Business Credit Basics

Learning business credit basics can help your company invest and grow
By Jessica Drew, Freelance Business Writer & Editor Business credit cards can allow your company to invest in goods and services needed for its success, which in turn will grow your business and make you more money. Corporate credit is especially important if your business is just starting out and you don’t have a lot of cash or venture capital to buy the necessary assets. That being said, unfortunately, business credit basics tend to be like all things regarding credit--anything but basic.
 

The main concept to keep in the forefront of your mind when considering business credit providers is that there will almost always be a business lending service that will permit you the desired line of credit, however it will most likely be at terms highly unfavorable to you. Also, unfair terms are often masked by legal jargon. Here are some basics you'll definitely want in a card:

1. The lower the interest rate on your business credit line the better.

2. Look for cards that offer no annual fees, this charge is often just thrown in as an "extra," and one that you don't need.

3. Find a card with a decent grace period, so if you’re late on payments, you won’t be heavily penalized.

Know your credit score and business credit information

By knowing your credit score, you know where you stand and what kind of terms you can expect from a business credit provider. If you have excellent credit and your business has a long and successful established history, you can expect a much more favorable rate than if your credit and business history is non-existent, fair or bad.
Try: By law you are required to be able to obtain your credit report for free each year from one of three credit reporting agencies. These agencies include Equifax, TransUnion or Experian.

Make a good effort to build business credit

Now that you know where you stand as far as your credit is concerned, you'll want to build your business credit to get the best deals on credit cards possible. Building your credit is complicated and based on multiple factors, which is why there are companies who charge fees to do this for you. However, most credit gurus advise against this route, as with a little effort you can see the same results building credit on your own.
Try: All Business has an in-depth article that focuses on ways to increase and build your corporate credit. It also has an article that explains What Is Business Credit that will help further your understanding of the basics. Eliminate-Credit-Card-Debt-Now.com features a step-by-step guide that will lead your business to a better credit standing.

Find business credit cards with no personal guarantee

Business credit cards with no personal guarantee mean that if something were to ever happen to your sole proprietorship or LLC, that you would not be personally liable for the credit debts incurred by the company. These are the best types of credit cards to have, as your financial security and that of your family is protected, however they are the hardest to get approved for.
Try: Nevada Corporate Headquarters offers a directory of reliable business cards with no personal guarantee. CreditCards.com offers a comprehensive comparison of several different business credit cards, so you can learn the differences between cards and get a better understanding of business credit basics.

• When considering business credit providers, make sure you attempt to negotiate terms. Although, the market for credit is pretty inflexible right now, it never hurts to try to negotiate a lower rate and you could end up with a better deal.