Your Business Needs Its Own Credit: Why Establishing Business Credit Is a Must

Are you planning to borrow money for your business in the future? You might be surprised by your terms if you haven’t worked on building the credit for your business yet.

Most people know about their personal credit score. Unfortunately, the same isn’t true for business. An estimated 45% of business owners don’t know that their company has a credit score.

If you think that establishing business credit doesn’t matter for your company, think again. Below are four reasons why building credit for your business is worth the effort.

Get Better Interest Rates

The last thing you want is to get a loan and end up paying a lot of money in interest. If you have poor credit, that’s what will happen to you. You might be stuck with short loan terms to get better rates.

Having excellent credit means you can get better interest rates for your loans. You can go for long-term loans and not have to worry about paying a ton of money because of interest.

Don’t Prepay for Items

If you don’t have solid credit, it’s hard for lenders and vendors to give you money without anything upfront. This can lead to large upfront payments that you might not be able to afford.

Having high credit for your business can help you avoid these upfront payments. You can get your loan or products ahead of time and pay for it in the future.

Get Better Payment Terms

A lot of vendors don’t require you to pay for your products right away. Many of them have net 15 and net 30 terms. These terms mean you have time before you need to pay for your product.

If you have bad credit, you won’t have great terms with your vendors. Having excellent business credit means that your business has proven that it can pay on time. If a vendor sees this, they’re more likely to give you better payment terms.

Doing this means you don’t need to tie up your money buying product. You can focus on purchasing other items and pay for them at a later date.

Avoid Personal Liability

It’s going to be hard to find someone to trust a business that has no credit. This can cause problems if you need more money to expand.

If you’re in this situation, you aren’t out of luck. The problem is that you’re going to be guaranteeing your lenders personally. By keeping your business credit high, you won’t need to mix your personal and business liabilities.

Establishing Business Credit Is Worth It

You need every advantage you can get when it comes to your business finances. Establishing business credit is one of the best things you can do if you’re looking to get better deals. Make sure you start working on it today, so it’s ready in the future when you need it.

Are you looking for ways to improve the finances of your business? Head back to our blog to read our latest tips that will help you get your budget under control.

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