The importance of maintaining credit in good standing must be known by every business owner. Through a sufficient credit line, a business is given more flexibility in acquiring the necessary funds it requires. As the business continues to grow, a bigger credit line is necessary. There are two financing alternatives accessible that the business owner needs to consider – the small business credit cards and the unsecured business line of credit.
The Small Business Credit Cards
One of the two ways that can help the business obtain the financial resources it requires is through small business credit cards; it is also one of the most common tools used in business financing. Small business credit cards can be ideal for new entrepreneurs since they are easier to obtain and some even offer flexible options for a business. Additionally, there are suppliers that accept payments through the use of small business credit cards. This would enable small businesses to be at par with other businesses and maintain the stocks with the materials needed for their production
However, small business credit cards also have disadvantages. Such cons may exist in the requirement of guaranteeing the card by newly formed businesses. This is a common requirement for some credit card companies. And so, the credit card will appear on the company owners’ personal reports on credit.
As you review your business credit card, you should ask the credit card company if this will be reported under the business name or your name personally. However, there are several issuers that are open to putting it in the business name only if the owner has good personal credit.
The Unsecured Line of Credit
For larger expenses, the unsecured line of credit is a more appropriate financial resource. The unsecured line of credit can also offer the same flexibility as a small business credit card but with a lower interest rate and a relatively bigger credit limit.
There are several creditors who offer a secured line of credit but with lower interest rates. You would also need to use some kind of collateral as protection against your debts. Through the use of an unsecured line of credit, the possibilities in relation to tolerating your assets to be utilized for security are shunned.
As compared to the application for a business loan, acquiring an unsecured line of credit is easier. On the other hand, in order for the unsecured line of credit to be approved, the company is still required to be able to present an excellent status in their business credit.
Maintaining and Building a Business Credit
If you are looking for a method to fund your business, it is important to consider if you will qualify for an unsecured line of credit. However, the business credit score should be reviewed and must be enough to acquire such credit. Fortunately, it is never too late to improve your score, and doing the correct actions early, such as opening a business credit card account in the business name only would help you to see improvements on your score.
Building good business credit is always emphasized whenever applying for business funding. From the time you launch your business, it is important to make it your goal to establish your business credit and keep it in good standing.
When the time comes that you will need financing, you will easily qualify for an unsecured line of credit.
Check out our AMAZING business credit tracker tool