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The Need For Separate Credit For Business

Apr 29, 2008
Many small business owners will argue that it is the money they generate from their small business that allows them to enjoy a quality personal life. They are able to buy a nice home, drive newer model vehicles, and even take regular vacations to get away from the daily grind. That is all good news to hear but you still need to take the time to have all of your business credit issues separate from those of your personal life.

This is a very common issue that comes up for owner's of small businesses, and one where too many of them make a dangerous mistake. They don't realize that when the two of them are connected that they could end up losing everything. I agree that it can be a major blow to lose your business. Yet you certainly don't want to further compound the issue by losing your home and your car as well.

We did get a business credit card and line of credit early on as well. We got both of them from the same lender which was good for us. Yet the interest rates on them weren't something I was proud of. I am happy to say though that we have proven to be worthy of that credit. We still have those same two accounts with the same creditor today.

Hold out for a quality lender to come along though that does understand the value that the separation of the accounts holds for the small business owner. Sure, you will end up paying a higher rate of interest. You will also get a lower credit limit to start out with. Yet as you show you are able to repay what you use then that lender will have more faith in you. In turn, they will end up offering you a much better deal than before.

It can be very exciting to finally make your dream of having your own business a reality. Yet you need to understand that even with the very best of intentions it can fail. There are too many variables in the world that you can't control. By being responsible though with your personal credit and protecting it you can move forward with your plans. You will still have some risks but you will feel better knowing everything you have isn't on the line.

Should your small business have a financial struggle you don't want to lose your home or your car because of it. Even if you do have a wonderful business you can never predict the economy. There are many reasons why small businesses fail so protect what is yours personality from being affected. Should you end up with a very successful small business then that is wonderful but you need to understand there is too much of a risk to blow off the issue.

I wish I could tell you that it has always been a piece of cake to keep your small business and personal credit separate from each other. It does take some planning, some hard work, and plenty of organization. Over the course of time though it will start to get easier for you. This is one of the best things you can do for yourself though as well as your new business.

Hopefully your small business is going to do very well for you. Who knows, it could turn into a very large business for you some time down the road! While every type of small business is different there are enough key elements that are the same. Among them is that it is necessary to keep your small business credit and personal credit matters separate from each other all the time.
About the Author
Robert Bain writes about how to build corporate credit the smart way, and avoid the common small business financing disasters.
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