Many business owners ponder if their personal credit score will be sufficient for financing a small business or whether they also need to build corporate credit. The difference between personal and company credit and the need of both for a small business’s financial stability are the answers to these questions.
A person’s history of borrowing and payments for things like credit cards, loans, and mortgages is known as personal credit. On the other hand, business credit is a history of the borrowing and repayment practices of a company. A higher score indicates a stronger credit history; business credit scores vary from 0 to 100.
Establishing business credit is crucial because it enables small business owners to keep their personal and corporate funds separate, protecting personal assets in the event that the company incurs debt or has legal challenges. A company may also be eligible for improved financing conditions, such as reduced interest rates or bigger credit limits, with the aid of a solid business credit score.
BlueVine is one organization that assists small businesses in establishing and enhancing their business credit. Lines of credit, term loans, and invoice factoring are just a few of the financing alternatives provided by Redwood City, California-based online lender BlueVine. Despite being primarily a lender, BlueVine also provides a free tool that lets small business owners track and raise their business credit score.
During the COVID-19 pandemic, BlueVine has been acknowledged as a viable choice for small businesses looking for finance through the Paycheck Protection Program (PPP). In fact, the Small Business Administration (SBA) has named BlueVine as the top PPP lender for handling the most loans to small businesses. Another query that small business owners can have is whether they are permitted to use two NAICS codes. Yes, a company can have multiple NAICS numbers if it engages in many kinds of commercial activity. Government organizations employ NAICS codes, which are issued by the business owner when applying for a tax ID number or business license, to categorize companies according to their major activity.
In conclusion, personal credit and corporate credit are different, albeit they have some similarities. Both are crucial for the financial stability of a small firm. Small businesses can develop and improve their business credit with the aid of BlueVine, a company that also provides financing choices. Additionally, to indicate various business operations, small enterprises might use numerous NAICS numbers.