One of the purest things in business is to truly separate yourself from your business dealings. Some business owners may look at this in various different forms. I can tell you first hand that obtaining a true business credit line for your business is not an easy task. However if your business qualifies and meets the lending market criteria then you can go about obtaining lines of credit in just your business name. Most business owners do not understand this way of thinking. They go out and use their personal credit to obtain lines of credit for their business and eventually run into the infamous "debt block".
The lending markets have tightened up their lending standards now and have made it not impossible but very difficult to obtain true business credit and cash credit lines. If you line your business up properly you will obtain a true credit line in just the company name. There are a lot of determining factors that go into this equation but it is very doable. Part of making sure your business is lined up with the lending market criteria is to work with someone who knows the market and what it will take to get you there. You can not think to yourself that if you go form and entity that you automatically qualify for a line of credit, this type of thinking would be unrealistic. Let me explain some factors to consider when looking at applying for lines of credit for your business:
1) There are some cases when your personal credit may be looked at when applying.
2) You want your Debt to income Ration at 30% to 40% maximum.
3) A Business will obtain much more credit than an individual.
4) Use the rule of no more than 3 business credit cards and 3 lines of credit.
5) Remember just cause they look at your personal credit does not mean it's a PG.
I work with a lot of business owners and once they start to understand the formula is all start's to make sense. I get the question a lot of "How come they want to look at me personally? Why do the banks do this"? Well the answer is simple; it's all about minimizing the risk for the lender. The Bank or Lender will assess your individual situation and make a determining factor on how risky you are to them to lend.
Making sure your business is in the right shape is extremely important going to the bank. There is a proper way to package your line of credit and help minimize your risk to the bank. This is most important as you do not want to waist the banker's time. If there is more information you would like to know feel free to contact me as I enjoy helping anyway I can and do give out free help! Thanks for the reads and remember as they change we change. Take care; see you at the finish line!