Unsecured Business Credit

Unsecured business credit is hard to obtain. In many cases the lender will require a reserve account of cash or average daily balances that greatly exceed the amount of credit requested. The approval process is very stringent. This type of business credit is normally only available to the businesses who don’t need credit; meaning, businesses that cash flow well, that maintain strong cash reserves and that have perfect credit.

Most often unsecured business credit comes in the form of a credit card. Most of these business owners use this credit as a revolver and pay the card off in full each month. The significant advantage for these business owners is flexibility in payments, managing employee expenses (PCard), and rewards or points earned.

Small amounts of unsecured credit can be found in small business credit cards. These cards typically are offered from the major card companies themselves and not the traditional bank lender. These cards are a great way to kick start your credibility as a business. Personal guarantee’s are often required and the underwriting is very similar to a standard personal credit card account. If you obtain one of these credit facilities, make sure you manage it correctly so the history is positive. It will most likely be found on your personal credit report.

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