Building Business Credit Without Personal Guarantee

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Business credit companies give loans without personal guarantee in special cases. Possessing fair amount of knowledge in this regard can come to your aid here. It is as it should be because the person intending to take a loan needs to be protected against an interest rate that will eat into his very resources. The credit lines have to be competitive in this case. It is not very easy to keep the personal and business separate. Building business credit without personal guarantee is mandatory to move papers for a business credit.

Mere fact that corporate credit concepts defer from personal loans is quite perplexing to many people. Banks do not take cognizance of a business as a business unless it is incorporated. It does not matter if the company had been operating for many years. As far as banks are concerned, if the business enterprise takes a loan, it is considered on par with personal loans. A bad record will be considered as bad personal credit and almost certainly affect adversely the possibilities of getting the loan. Declaration of bankruptcy will not absolve you of paying the debt back. On the other hand, if the venture had been incorporated, it can escape from debt liabilities.

A business credit company studies the past records thoroughly and arrives at the best solution. It takes into account, the ability of the borrower to pay the repayments within the stipulated period. This translates to the company’s credit worthiness. A score is maintained and this is what is referred to when lending agencies take up your case for a corporate business credit. This will reflect upon the interest rates and other terms like repayments to be decided by them. One achieves a higher score mainly by repaying on time every time. Default is looked at with some consternation. Prompt payment, on the other hand, can get you a good score.

Small Business Administration is the federal government’s agency for small business loans. The interest rate is low compared to most other lending agencies. An expert typically, approaches this agency first for getting the intended loan sanctioned. A loanee, already burdened with cash crunch, will be considerably relived when he pays only a fraction of interest that he would otherwise pay. This will go a long way in paying back the loan on time and to get good credit scores.

Building business credit to a score of 700 should be the aim. Corporate credit concepts have it in them to do this. For, the loan companies have the practice of giving loan mostly to the applicants who have reached that magical number. When loans are paid back in time and the bills are dealt the same way, credit score automatically goes up and getting the loan is that much easy. Even if you have no records of paying back loans on time, you can always get a credit card or two, use them for payments of purchases and repay promptly. That is an effective way of getting the companies to advance you the loan. Follow all of the methods mentioned above, and you will not have any problem in building business credit without personal guarantee.

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