Small Business Credit: What the Banks Don’t Want You to Know

A guest blog series on accessing alternative business credit by a ConnXus partner company, Performance Financial Solutions

It’s not unusual for one of my consultations to get weird as I begin the educational process of explaining business credit as a massive option and benefit to a business owner.

“It’s not natural.”

“If this works so well, why haven’t I ever heard of this before?”

“Man, that sounds like magic!”

Business Credit is not a new phenomenon, but there are more than a few reasons that you’ve never heard of it…

First and foremost, the banks don’t want you to know about an option that absolves you of personal responsibility for when your business fails… They want you to personally guarantee your loans, so that if your business begins to fail, they have recourse in the form of your personal assets.

This is a concept that the wealthy have been teaching their families for a long time. It’s the reason that companies can go bankrupt, yet the business owner still maintains his/her personal wealth. There’s nothing wrong with this; more people just need to learn how to utilize these secrets and business principles to their own advantage.

What Business Credit is NOT

Business credit was not meant to be a get-out-of-jail-free card. In fact, it still is good karma and ethics to be financially responsible for the monies that you borrow. But let’s face it, businesses fail all of the time. Do you really want your family’s future and assets to be linked to that failure? That’s a hard conversation to explain to a spouse that you’ve lost your business, and oh, by the way, you’re probably going to lose your house, too…

Business credit is also not bound by the same calculation methods that personal credit uses.

18119584_1728212800529976_5766219642545280609_n-300x224Personal credit takes into account all 5 of these factors when determining credit. The sliding scale for credit (FICO-based) ranges from 300-850, giving you 550 points to gain or lose.

In this case, 30% of your score is based on your utilization ratio – the amount you owe on revolving lines of credit (credit cards) versus your available limits. That means that 165 points alone come from the amount of credit being used. Any time that you have a balance over 20-30% utilized, it is hurting your credit score. Ex: If you have a $10,000 limit, it’s best to stay underneath $3,000 balance at the close of your statement date (not your due date).

With business credit, the amount you owe on your credit card doesn’t matter. The only thing that business credit measures is your payment history. Thus, if you pay your business bills on time, even if it is just the minimum payment, you will have pristine business credit.

This means, that even if you have less than stellar personal credit, you can be approved for business credit. Having great business credit can protect you from having to provide your social security number (SSN) at all on applications, meaning that you will not have to personally guarantee the credit.

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Getting Business Credit Approvals Without Using Your SSN

With a properly established and credible business entity, you can get approved for anywhere from $50,000 – $250,000+ in vendor, store and cash credit. This will allow you also to get business credit approvals for commercial fleet vehicles, etc., all without using your SSN.

It’s time you learn how your business can take a quantum leap, this year, with business credit. For a FREE business credit and financing consultation, visit www.performancebizsolutions.com