LAS VEGAS, Al -- Separating Business and Personal Credit is Crucial; Understanding Biz Credit Approval Process Before Applying is Key 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, www.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, www.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, www.Entrepreneur.com and other respected business development resources. BCS is based in Las Vegas; for more information, log on to http://www.bcscredit.com/.
First Call Analyst:
FCMN Contact:
Source: Business Credit Services, Inc.
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CONTACT: Steve Simon of SS|PR, +1-847-415-9347, steve@sspr.com, for
Business Credit Services, Inc.
Web site: http://www.bcscredit.com/
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