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Why Business Credit is Important for Small Business

If you’re a small business owner you’re among the 28.8 million small business owners in the U.S., as stated by the Small Business Administration.

Similar to personal credit, business credit determines whether your company can be trusted by the way it manages money. Think of your business credit report as a gauge for the financial reputation of your business.

Having access to business credit is the lifeline for a business. It enables you to obtain the capital you need to expand, cover day to day expenses, purchase inventory, hire additional staff and allows you to conserve the cash on hand to cover your cost of doing business.

By taking the necessary steps to build business credit the more financial opportunities your business will have. Banks, lenders and suppliers rely on business credit reports to assess the creditworthiness of a company. With strong business credit, you create a safety net for your business so you should have no trouble gaining access to the business funding you need.

While you may have excellent personal credit, you won’t want to put a loan for your business in your name for liability reasons, as you could become responsible for your business’ debt. There is always a chance that your business could hit hard times, and if your business cannot repay the loan, you don’t want that debt reflected on your own personal credit report. Not to mention in some extreme cases, the creditors could go after your personal assets if you filed the loan in your own name. Therefore it’s best to build business credit, and then apply for business loans with your company’s credit report instead.

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