5 Simple Ways to Obtain Business Credit Without a Personal Guarantee
Tired of putting your personal guarantee on those credit applications? I’m sure you realize the whole purpose behind the PG is to ensure that if your business fails to repay the debt then you as an owner assumes personal responsibility.
While the majority of creditors add this extra level of protection to minimize the risk of loan defaults not all types of commercial credit sources require it. There are five simple ways to obtain business credit without a personal guarantee.
How to obtain business credit without a personal guarantee
1. B2B financing
Business to business financing offers you the opportunity to acquire various products and services from suppliers with payment terms ranging from net 10 to as long as net 90 day terms with no interest. Don’t take this option lightly because it can prove to be an excellent source of financing your company may need to get your business up and running.
2. Merchant cash advance
If your business has cash flow from credit card transactions then consider looking into a merchant cash advance. Approvals are fast and all you need to do is supply your company’s past three to six months of recent credit card processing statements to see what amount you qualify for.
You can receive up to three times your monthly credit card volume upfront and best of all there are no liens, collateral, or personal guarantee.
Payment terms are flexible too because they only collect a small percentage of your future credit card sales to payback your cash advance.
3. Merchant line of credit
The qualification for this line of credit is exactly like the merchant cash advance but without the demand for funds right now. Once you get approved for a specific amount your company can access this cash advance at any time using a merchant card that is supplied to you.
Now keep in mind not all merchant cash advance companies offer this unique financing option so make sure you ask if it is available before you apply.
4. Factoring invoices
This basically turns your accounts receivable into cash immediately. To do this, a factoring company will purchase your credit-worthy business accounts receivable at a small discount and fund you with immediate cash flow.
So if you currently offer credit terms to your customers and don’t want to wait 30, 45, or 60 days for them to pay this may be a good choice for your business to get immediate cash.
5. Secured business credit cards
Secured business credit cards are designed for businesses with no credit or less than perfect credit history. When you apply you simply provide a security deposit which establishes your company’s credit line.
You might not need a personal guarantee
These are all simple yet effective ways to get business credit without a personal guarantee. So the next time you decide to furnish that PG, let this post serve as a helpful reminder that you don’t always have to secure all your company’s financing.
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