“You wanna know what’s more important than throwin’ away money at a strip club? Credit.”
Jay-Z said it best. Credit is king. As you continue to work towards your 2020 goals, consider the importance of establishing and building business credit.
Business credit has several benefits that can help your business launch and thrive.
1. Freedom to Spend Money How You Choose
Most grants have requirements regarding how you can use the money. This means that you must make the funders priority your priority. Some grants prohibit money being used to cover administrative fees, salaries and stipends. If you need money to purchase equipment, you are allowed to, but what if you need the money to hire a consultant? A small business line of credit can be used to cover any business expense.
2. Faster Access to Funding
The process of applying for a business credit card is significantly faster than applying for a business loan or grant. The grant and loan application process can be tedious depending on the source of funding. A small business loan from a bank could take several weeks, and a small business loan from the Small Business Administration (SBA) could take 90 days or longer. Furthermore, it usually takes several months before you are selected for most grant awards and funds are released.
Applying for a business credit card is similar to applying for a personal credit card. According to Credit Karma, once you have been approved for a business credit card, most companies will mail your card within seven to 14 business days.
3. Separate Your Personal Credit
Why is it important to separate your personal credit? Experian recommends separating personal credit from business credit for protection and elevation. If your business is ever at risk, your personal credit is also at risk. Establishing business credit separates your business credit from personal credit. Your personal credit can be an advantage to your business profile if your personal credit is good. However, if you have not established business credit and your personal credit is poor, your personal credit is your business credit. In addition, even if your personal credit is good, many companies require strong business credit to qualify for higher credit limits.