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What Is Business Credit and why EVERY business NEEDS It!

What is Business Credit?
Article by April Mason ~ The Business Credit Expert
Memphis Minority Business Magazine

Funding Your Business WITHOUT Using Your Personal Credit

Pull Quote- “One of the wonderful things about business credit is that it can be established without using personal credit".

Many business owners have no clue that business credit exists. With all of the information on the market about the “how to” of business, I was amazed that the only resources available when it came to financing your business were the normal methods. I guess you are wondering,”What is business credit?” Business credit is credit extended between businesses. Normally business credit is extended for the purpose of acquiring equipment, products or services that will be resold or used to generate a profit.

Business credit is rather easy to establish when you know the proper formula. There are many companies out there that will try and sell you a pipe dream when it comes to business credit. If you see advertisements like “Get $1,000,000 in business credit in 90 days” or “replace bad credit with business credit”, beware.

Many companies that advertise offers like this understand that the knowledge of the “how to” of business credit is not widely publicized, so they will charge an arm and 2 kids for the information! It has been such a well kept secret for years; only those who were deemed “the elite” knew the ins and outs of business credit. Many of our nation’s most successful business owners started their business using business credit. Think about this. Walt Disney filed bankruptcy five times before Disney World was complete. Now you and I both know if you’ve filed bankruptcy once, let alone five times, no one is going to give you anything. How did he do it, you ask? He used business credit and lines of business credit not attached to his personal credit.

One of the wonderful things about business credit is that it can be established without using personal credit. One of the keys to doing this is becoming an entity other than a sole proprietorship. A sole proprietor is someone who owns an unincorporated business by himself or herself1. Basically, it’s someone who has a business license and a tax ID number (EIN).

Now, once you’ve decided to become a Corporation, Limited Liability Company (LLC) or Non-Profit you have effectively separated your personal assets from those of the business. Most people stop there because they have no idea that they have now positioned their business to have its own credit file.

There are two types of Corporate Credit: trade credit and cash credit.

•Trade Credit (also known as vendor credit) usually consists of credit from stores such as Staples, Office Depot, Home Depot, Dell, and Lowes.

•Cash Credit is the type of credit obtained from traditional credit cards such as Master Card, Visa, Amex, as well as cash lines of credit from individual lenders.


I have had several clients who have been in business for years, but can’t establish credit because they have operated on a cash base only. No matter how old or new your company is, it is mandatory to establish a credit profile for every business you start. I suggest you establish a credit portfolio before you will ever need it. It is best to have then need than to need and not have.

April Mason is a Business Finance Development coach and the author of “Choose to Prosper: April Mason’s Guide to Establishing Business Credit WITHOUT Using Personal Credit” who assists businesses, churches and ministries in establishing credit for their vision without the use of personal credit.www. businesscreditfirm.com

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