| Small businesses are extremely important to our | | | | credit and even help you save cash. |
| culture and our economy, especially in the current | | | | Different kinds of credit are needed for all business |
| economic challenges we face as a nation. In fact, small | | | | owners and you should know what you need. For |
| businesses make up a very significant portion of our | | | | example, if you are running a major office based |
| economy. The financial success of America's small | | | | business with many supplies and office employees, |
| businesses lies heavily on their ability to attain credit in | | | | you may need a forty thousand dollar line of credit |
| order to maintain their business. It is shocking that | | | | with Office Max. But if you run a small business from |
| nearly all small-businesses fail in their first months or | | | | home your line of credit may come from the bank that |
| years of business. One of the primary flaws is how | | | | you do business with. Either way, lines of credit are like |
| business owners do not start their business on the | | | | cash, they increase your assets and help the success |
| proper foundation to put their business in the best | | | | of a business. |
| position to obtain cash and capital. | | | | You may even use a line of credit to directly give you |
| Another problem is the way people run their | | | | cash, say to pay for marketing expenses or office |
| businesses is being lax when is comes to book | | | | space. Either way, these are all things that ultimately |
| keeping and cash flows. However, taking some steps | | | | benefit your business. It is important for businesses to |
| to alleviate and deter credit problems can ensure a | | | | have capital, especially if they have these other lines of |
| continuous supply of capital and will more than likely put | | | | credit. This is because you cannot use your line of |
| the small business owner in a position to succeed! | | | | credit with Office Max to pay rent or payroll expenses. |
| The first step is to stop using your personal credit | | | | If you have a corporation, you may be eligible to |
| cards to finance your small business. That means form | | | | receive a lot of money in credit, if you follow the |
| a corporation or LLC (not a sole proprietorship) and | | | | proper steps (even in today's tight credit markets). This |
| obtain a business credit card in the name of the | | | | is very important for new businesses because they |
| corporation or LLC. Yes, the debt will be personally | | | | need to have significant amounts of capital to remain in |
| guaranteed but the debt will not affect your personal | | | | business. Often times, companies that are incorporated |
| revolving debt ratio! | | | | can get one hundred thousand, five hundred thousand, |
| It is very important to keep your personal revolving | | | | or even one million dollars in credit limits, which is a |
| debt on your credit cards below 30% or less. This will | | | | great start up amount of money. |
| put you in a better position when you work with the | | | | New small business owners should be sure to |
| banks and other business credit resource to help your | | | | increase their chances of getting capital and should |
| business to obtain cash and capital. This is very | | | | consider the benefits of separating personal and |
| different than business trade credit which is a different | | | | business accounts. This should be done for the sake |
| strategy. Separating your personal and business credit | | | | of organizing cash flows, increasing capital, and |
| also has been shown to improve cash flows and | | | | ultimately increasing revenues. |
| maintaining accounts. This allows you to increase your | | | | |