Business Loans and Personal Credit
Whether you’re looking for ways to support your operations or are ready to scale your growth, the right business funds can help you accomplish your goals. Strategize how to streamline your operations, fund your next product launch or open a new location while keeping your personal credit separate.
Understanding Business Loans and Personal Credit
Business funds provide a way to operate and grow. The money may come from various sources, such as lenders, investors or personal savings. How you manage those funds can help ensure stability and peace of mind.
If you mix business and personal finances and request financing options, most lenders will review your personal credit score to determine how well you manage your earned and borrowed money. Having a strong personal credit score can help you secure new financing opportunities.
Several factors can impact your credit score. Generally, you can build a stronger credit score by paying your bills on time, managing your debt-to-income ratio and diversifying your credit mix over time.
Can You Get Business Loans With Bad Personal Credit?
Today’s nontraditional lenders offer several ways to get business funds, even if you have bad personal credit. Instead of relying on your personal credit score, lenders may focus on your business revenue.
Showing the past few months of your bank statements can help demonstrate your business’s cash flow and help underwriting teams determine how much funding you qualify for.
Do Business Loans Affect Personal Credit?
While financial conditions and situations vary, your business structure and how your funds are used may affect your personal credit. For example, personal credit is more closely tied to sole proprietorships and partnerships because the businesses aren’t separate legal entities.
On the other hand, limited liability companies (LLCs) registered as separate entities have less impact on personal credit. An LLC’s late payments or defaults wouldn’t impact a personal credit score unless personal guarantees are involved.
Separating Your Business and Personal Finances
Keeping your business and personal finances separate can help you better protect your assets and manage your finances. Consider working with tax experts and financial advisors when setting up a business structure. Professionals can help you follow the best practices and set your business up for success.
Which Business Funding Options Should You Choose?
Some business funding options include:
- Invoice factoring: Turn your unpaid invoices into cash to keep your business running smoothly. Invoice factoring is considered a sale of assets, which means it typically doesn’t affect your personal credit score.
- Merchant cash advances (MCAs): Receive a lump sum of money upfront in exchange for a percentage of your future credit card sales. With timely payments, MCAs usually don’t affect your personal credit score.
- Unsecured business loans: Get funds without risking your business or personal assets. Unsecured business loans only impact your personal credit score if you sign a personal guarantee.
- Equipment financing: Request funds to upgrade or replace your machines. Equipment financing could affect your personal credit if you personally guarantee the loan, make late payments or skip payments entirely.
Discover the Best Ways to Get Business Loans Without Affecting Your Credit Score
Looking for a quick, stress-free way to get business funds? Consider working with SpringFi. You don’t need a perfect credit score to work with us — our underwriting team looks at your business’s cash flow to determine how much you’ll qualify for.
Our company has over 20 years of combined experience helping businesses streamline their operations and scale their growth. Our specialists can offer guidance to protect your assets and select financing options aligned with your industry requirements.
Call 929-460-9727, message us or apply for funds online to get started. We offer a straightforward application process without any costs or obligations. Once approved, you can typically receive your funds in as little as one to two business days.