Need Credit for Your Business? Some Tips on How to Get Started

One of the most significant problems that businesswomen just getting starting face is getting capital to finance the growth of your business.



If you're like most small business owners, you often charge expenses to your personal credit card(s). This will work for a while, but there are 4 reasons that your business must establish its own credit lines as soon as possible.



1. The greater the separation between you and your business, the better. Having a separate credit card in the name of your business establishes clearly that your business is a separate entity.

2. You are personally liable for charges that you make for your business on your personal credit cards, because they were made in your name and not in that of the LLC or corporation.

3. Your business will build credibility that will make it easier for you to borrow larger and larger sums as you expand. Not seeking credit in the name of the business conveys the impression that you don't expect your business to be around for long.

4. You can more easily delegate bookkeeping and accounting responsibilities. A bookkeeper can readily identify and record the charges that are for your business without your having to expose your personal credit card information.



Here's how your company can begin to establish credit:

1. Open two or three credit accounts with major suppliers, such as Office Depot or Staples. Be sure not to pay off your balances in full each month--the account needs to maintain some sort of balance for at least 12 to 18 months to build a credit history.

2. Open an account with a major credit card company, such as a MasterCard/Visa or American Express. American Express will typically want to open an account linked to the account of the majority partner (or the cardmember partner with the stronger credit rating) if your business is new.



For MasterCard or Visa, the best, recommended by "Smart Money" magazine, is Advanta's Platinum Business Card. You will have to rely on the credit report of one of the individual owners of your business, but you can use your own discretion in transferring business charges from a personal credit card to your Advanta card. (This is not possible with American Express).



Advanta's best offer is a card with 0% APR for 15 months on balance transfers and a 5% rebate on certain purchases. You can find a link to this offer on the resource page of our website.



3. Let your banker know that you are planning to open a credit line with them. She will confirm that when the time comes, it will be to your advantage if the majority partner or shareholder is female.



4. Meanwhile, if you must use a personal credit card, designate a single card to use for your business expenses. This will make it clear that in your own mind, your business is separate from you--and it will save considerable time in determining which expenditures were for business purposes.



If, like many women, you only have credit jointly with your husband, you can use strategies 1 and 2 above to start establishing credit in your own name. Then, as soon as you can, transfer charges from your personal card to a new business card such as the Advanta Platinum card and save yourself some interest!



Germaine A. Hoston, Ph.D.

Copyright 2006 Azur Pacific Associates

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Germaine A. Hoston is President of Azur Pacific Associates, a consulting and translation company operating in the United States, Europe, and the Far East. Receive free monthly tips from the experts on how to structure your business quickly and easily to maximize your bottom line--along with a free special report--when you subscribe to her free wealth structuring eNewsletter for Women Entrepreneurs at: http://www.womenswealthlive.com . The link for the Advanta business credit card mentioned above, along with other vital resources can be found at: http://www.womenswealthlive.com/resources.htm