Business Credit is a credit that is obtained in a Business Name. With business credit the Business builds its own credit profile and credit score. With an established credit profile and score, the business will then qualify for credit. This credit is in the business name and based on the business’s ability to pay, not the business owners. Since the business qualifies for the credit, in some cases there is no personal credit check required from the business owner. There are a ton of benefits that business credit provide including that a credit profile can be built for a business that is completely separate from the business owner’s personal credit profile. This gives business owners DOUBLE the borrowing power as they have both Personal and Business credit profiles built. Business credit scores are based only on whether the business pays its bills on time. A business owner can obtain credit much faster using their business credit profile versus their personal credit profile. Approval limits are much higher on business accounts versus personal accounts which is yet another benefit. Per SBA, credit limits on business cards are usually 10-100 times higher than consumer credit. When done correctly Business Credit can be built without a personal credit check. Business credit can quickly be obtained regardless of personal credit quality. Plus most business credit can be obtained without the owner taking on personal liability, or a personal guarantee. This means in case of default, the business owner’s personal assets can’t be pursued.
Even though most don’t know this, when a business owner applies for financing, their business credit IS reviewed. Not having business credit established will get an owner DECLINED for financing. There are no regulations that require the lenders notify the business owner for their reason for denial, so most never know. The business can use its credit to qualify for revolving store credit cards like Staples, Lowes, Sam’s Club, Costco, BP, Wal-Mart, even MasterCard, Visa, and AMEX. The business can also qualify for credit lines and loans.