No Personal Guarantee Business Credit Cards
No personal guarantee business credit cards are a dying breed in lending, but that doesn’t mean your business should have to suffer. Even while the small business credit card industry trends toward personal guarantees, you do have some choices in borrowing money for your business with a non-PG credit card.
Building Business Credit
Business credit is a necessity to achieving a no personal guarantee business credit card. This doesn’t just mean having a good business revenues or income statement; banks want to know that a borrower has the history necessary to make them capable managers of corporate funds.
Building business credit takes time, but it’s not difficult. Here are a few first steps:
1. Dunns and Bradstreet – DnB, as the ratings agency is known, is the credit reporting agency of the modern business, muck like TransUnion scores are kept for individuals. All business owners should register their company for free with DnB to activate a new DnB number which creditors will use to report your payments.
2. Phone and Utilities – Phone and utility companies are among the best at reporting your payment history to the DnB database. Signing up to a local phone company and a utility company—go to individual firms to get 2 accounts that report monthly, if possible—will ensure that you have consistently high marks appearing on your DnB business profile.
3. Suppliers – Suppliers traditionally report accounts to DnB if you choose to have the shipment billed to you on a net-30 or net-60 basis. Staples, Office Depot, Home Depot, and others will all report to DnB, especially if you ask each business to report before you make the purchase. These companies know the value of having customers who are intimately familiar with the credit-side of running a business, and they’ll be happy to help in any way.
4. Gasoline cards – Gasoline cards for businesses are easy to get as they often have very low credit lines. While having a low credit line isn’t necessarily good for financing a whole business operation, consider these cards as a way to “get your foot in the door” of major financiers, who will give you other non-PG cards after building up your business credit.
PG is a new necessity
Personal guarantees are a necessity to businesses that have borrowed money but have not borrowed money to the extent that it cannot be repaid. Personal guaranteed cards will allow you to build relationships with lenders who will, eventually, drop the personal guarantee, or offer better cards which allow for no personal guarantees.
Keep in mind that a personal guarantee on a credit card is not the end of the world for financing your business. As your company matures, revenues grow, and your DnB crosses the necessary threshold of 80 or higher, you will have more credit card applications than you can wrap your head around. Financing your company with a PG card is a step toward non-PG cards, not a step back.
The fastest way to know that a card requires a personal guarantee or does not require one is to look at the application for a line which asks for your social security number. Pending that the card asks for your personal SSN, and not your business’ EIN, then you know that your personal funds are what backs up the card for security of the bank. More than 90% of the time, this simple qualifier can be used to sort out no personal guarantee credit cards from those which require a personal guarantee. Of course, you should always be sure to read the fine print and see for sure.