Published By Janet Gershen-Siegel at March 15th, 2018
Do you know how to get business credit cards with no personal guarantee? We do, and we are here to show you how.
Normally, getting credit isn’t easy. Because you need to be Fundable™.
You know what I’m talking about. You looked around the big banks, and then the medium-sized banks and then the small ones. And you tried the banks where you do business. And you also tried the others suggested by your friends or business associates. But after your long quest, you were unable to acquire any kind of a small business credit card without a personal guarantee.
There are over 500 distinct business credit cards around but less than fifty of them grant credit to companies in the absence of a personal guarantee. Complicating matters, these cards are not marketed or granted to all interested clients.
You can identify with the banks’ viewpoint. They don’t like risk so they attempt to diminish it by securing a business credit card. They accomplish this by asking you, the business owner, to guarantee payments from your private finances. So, this is in the event of business default.
If worst comes to worst, and as a guarantor or co-signer you are not able to pay the financial obligation, then your individual assets will be executed. If you provide a personal guarantee and don’t pay your business credit card bills, the bank can seize your accounts, your vehicle, your residential property, and your stocks.
And they can seize whatever else you may have used to guarantee that card.
But your standpoint, of course, is that you need to have this card to run your company better.
The first thing you can do, and it’s easier said than done, is to have patience, and grow creditworthiness for your small business in the same manner that you have established your personal credit history. For most companies, this means paying your debts punctually, plus staying in business for a while, to develop a record of creditworthiness.
In order to get rid of the sticking point of a personal guarantee, you will have to demonstrate to the bank that your small business is solid. And you have to show that it can produce consistent earnings, and it has a substantial cash flow.
And the business needs to have a flawless payment history. If all the above can be shown, it will be a lot easier to find small business credit cards with no personal guarantee.
This is how to start establishing business credit without personal guarantee.
Set apart yourself from your company. This means you can help your cause by incorporating or becoming a limited liability company (LLC). This is a separate entity from the owner(s). And it means you must register for a separate identification number with Internal Revenue Service.
If your business is already an LLC you can skip this step altogether.
Get several company credit cards with personal guarantees. The ones with high spending limits will be better. This is because they are the only ones reported to the business credit agencies. And you definitely want business credit cards that do not report to personal credit.
Make sure when you buy these products, they have the personal guarantee removal feature baked right in. Keep your credit utilization at one third of your credit limit or less. Pay in a timely manner every time.
Make sure to use these small business credit cards to make your business’s large orders. These purchases, in combination with a low revolving debt and of course on time payment will all help.
These actions will demonstrate to the bank that your company can control its financial resources well. It will also persuasively show that the profit your business yields is enough to take care of financial obligations and more.
This can lead to an unsecured business credit card no personal guarantee.
Make certain that your personal credit history stays spotless. Eventually, you can file a personal guarantee removal request for these preexisting business credit cards. So, this is normally six months to one year.
The financial institution will hold an account review. But they could also consider your private credit report. If the bank approves your request then you have met your goal. If the bank says no, don’t lose hope. Just go to the next step.
No personal guarantee business credit cards can be yours.
You can elect to make an application for third-party guaranteed lending. For example, this could be an SBA loan, for financing. Settling such a loan will help you develop your business credit score.
You can also make an application for a small business credit card from a particular retailer. These retail credit cards often do not require a personal guarantee. Chose a store where your company makes purchases often. And by all means do not forget about those prompt payments!
These retail credit cards, along with an SBA loan will raise your PAYDEX score from Dun and Bradstreet. If you are unfamiliar with the term, the quick version is that PAYDEX is for businesses what FICO is for people.
Retail credit cards will give you an extra advantage from the start. This is because they will decrease your personal liability for your company debt. These are business credit cards for new businesses without personal guarantee.
Ask the financial institution again to take off the personal guarantee clause. Or apply for new business credit cards without any personal guarantee. Yes, new business credit cards without personal guarantee are possible.
You can try this once you have gotten an 80 PAYDEX score under the above conditions. This is when your opportunity to get such credit cards will increase exponentially.
You can instead apply directly for those very few small business credit cards with no personal guarantees. You should apply for business credit card no personal guarantee. For example you can opt for Sam’s Club® Business MasterCard® or the Bremer Bank Visa® Signature Business Company Card.
Each specific card of this type asks you, the business owner, to satisfy a set of conditions. But these conditions will differ from one card to another. For a Sam’s Club ® Business MasterCard ® you need your business to bring in over $5 million in yearly sales.
