Author: Elaine Pofeldt / Source: Wise Bread
The most exciting opportunities in a small business often arrive unexpectedly. And sometimes, taking advantage of them requires money — more than you may have at the moment. Whether you need to fill a big retail order or hire contractors to complete a professional services contract, you’ll be able to act a lot more quickly if you have business credit lined up.
Many small business owners don’t realize that their personal credit plays a big role in obtaining the business credit they need until they actually apply for it. Entrepreneurs are often surprised to discover that for both small-business loans and business credit cards, lenders typically require a personal guarantee.
It’s very difficult to get credit based solely on the business’s credit profile unless you run a very substantial-sized business. So how can you get business credit if you have a limited personal credit history or made mistakes with your personal credit in the past? There’s really only one answer if you want to borrow at attractive interest rates. It’s buffing up your personal credit.
Fortunately, you can make a difference in your credit profile quickly if you start doing the right things today. Here are some strategies to put into action ASAP.
Create a wall between your business and personal finances
If you’ve been using your personal checking account to deposit payments from clients, make this the week you get serious about your finances and open a separate business checking account. To do so, your bank will probably require you to have an employer identification number (EIN), so make getting one your first step, if you don’t have one already.
You can apply online for an EIN from the IRS.Keeping a separate business bank account will help you to maintain the protections that come with your business entity, if you have set one up, safeguarding you from financial liability. It will also force…
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