El Paso, TX – In an attempt to educate small business owners about funding and business loans, the team at Zen Lending and Consulting has gone ahead to tackle the three most common myths surrounding business credit. At the end of the day, the company hopes that more business owners can apply for business loans confidently when they understand the intricacies that come with it.
Myth #1: Business Credit is Just Like Personal Credit
According to the guys at Zen Lending and Consulting, this is false. Many entrepreneurs have a hard time telling personal credit apart from business credit. Sure, the credit systems are similar. However, there are some very major differences that can seriously affect a business. For starters, the consumer credit system has, both in court and in congressional testimony, been demonstrated to be fairly anti-consumer. The system works against consumers in many cases, is prone to errors, and tends to resist the correction of any errors by consumers or their advocates. (In one example, even after a credit bureau was sued and lost in court, they continued to refuse for months to remove the incorrect information from the person’s credit reports.) The business credit system is quite different. It is not anti-business (or anti-consumer), it is less prone to errors, and when there are legitimate errors, they are generally easier to get corrected.
Myth #2: It Doesn’t Hurt To Use Personal Credit In Place of Business Credit
It is said that this is a problematic way of thinking that can lead to big problems down the road. Using personal credit for business purposes puts personal credit at risk which can leave a business exposed to many disadvantages. By using personal credit for business, business owners limit the resources available to them personally and to their businesses, and the end result could be disastrous. Zen Lending and Consulting discourage business owners from doing this by citing an illustration, “Imagine when your business credit needs exceed your personal credit capacity, it becomes bad because when you need to use your personal credit you won’t be able to because it’s been tied up by your business. No matter how you spin it, in the end using your personal credit for business is a bad idea.”
Myth #3: Business Credit and Personal Credit Are In No Way Related
Although using personal credit for business purposes is deemed a bad idea, they do come together in other ways. In many cases, especially when starting out with business credit, business owners will be required to provide a “personal guarantee” for the business credit loan or line of credit. When providing a personal guarantee, the company extending credit will not only check their business credit but will also check their personal credit history. While the business account won’t show up on a personal credit report, the personal guarantee could eventually affect one’s personal credit in the event that the business fails to meet its obligations. In this scenario, Zen Lending and Consulting says, “Obviously, you should aim to avoid that scenario (and certainly can) by careful planning and smart use of business credit.”
Zen Lending and Consulting is all about creating ideas and promoting proper information and education to inspire entrepreneurs to take advantage of all the available loan options like peer to peer lending, unsecured business financing, collateral-based loans, friends and family loans, inventory financing, crowdfunding, SBA loans, grants, federal grants, and business credits, etc.
For more information, please visit www.yourzenlender.com.
Company Name: Zen Lending and Consulting
Contact Person: Brian S. Weeden
Email: Send Email
Address:2104 E Yandell Drive Ste: 2
City: El Paso
State: TX 79903
Country: United States