Should I use personal credit to fund my business?

Guest post by: Joe Ferriolo
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What affects your credit score? - By Joe Ferriolo

Have you heard the saying when you don't need it, it is there; and when you do need it, it is not there?

We have seen many small business owners in this position when it comes to business financing. Do yourself a favor and put your company in a good financial position. Secure your business credit before you need it.

Using your personal credit is possibly the worst thing you can do for you and your business. We have see business owners make this mistake time and time again. If you use personal credit to fund your business it can have a long-term negative effect on you and your business. Common forms of personal credit used are credit cards, home equity lines of credit, etc. Using these forms of credit can stop you from obtaining business credit lines.

How business credit works?

Banks are stricter on extending business credit. Most banks now ask for the business owner to be the credit guarantor. This means that if the business does not pay its obligations you are personally held liable. An underwriter or bank will first look to your personal credit. If you are using more than 50% of the available credit on your personal credit cards and home equity lines of credit this could result in you getting declined. Before applying look at the balances owned on your personal credit and try to pay them down. This will help you to receive a better business credit approval.

Keep Business Credit Separate from Personal Credit

Some business banks will not report the business debt to your personal credit. Check with the bank before applying and see if they report to your business credit report and not your personal credit report. By using business credit it will help with your accounting at the end of the year. Having business expenses separate from personal expenses will make your life easier. Lastly, your business debt will be separate from your personal credit keeping your Fico scores higher. This will result in better terms when you need to use your personal credit. Your business debt may not show on your personal credit report.

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What affects your credit score? - By Joe Ferriolo

About the Author: Joe Ferriolo

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Joseph Ferriolo has been in the financing industry for 15+ years. To say the least, he has seen a lot of changes over this time. Each passing year has enabled him to see new ways and avenues of making loans work. He started in large traditional banking institutions doing credit analyses and underwriting. He eventually, took his experience in finance and put his passion into creating his own business ventures. He found that a lack of cash flow can stop a successful business in its tracks. This is why he developed a company that helps business owners obtain financing for their small business. He commonly says "getting a loan has become an art form. Simple mistakes can stop your business from getting the capital you need to get through the slow seasons." Learn and benefit from his ventures, mistakes and life experiences in business financing.

Joseph Ferriolo

CEO of Wise Man Finance

www.wisemanfinance.com

Click here to visit Joe's website.

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