Personal Guarantees and Business Credit

Last Updated May 06 2008 11:29:57.

I recently read a major business publication where readers write in to ask questions. This particular one was of interest to me, considering the question was about business credit.

The reader asked, “Can I have any personal guarantees removed from my business accounts now that I’m more established as a business owner?”

The so-called expert writer basically said, “No way!”

So I thought I would respond with the real answer. It is possible to remove personal guarantees; however, the lender must be willing to allow it. When will the lender be willing? Well, this is where the other writer dropped the ball. The reader needs to first establish a sound profile for their company that gets them listed with all the major credit bureaus, then register with the business credit bureaus, find companies that will grant credit and report trade references so he can build a credit score and then work to continuously improve his credit lines.

In the mean time, the reader (and business owners like him) needs to increase his company's revenue each year and maintain a personal credit score greater then 680. When all that is accomplished, he will have built a solid business credit profile and a lender will be more willing to grant credit without a guarantee. The personal guarantee can be dropped with vendors at that point if they are willing.

I will say, however, that almost any bank will always ask for a guarantee for an unsecured credit line which is what many business owners are after.

Source: David Gass, President & CEO, Business Credit Services, Inc. Business Credit Services, Inc. specializes in helping businesses build business credit and establish an excellent corporate credit history. Download their free booklet How to Build Business Credit at http://corporatecredit.biz

Original Article: Personal Guarantees and Business Credit published at http://corporatecredit.biz

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