So I finally got approved for a business credit card for my little Etsy shop. I was thrilled until I read the fine print and saw I had to sign a personal guarantee. I know it's probably standard but it caught me off guard. Is this just how it goes for small businesses? Does it ever go away if you build business credit?
Financing
I was surprised by the personal guarantee on my first business card
Yep, pretty much standard for any small biz card. They want someone on the hook. Sucks but normal.
Wait until you hear about the personal guarantee on your business loan lol.
I remembr being surprised too. I thought the whole point of an LLC was to separate finances. Nope, not when you're borrowing money. At least for us little guys.
Exactly. LLC protects you from lawsuits, not from your own credit card debt. Banks aren't stupid.
To answer your question, it can go away eventually if you have a long track record and strong business credit, but it's rare. Most small business owners just have to suck it up. I've been in business 8 years and still had to sign one last year.
Honestly, it's not the end of the world. Just budget liek it's your own money (which it is) and pay it off every month. The card is a tool.
lol tool is right. A tool to get you into debt. Be careful.
I had the same surprise. I think it's just part of the game. But definitely look intoo whether the card reports to business credit bureaus (like Dun & Bradstreet or Experian Business) so you can can build a separate credit profile. That's the only way you'll ever be able to get a card without a personal guarantee.
Yeah, the 'business credit' thing is a long game. Most people give up. Good luck though.
Just don't be like me and put your personal cell phone bill on it thinking you'll get points.Now I have a business card with a personal guarantee and a mess to untangle. Live and learn.
Actually, putting legitimate business expenses on it is how you build the credit. But personal expenses are a no-no. Even if you have a guarantee, keep it strictly business.