When it comes to finding funding, most entrepreneurs run into roadblocks. Out of frustration, some even throw in the towel.
But you’re better than that!
Let’s look at a tactic you can use to get access to funds and build your business credit in the process–all without putting your personal assets at risk.
Change your game plan
Instead of looking for a bank loan or line of credit first (which usually results in a denial), start by opening a business credit card.
82% of small business owners say credit cards are a vital part of their overall financing strategy.
It can be difficult, but you may be able to do this without a personal guarantee. To start, try applying for a card with a supplier you work with often, like Staples, Home Depot, Lowe’s, etc.
Business credit cards also make it easy to identify expenses, which helps during tax filing. Just make sure you use your credit cards wisely!
- Make your payments on time (can’t say that enough).
- Don’t use a business credit card that reports to your personal credit profile.
- Keep your credit utilization low–aim to keep your balances at about 25% of your limit.
Build your business credit profile
Beyond credit card cards, you can also build your credit profile via trade lines with vendors and suppliers. Making timely payments to these creditors will help boost your credit scores. Just make sure they’re reporting your payment history to the reporting agencies.
Use your good credit to access unsecured funding
Once you’ve established your business as being a solid bet, you may be able to secure higher loan amounts and credit lines from lenders, often without personal guarantees.
After securing a loan or credit line, you can then use these funds to pay down your higher interest business credit cards.
Protect what you’ve built
As you start to build credit for your business, you’ll want to track and monitor your complete credit profile, which includes all your business and personal credit reports (lenders usually look at both when evaluating a business).
When changes happen to your credit profile, they can happen fast. With monitoring, you’ll always know where you stand, and protect everything you’ve worked so hard to build.