Having a business concept can be exciting, however funding that concept, or parts of an existing business can be a daunting undertaking. For entrepreneurs, it can be easy to fund parts of a startup bit by bit out of pocket or to pay for business needs with personal credit cards. There is no written rule stating that self-funding of business expenses is not acceptable, however, as the business grows, relying on personal funds may not be ideal.
There are numerous benefits to having business credit and separate financial accounts for personal and company use. Whether it’s for start-up funding or ongoing maintenance of an established business, securing business credit is paramount to ensuring the long term success of any company.
A primary reason for keeping all business expenses separate from personal bank accounts is that it keeps the business’s bottom line honest without putting personal finances at risk. It can be very easy to cover expenses personally, maybe due to low funding or just fulfilling a quick need, but doing so puts personal financial health at risk.
To become, and remain a viable entity, it is important that any business take care of itself financially, padding from personal accounts can create false projections of the business’s financial health.
Creating business credit where there may not be enough equity or financial reports to support a bank loan can seem almost impossible. Though the business’s credit score may be initially based on a personal credit rating, it will not be linked to any personal credit accounts which keep personal finances safe from any potential problems down the line.
Securing business credit gives the business an opportunity to create a financial footprint that will be more attractive to banks if a loan is necessary at some point. Banks can easily check credit scores and track income and expenses to determine an amount of money to loan. In many cases, proof that a business has a solid credit history is a good sign to banks that a loan will be repaid without issue.
Added benefits to acquiring business credit are that cards often offer rewards, extended warranty on purchased goods, and even cash back on certain purchases. These, added to an often zero or low-interest rate, give a business more financial options such as increased cash flow. Companies such as Business Credit Works provide access to business credit and loans in a one-stop-shop scenario. With their professional staff ready to assist business owners at every stage of the financial process, Business Credit Works is making securing business credit easier than ever before. Don’t go it alone in the process of financing business expenses, there are options available and professionals who will help you every step of the way.