10 Steps to Build Business Credit -- Without a Personal Guarantee

What are the best reasons to build business credit with no personal guarantee?

For starters, you’ll finally stop putting your personal credit and assets at risk when securing the financing you need for your business.

Secondly, you can expect to qualify for much larger amounts of financing since businesses have 10 to 100 times greater credit capacity than individuals.

So are you ready to get started?

Here are 10 steps to qualifying for business credit with no personal guarantee:

1. Select a business name. Avoid a name that would reflect your business as being in a high risk industry. For example, John Doe Business Development, LLC is much better than John Doe Real Estate Investing, LLC.
2. and obtain an Employer Identification Number. Select the proper entity structure because it impacts critical areas such as taxes and asset protection.
3. Obtain your business license. Verify what license is required in order for your business to operate legally in your city, county, and state.
4. Select the appropriate business SIC and NAICS codes. These are classification codes that identify the type of industry your company is involved in. Remember, avoid high risk classification codes like 6531, 6798, 237210, and 522292.
5. Establish a real business setup. This includes many factors including but not limited to a business address, licensing, , dedicated email, company website, and a host of other compliance checks.
6. Set up a business bank account. A bank account rating will always play a part in determining the creditworthiness of your company. So you should maintain a healthy balance in order to at least achieve a low "5" rating.
7. Get a DUNS Number. A Dun and Bradstreet number will be your company’s identifying number which you will use when applying for business credit with no personal guarantee.
8. Develop your company profile. Once you obtain a DUNS number you will need to register with iUpdate so you can complete your profile.
9. Establish a business credit score. If you have existing trade references, you should add these to your file. D&B is the only bureau that allows this, and once you have a minimum of three trade lines your company will have a Paydex Score.
10. Start applying for business credit with no personal guarantee. There are less than 6,000 companies in the country that are willing to extend credit to companies like yours. Some offer terms as short as 10 days while other may extend terms up to 90 days or more.

As you work to build solid bank and business credit ratings you can eventually qualify for business credit cards with no personal guarantee.

Remember, a personal guarantee obligates you to personally repay a debt that your company defaults on. The stronger you can establish your company’s creditworthiness the less importance your personal credit and guarantee will play a role in the credit granting process.

What types of financing have you obtained with no personal guarantee?

Marco is founder of the Business Credit Insiders Circle, a step-by-step business credit building system. You may contact Marco directly at: marco@businesscreditblogger.com Follow Marco on Twitter @MarcoCarbajo and read more of his insights on small business credit.