Often business owners go to great lengths to pay the company’s bills on time. Often at the expense of their not taking a salary. When cash is tight which is more important; your company credit rating or your personal credit rating and why?
Personal Credit: How Important For Business Loans?
Bankers don’t like it but they understand when the economy goes south. Sometimes businesses can’t meet their financial obligations and need their banker to work with them. It is at these times that the banker resorts to the Five C’s of Credit for evaluating the risks.
When collateral is not there, nor the cash flow, the banker looks to the character of the borrower. The best indicator of a borrowers’ intent to repay is their personal credit history. If you keep your personal credit squeaky clean then you will probably do the same with your business credit once the economy returns.
So as you work with your companies to either maintain your business credit or obtain new credit sources make sure that the owners are maintaining their credit ratings.