In many countries, businesses can have a credit history and credit scores that are separate from the business owner’s credit. Building your business credit (score or history) can make it easier to qualify for a line of credit, loan or credit card. You can then use these accounts when you need to borrow money to help run and grow your business.
The benefits of business credit
Where available, establishing a good business credit history could help your business:
- Qualify for higher loan amounts and lower interest rates when borrowing money
- Pay less for business insurance
- Receive better agreements with suppliers
If you don’t build business credit, you may be able to use your personal credit to borrow money for your business. However, your personal savings and possessions may be at risk if you can’t afford to repay the money you borrow using your personal credit. Additionally, using your personal credit for your business could make it more difficult to qualify for a personal loan, such as when you want to buy a vehicle or home.
Whether you rely on your business’s credit, your personal credit or a mix of both, you might consider three ways to borrow money: a credit line, a loan or a credit card.