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Establishing Business Credit
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If you are a new business owner, one of the things you might be thinking of is establishing business credit. If you're in need of capital, you're not alone. However, these days, things can be tough even for established businesses, not to mention ones that are just starting out. In this economy, it might be difficult to go about establishing business credit, but it can be done with companies who specialize in this; they can work with you to lend you money so that you can pay it back on terms you can handle, either on a short–term or long–term basis.

Getting Business Credit

When your business is new and just starting out, perhaps you've got some capital put away so that you can finance things yourself without having to turn to business credit to meet financial needs. Or, you might choose to work while you get your business going, so that you have enough to pay the bills until things are at the point where your business can support you. Others have gotten themselves and quite dire straits by maxing out credit cards, refinancing mortgages, or by using major assets as collateral that they've later lost.

In fact, many business owners utilize personal credit cards to help meet business needs, according to the Small Business Administration. Other types of credit used were lines of credit or vehicle loans. Even though many people find themselves using their personal credit cards to finance startup businesses or to keep them going during a shortfall, this isn't really a good idea, for several reasons.

Why You Need to Keep Personal Credit Separate from Business Credit

In fact, it's important to build business credit on its own terms, because it'll save you time and money in the long run. It's very important that you separate your personal credit from your business credit. You also need to make sure that you keep records so that you can prepare for times in the future where you might need funds, and you need to build credibility for your business. Establishing business credit early on can help you protect both your personal assets and buy you purchase equipment, vehicles, and computers with no need of guaranteeing them personally.

Even today, with things tough economically, establishing business credit can help make sure that your business is going to succeed over the long haul. In addition, this can actually save you money. Because establishing business credit can give you a favorable credit score, you can actually pay less interest for leases and loans. Because you free up liquid capital, you can also take advantage of discounts vendors might give you because you prepay on orders. This type of freedom can also let you add employees as your business grows, and pay other expenses such as buying extra inventory when needed.

In addition, keeping personal and business credit separate is very important because either could negatively impact your credit just when you need it most. For example, if you receive a contract and need to apply for financing so that you can buy equipment to fill that contract, you could find yourself a disadvantage if you use personal credit to do this. You could negatively impact your ability to buy a car for personal use or to mortgage a home, for example. Therefore, keeping these credit lines separate is important for both your own personal credit health and for the health of your business. Intermixing the two (or using personal credit for business needs as this article addresses) can be detrimental to both your personal and business credit. If you should go out of business, for example, and if you have used your personal credit to finance your business, you will still be responsible for that debt if you've used your personal credit to manage your business. With corporate credit, however, you may be able to avoid legal and personal responsibility for business expenditures after the business has failed.

How do you do this, though, if conventional means of obtaining loans are out of the reach? One such company,, can help you. To work with Merchant Credit Advance, you'll need to have a least $5,000 a month in credit card receipts and be willing to share your work history with them. You'll also need to be in business before you can apply to work with them. They give you something called "advance" or "factoring" loans. Another good thing about this type of loan is that you don't need any collateral to apply for one.


A major caution to this is that you should not "leverage" your business into the future by borrowing more than you can pay back reasonably. Do this only for short-term cash needs, such as if covering payroll temporarily is a problem, or if you need to pay a vendor immediately. You should be able to see that this is only a short-term cash need and not a long-term situation you might be stuck in for quite awhile. If the latter is true, don't use these types of loans.

That said, though, MCA (Merchant Cash Advance) is one solution to establish business credit. In addition, once you have established business credit and have a viable credit history, it's going to be much easier for you to get traditional lending — or it will be once the current credit crunch has resolved itself. Since this is in doubt at the moment, companies such as MCA may be one of the only a few viable alternatives, depending on how soon this credit crisis resolves itself.


Establishing business credit is key to business success. Doing so as safely as possible so as to protect you personally is even more important, however. Therefore, the key is to keep business credit and personal credit separate. One way to do this is to apply for something called and "advance" or factoring loan. One such place to apply for this type of loan is

Comments on this article:
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It's really nice and amazing...
Posted By: Rajesh Vyas

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