Does 100PF Recommend a Personal Guarantee When it Comes to Business Credit?

If you’re debating whether to apply for business credit with a personal guarantee or no guarantee and want to know what we recommend, then this article is for you!

When you open a business, you’re not the only one taking a financial risk, your credit card issuer is to. So to minimize losses in the event that your company isn't successful, lenders generally require you to sign a personal guarantee when you apply for a business credit card.

Many want to obtain business credit without a personal guarantee; however, unless your business has an 80 paydex score, is in compliance (1-800 number, office, etc), and has full documentation (business tax returns, bank statements, and merchant account statements) proving profitability, then most business credit card companies will only lend to you via the business card with a personal guarantee route. 

A personal guarantee is an agreement you make with your creditor to personally pay your business debts if your company can't. 

It’s similar to co-signing for someone’s credit card. If your company falls behind on its payments, you’ll be personally responsible for those payments and the creditor has the right to go after your personal assets, including cash, real estate, etc.

While this doesn't always seem ideal, using business credit with a personal guarantee does have its advantages:

1. Minimum qualifications
2. Quick transfer of funds
3. No attachment to your personal credit file unless you default. 

When it comes to a personal guarantee VS no personal guarantee, your business status is the determining factor. 

Still need help? Click this link to watch the free >>> Business Credit webinar