Business Credit Cards With No Personal Guarantee – The Help You Need to Get Started

Business Credit Cards No Personal Guarantee

When you start up a business, you would certainly like to keep the finances of your venture separated from your private finances and this is exactly what many credit providers now offer: business cards, no personal guarantee.

It is essential that your private assets be protected in case anything unexpected happens to your business: if the business happens to fail and your credit contract does not include a special clause that specifies the no personal guarantee nature of the credit, you will be held liable for all the charges that have been created by your business.

Reasons to Get Business Credit Cards No Personal Guarantee

Obtaining a business credit card that requires no personal guarantee is a good decision that can solve a number of problems and can help your venture grow and evolve.

You may have just started up your company and you do not want to finance the needs of the business from your personal savings or credits, or you may need such a credit card to expand your activity or to get equipment that would make your work more efficient. The uses for such credit cards are basically limitless – it all depends on your current and future plans.

How to Get Business Credit Cards with the No Personal Guarantee Option

Getting business cards with no personal guarantee is possible only if your business is in credit compliance, which means that the venture already has an established reputation and it has the right credit scores.

This also implies that, first, you need a legally established business with all the technicalities in place.

Most providers of such business cards – no personal guarantee needed – will use a checklist with 20 requirements to evaluate business compliance. In the following list, we will elaborate and explain some of the requirements on this checklist:

- You need a valid business license;

- Your business needs to be registered as an LLC or an incorporated and to have an Employer ID Number (EIN), also known as Federal Tax Identification Number, from the IRS. Most providers of such business cards – no personal guarantee cards – will refuse your application if your company is a sole proprietor enterprise. Registering your venture with the right form of ownership is necessary if you want to obtain business cards, no personal guarantee needed; this is because the credit you apply for is registered on the basis of this EIN;

- You need a phone line under the business name used by your company listed both in your local provider’s database and in the 411 National Directory Assistance;

- You need a bank account registered with your business name.

Business Cards, No Personal Guarantee – The Importance of Your Credit Score

If your venture meets all these legal requirements, you need to get your credit reports. These credit reports are obtained if you register your business at the three business credit reporting agencies in the country, which will calculate your credit scores depending on the payment history of your business.

In order to qualify for no personal guarantee business cards, you will need excellent credit scores from all the business credit reporting agencies.

A credit score is a value calculated through statistical methods using the data of a person’s or a company’s credit files and credit reports, used for evaluating creditworthiness. These scores are used by banks and credit card issuers for the evaluation of the risk level that a credit to a certain person or company would pose, so that they can decide whether the person or company is eligible for the credit and to calculate the interest rates applicable for that specific risk category.

These scores are calculated on account of your payment history, and you will be given the scores based on your payment patterns. You will receive a certain number of points for making anticipated payments to your vendors; a different number of points is assigned if your payments are prompt or if your payments are slow or unavailable. Don’t forget that your accounts will be frequently checked and it is very important to keep your cash flow neat.

Business Cards, No Personal Guarantee – Improving Your Credit Score

Obtaining the proper credit scores for a no personal guarantee credit requires discipline and planning. You must never mix your personal finances with the finances of your enterprise. If you would like to purchase something, but you are not sure you will be able to pay for the item on time, you should not use your company’s credit cards for the purchase, because missing the payment deadline will ruin your credit reputation.

If you decided to obtain one of the available no personal guarantee business cards, but your existing credit scores are not good enough for the time being, you need to improve these scores. A very important aspect you might want to consider when trying to improve your scores is obtaining as many positive reports about your payment history.

For this, you need business partners who also submit reports to the credit bureaus. However, you do not know which of your partners is registered with which bureau, so the best thing to do is to register your company with all three existing bureaus.

Business Credit Cards, No Personal Guarantee – Other Requirements You Need to Fulfill if You Want to Get Such a Card

Other documents required by some credit card issuers might need to include all or some of the following:

-           A business summary and a business plan to illustrate your future plans

-           A personal profile,

-           A proposal to define the value of the credit line

-           Comprehensive documentation to support your application.

If you consider getting a business credit card without personal guarantee, you need to have a well-established business. Besides fulfilling the administrative requirements, you also need to obtain the credit scores necessary to prove that you will be able to repay the debt.

No personal guarantee credit lines are very useful tools for expanding your business, but only if you use them in a responsible manner.

If you are able to back up your ideas with financial stability, there is no reason why you should not try out one of the most popular financial products nowadays: business credit cards, no personal guarantee.