You must clean up your own act before you borrow and spend on behalf of your business.
QUESTION: I am a sole proprietor but I have a federal tax ID number for my business and keep my business and personal accounts separate. If I have bad credit on my personal accounts, will it affect a decision if my business accounts are in good standing?
ANSWER: The short answer is yes. Small- and medium-style businesses are typically characterized by the owner's personal credit. Individuals with sound businesses usually carry strong personal credit. Difficult situations occur in life and in business. Lending companies understand this, but such situations must be explained at the beginning of the application process. All owners of companies of this size will be signing personally on behalf of their companies. Although they use different bank statements and exist as separate entities for the purposes of getting a loan, they actually are one and the same. Personal credit history will affect the business loan process.
Source: Don Coolbaugh, vice president of sales, Advantage Funding Inc.
E-mail finance and leasing questions to: Martin@LCTmag.com