Business Credit is the credit that is obtained in a Business Name. With business credit the Business builds its own credit profile and credit score. With an established credit profile and score, the business will then qualify for credit.
This credit is in the business name and based on the business's
ability to pay, not the business owner's. Since the business
qualifies for the credit, in some cases there is no personal credit
check required from the business owner.
There are a ton of benefits that business credit provides
including that a credit profile can be built for a business that is
completely separate from the business owner's personal credit
profile. This gives business owners DOUBLE the borrowing power as
they have both Personal and Business credit profiles built.
Business credit scores are based only on whether the business
pays its bills on time. A business owner can obtain credit much
their business credit profile versus their personal credit profile.
Approval limits are much higher on business accounts versus
personal accounts which is yet another benefit. Per SBA, credit
limits on business cards are usually 10-100 times higher than
When done correctly Business Credit can be built without a
credit check. Business credit can quickly be obtained regardless of
personal credit quality.
Plus, most of the business credit can be obtained without the
owner taking on personal liability, or a personal guarantee. This
means in case of default, the business owner's personal assets
can't be pursued.
Even though most don't know this, when a business owner applies
financing, their business credit IS reviewed. Not having business credit established will get an owner DECLINED for financing. There are no regulations that require the lenders to notify the business owner for their reason for denial, so most never know.
The business can use its credit to qualify for revolving store credit cards like Staples, Lowes, Sam's Club, Costco, BP, Walmart, even MasterCard, Visa, and AMEX. The business can also qualify for credit lines and loans.