How to Never Sign a Personal Guarantee

In a recent podcast episode, business expert Andrew Cervenka, of J.Galt, shared valuable insights into the often overlooked realm of corporate credit for business owners. This blog post aims to distill the key points from the podcast, shedding light on the significance of building and utilizing true corporate credit.

Understanding Corporate Credit:
Andrew specializes in helping business owners tap into the potential of corporate credit, a powerful tool that can transform a business into a true business partner. Unlike personal credit, which is well-known and ranges from 350 to 850, corporate credit operates on a scale of zero to 100. The goal is to reach tier four, where a score of 80 or above signifies the true separation of business and personal credit.

The Need for Corporate Credit:
The podcast emphasized the consequences of relying solely on personal credit for business endeavors. A startling statistic from the Small Business Administration (SBA) revealed that a significant number of businesses that closed left their owners personally liable for an average of $83,000 in business debt. The importance of building corporate credit becomes evident in shielding personal assets and avoiding unnecessary financial burdens.

Business Credit Reporting Agencies:
Andrew discussed the three major business credit reporting agencies: Dun & Bradstreet, Experian Business, and Equifax Business. Unlike personal credit, businesses need to proactively register and engage with these agencies to ensure their credit profiles are established.

Building Corporate Credit:
One of the challenges highlighted in the podcast is the fact that approximately 93% of business accounts do not report to any business credit bureau. Andrew emphasized the need to identify vendors and lenders that report to these bureaus and strategically use business credit cards and loans to build a positive credit history.

Starting Early and Catching Up:
Whether you're a new business owner or have been in business for years, it's never too early or too late to start building corporate credit. Andrew shared success stories of businesses achieving significant corporate credit scores in as little as 12 months, opening doors to various funding options.

Exit Strategy and Corporate Credit:
The conversation also touched on the strategic use of corporate credit in exit planning. Andrew shared an example of a construction company owner who, despite running a successful business, was still personally guaranteeing fleet purchases. By building corporate credit, business owners can potentially exit their businesses without personal liabilities.

Unveiling the hidden power of corporate credit is essential for business owners looking to protect personal assets, access better funding options, and plan for the future. If you are a business owners seeking to navigate the world of corporate credit, book a complimentary consultation with Andrew. By running business credit reports, he can provide insights into a business's credit standing and discuss strategies to enhance corporate credit.

Listen to the podcast anywhere you enjoy podcasts by clicking here.