When considering financing options for a small business startup, you can’t neglect your personal credit history. It’s almost sure to affect your business financing options.
Whether you’re looking into business bank loans, personal bank loans, business or personal credit cards, or other credit-based financing options for your new business venture, you’ll often have to personally guarantee the debt (meaning if the business can’t afford the payments, you’ll be personally responsible for them and non-payment will affect your personal credit history as opposed to just a business credit record).
What that means is that your total amount of debt (existing loans and credit cards including things like mortgages and auto loans), and your history of repayment with them, can affect your ability to gain credit-based business financing.
So don’t make the mistake of assuming that you’ll be able to get financing for your business based on the business alone. You, or other investors / part-owners in the company (if it’s a corporation for example) will very likely be asked to personally guarantee any business credit early in the startup game.
Take time before launching your business to improve your credit or deal with any credit repair issues needed to take care of past credit problems, and you’ll be able to improve your chances of securing credit-based small business financing for your new startup.