Business Credit Cards Are Really Personal Credit Cards in Disguise
In business, opportunities come when you least expect them. Often, they are disguised as hard work or temporary defeat. Even personal credit cards can come disguised as business credit cards. Understanding the differences may help you manage your finances and save your business.
There are times in the life of every business where your situation seems impossible. One of these instances is when you try to separate your business credit cards and your personal credit history. It can be done, but it’s not easy and you may experience some setbacks. Learn more to keep your finances in check.
The Truth about Business Credit Cards
What all small business owners should know is that no credit card company is going to give you a credit card without you being on the hook personally for paying it back. By signing personally, it affects your personal credit score.
Even if you pay all your bills on time, you own your home with good equity, and you have a profitable business, credit agencies are going to add up all the credit you have available. They also look at how much of it you have outstanding and reflect that in your credit score.
The problem small business owners have is that when you lease equipment, have credit cards and have other small business loans; it all goes on your personal credit history. To change this, you probably have to get a federal Employer Identification Number, form an LLC and get a business checking account.
Alternatives to Business Credit Cards
There are numerous tools used by small businesses in place of business credit cards. For example, you can get prepaid business debit cards. These pull funds from your own account. However, this is not ideal for large equipment purchases or emergency business funding.
Many businesses are turning to alternative lenders for different types of small business funding. The line of credit (LOC) product from Financing Solutions (www.financingsolutionsnow.com) isn’t set up like business credit or debit cards.
Financing Solutions doesn’t report to the credit agencies, except in the cases of default, so your credit score will not take a hit. In addition, they don’t require a personal guarantee.
Getting a line of credit or business cash advance allows you to free your business from the hassle of cards. Unlike business credit cards, you can use this short term business financing to make payroll, pay business taxes and manage cash flow.
How to Solve Business Problems that Are Really Personal Problems in Disguise
Problem #1: Not realizing that businesses are run by people. When your people are unhappy, they don’t perform well and your business and customer service suffers. Provide employees with opportunities for advancement, feedback and flextime if necessary.
Problem #2: An inability to spot problems early. It’s easy to get so caught up in details that you miss the big picture. Often, this is the result of time mismanagement on your part. Focus on activities that affect growth and delegate the rest. This will leave you free to see what’s really going on in your business.
Problem #3: Fear of taking a leap. When opportunity comes, you may be too afraid to take advantage due to worries about cash flow. This can be alleviated with help from Financing Solutions.