Basic fundamentals of Getting Credit
Regardless of what people will try to sell you, there some simple basic fundamentals to obtaining business credit in the general sense. The main ones are good personal and business credit profile or good strong history in business. Lets break this down.
1. Good Credit Rating – If you have good credit ratings today, you could get some degree of business credit or what is called unsecured credit. Normally this is in the region of maximum $100K per bank as above that would probably need other documentation. Now a provider could offer the good personal credit piece to ensure that you get credit but you would also need to build up the Paydex score to 80 or so.
2. Good Business History – This is the area that I think gets confusing. If you have an older company and some good trade lines showing high amounts with good payment history, you maybe able to avoid the personal guarantee requirement. The requirements for this is very strict as then you may need to supply tax returns showing that the business actually was doing stuff for some years. This is where some providers tend to offer services but then again, they need to know what they are doing to pull it off. In any case, they need to provide some guarantor to get large credit lines for the business anyway.
3. Small Loans – Looking back at #1, you may be able to get smaller amounts without any personal guarantee per institution. This could be in the region of $50000 or less. Again, you have to pick banks that are friendly with this stuff.
In terms of personal guarantee, its always good to avoid this as when the business fail, they will come after you for the money and not just the business. However, you may need to work with a reputable provider to get the guarantee in order to get a descent loan otherwise, you will not get much from each bank.
