What Makes Business Credit Important

If you look up the meaning of asset via Wikipedia, it states that it is a kind of resource in which an entity controls it; a direct result of the past events. It is also where the economic benefits in the future is expected, that goes through the entity that controls it. A lot of startup businesses have been solely relying on their personal assets, that secures their funding for their business.


Even though money can be quite scarce at the beginning stages of opening a business, plus the budget is quite tight during those times, the main goal of startups is to increase both sales revenues and build up the credit worthiness of a business. The reason why a lot of startups are having second thoughts or never consider having business credit is because they think it is a liability, when in fact a lot of startups have started that way and was able to pave their way to success. Business credit is considered an asset and economic resource which makes up the company’s financial foundation.


The two most important questions that you need to inquire yourself when it comes to business credit is the meaning behind tangible and intangible business asset.

What Makes Business Credit Important


Tangible business asset refers to the purchase of various fixtures, furnitures, computers, real estate, vehicles and many other things that are used exclusively for your business. Intangible business asset refers to the resources that are nonphysical, and the rights which also have value in them in relation to the business. A number of examples to this asset includes trademarks, copyrights, account receivables, patents and the business credit.


What you need to know about business credit is its importance to your startup business. Not many people consider business credit to be an asset because of the word ‘credit’ attached to it, but in actual sense, many startups have gained a lot of benefits from utilizing business credit. By getting your business in business credit, it adds value to your company’s capacity on credits and financing ability. Below are 3 of the main benefits you will get from business credit:


Protect personal credit – business owners can limit themselves, or eliminate in using their own credit checks, because the company also got its own ratings on credit. This will prevent you, as the owner of the starter business, from having to use personal credit on your business, including personal assets and personal debts.


Increase value of the company – you might not believe it, but having business credit for your startup increases your advantage over your financial ability. Since this asset is considered to be fully transferable with its business, this makes it a very attractive factor for any potential investor or buyer.


Large credit capacity – businesses will get between ten to a hundred times credit capacities compared to having only personal credit. Becoming a creditworthy business, the company will get a position in qualifying for financing that are based on the factors exclusively restricted for businesses. Without a buildup on business credit, you will be continuing to rely solely on personal credit.

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