The Bremer Bank Visa ® Signature Business Company Card is available for businesses with annual revenues between $1 million and $10 million. But at the same time other company credit cards with no personal guarantee attached call for an open Dun & Bradstreet file. Plus there can be other requirements to be met.
Be sure to consult the card issuer. And read through all the specifics of the promotion carefully.
Increase your chances big time by building business credit!
Small business credit is credit in a business’s name. It doesn’t link to an owner’s individual credit, not even if the owner is a sole proprietor and the solitary employee of the company.
Accordingly, a business owner’s business and consumer credit scores can be very different.
Considering that small business credit is distinct from individual, it helps to protect a small business owner’s personal assets, in case of legal action or business insolvency.
Also, with two distinct credit scores, a business owner can get two different cards from the same merchant. This effectively doubles buying power.
Another benefit is that even new ventures can do this. Visiting a bank for a business loan can be a formula for frustration. But building company credit, when done properly, is a plan for success.
Individual credit scores rely on payments but also additional components like credit usage percentages.
But for business credit, the scores actually only hinge on whether a small business pays its debts promptly.
Establishing business credit is a process, and it does not happen automatically. A small business will need to actively work to develop small business credit.
Having said that, it can be done easily and quickly, and it is much speedier than establishing personal credit scores.
Merchants are a big part of this process.
Carrying out the steps out of sequence will cause repetitive denials. Nobody can start at the top with small business credit.
Starting with vendors is how to get easy business credit cards no personal guarantee.
A business must be fundable to loan providers and merchants.
Hence, a company will need a professional-looking website and e-mail address. And it needs to have website hosting from a company like GoDaddy.
Plus, company telephone and fax numbers ought to have a listing on 411.com.
In addition, the company telephone number should be toll-free (800 exchange or the like).
A small business will also need a bank account dedicated strictly to it, and it needs to have every one of the licenses essential for running.
These licenses all must be in the correct, appropriate name of the small business. And they need to have the same business address and phone numbers.
So keep in mind, that this means not just state licenses, but potentially also city licenses.
Visit the Internal Revenue Service website and obtain an EIN for the small business. They’re totally free. Select a business entity like corporation, LLC, etc.
A company can start off as a sole proprietor. But they should switch to a kind of corporation or an LLC.
This is to minimize risk. And it will make the most of tax benefits.
A business entity will matter when it involves tax obligations and liability in case of a lawsuit. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. No one else is responsible.
A corporate business card will be in the corporate name. Yes, that even includes corporate credit cards without personal guarantee. And it can even mean start up business credit cards without personal guarantee. This is how to get a credit card without credit.
Begin at the D&B website and obtain a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a business in their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s websites for the small business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.
In this way, Experian and Equifax will have something to report on.
Start with business credit cards without personal credit.
First you ought to build trade lines that report. This is also referred to as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can begin to get more credit.
These kinds of accounts have the tendency to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, and office furniture.
But first off, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are often Net 30, instead of revolving.
Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, such as within 30 days on a Net 30 account.
Soon, these will be business credit cards that do not require a personal guarantee.
Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to a minimum of one of the CRAs, a trade account which does not report can still be of some worth.
You can always ask non-reporting accounts for trade references. And also credit accounts of any sort should help you to better even out business expenditures, thus making financial planning simpler. These are providers like PayPal Credit, T-Mobile, and Best Buy.
These won’t start out as small business credit cards without personal guarantee. But in time, they can be credit cards for businesses with no personal guarantee.
Eventually, you might get business credit lines with no personal guarantee.
Always use credit sensibly! Never borrow beyond what you can pay off. Monitor balances and deadlines for repayments. Paying in a timely manner and fully will do more to boost business credit scores than almost anything else.
Establishing small business credit pays off. Excellent business credit scores can help a business get a business loan no personal guarantee. Your lending institution knows the business can pay its financial obligations. They recognize the small business is authentic.
The company’s EIN links to high scores and loan providers won’t feel the need to request a personal guarantee.
Business credit is an asset which can help your business for many years to come. It’s really the only way to get a business credit card no personal guarantee required.
With patience and over time, you can get business credit cards with no personal guarantee. All you need to have is what the banks ask. That is, a dependable small business generating consistent profit, with a strong cash flow. And then, you will have what it takes.
This is how to get business credit card without personal guarantee.