credit card under your name and make sure that you make timely payments. Eventually, you can build a great rating and in due time, get your own business cards.
