Separating Business and Personal Credit is Crucial; Understanding Biz Credit Approval Process Before Applying is Key LAS VEGAS, Aug. 21
LAS VEGAS, Aug. 21 /PRNewswire/ -- Amidst the glaring media attention
focused on escalating home foreclosure rates and skyrocketing consumer debt,
one of the most critical economic issues in the country is being completely
overshadowed: small business credit. And, small business finance experts say
that entrepreneurs must plan carefully in order to avoid that sucking sound
heard by millions of Americans as their credit goes down the drain.
Small businesses account for 99% of all businesses in the U.S. and employ
a little more than half of the private sector workforce, according to the
Small Business Administration. Unfortunately, of the millions that open their
doors each year, about 75% fail due to lack of financial planning and sound
debt management. One of the biggest mistakes, experts say, is financing
business expenses with personal credit.
"Establishing business credit that is entirely separate from personal
credit is crucial," said David Gass, renowned author, speaker and founder of
Business Credit Services, Inc., a nationally-recognized business credit
coaching firm that specializes in small business finance. "First off, it
protects your personal credit score from being affected by business debt,
which can negatively impact your ability to qualify for a mortgage or car
loan. And, it safeguards your business from personal financial strains -- if
you're already struggling to make your mortgage payment, the last thing you
want is to lose your business, possibly your only source of income."
Starting out by making the business/personal credit distinction builds a
solid foundation for growth and success, but even if you have already woven a
tangled web of personal and business financing, Gass says there is still hope.
The first step is to extricate the two with a credit bridge that transfers
business debt built upon personal credit and personal guarantees to a true
business credit profile. By establishing a business credit profile, small
business owners can not only protect their personal assets, but also add
legitimacy to their business and provide a platform for future business
financing.
Once business credit is established, the next step is to fully understand
the credit approval process. Because business credit is not regulated in the
same way as personal credit, Gass says there is no system in place to monitor
lenders who conduct business credit checks. They can check credit at any time,
literally multiple times per week or month.
"If your business credit is tied to your personal credit, the more they
check the more your score drops, and once again your personal finances can
take a hit every time you apply for a personal loan," Gass said.
As part of its CreditREADY(TM) program for small businesses, BCS conducts
pre-financing compliance checks to weed out problems before they arise.
Through this audit-style procedure, BCS simulates the process of third-party
lenders by examining some 2,600 lending criteria to determine credit
worthiness. Armed with a list of critical action items, small business owners
can then take steps to improve their chances of approval before they even
apply for a line of credit.
Of course, maintaining a strong financial position is important in the
long-term as well. Gass offers the following tips to help stave off
credit-related financial troubles over the long haul:
-- Maximize trade credit by working with vendors and suppliers to build a
strong credit history before going after bank lines of credit or venture
capital;
-- Work with lenders who report good credit, not just bad. "Many lenders
only report missed payments and defaults, but good credit goes beyond just
keeping it blemish-free," Gass said. "You should be rewarded for good
behavior, too, not just penalized for the bad."
-- Watch out for scams by companies who promise to help establish
overnight credit, extend large lines of credit or change your business credit
report.
BCS has helped more than 11,000 small business owners establish and manage
solid business credit since Gass founded the company in October 2000. The
company recently launched three new initiatives, SmallBusinessConsulting.com,
the BCS Angel Network (http://www.bcsangels.com), and the BCS Affiliate
Program (http://www.bcscredit.com/affiliates/index.php) to help small business
owners leverage the power of BCS experts and investment partners, as well as
other successful entrepreneurs.
Gass is the author of "Business Credit for Business Owners," which sold
more than 10,000 copies in just the first 6 months. Gass and his associates
have served as guest speakers at business seminars and on radio and television
programs around the country, and have been mentioned in several top business
books and websites. BCS' high standards for customer satisfaction have earned
the company a spot on the Honor Roll with the Better Business Bureau and
inclusion in the partner program for prominent businesses and government
agencies such as S.C.O.R.E., The IRS, Network Solutions, Entrepreneuer.com,
Palo Alto Software, Experian and many more.
To learn more, visit http://www.bcscredit.com.
About Business Credit Services, Inc.:
Founded in 2000 by business credit expert David Gass, Business Credit
Services (BCS) has helped over 10,000 small business owners obtain the capital
necessary to start and grow their businesses, and to move their businesses to
an independent financial footing. Offering a full range of counseling and
consulting services from credit building programs and incorporation guidance
to management seminars and document software, BCS has been featured by the
IRS, the INC. 500, SCORE, Entrepreneur.com and other respected business
development resources. BCS is based in Las Vegas; for more information, log
on to http://www.bcscredit.com.
SOURCE Business Credit Services, Inc.
