Small Business Success

I recently read an article on MSNBC.com entitled "Small business owners face credit squeeze Entrepreneurs say banks remain extremely wary of risk". I find it quite absurd that top news sites continue to publish such articles stating facts about the problems; the economy's state, the ongoing credit crunch, and the lack of capital available to entrepreneurs and small business owners, without publishing any solutions to these problems. Reading such articles as an entrepreneur and small business owner would have me running for the hills (if I didn't already know what it takes to access business credit today). This type of information is quite disheartening to say the least. We are a Nation of entrepreneurs and small business owners, who sit smack dab in the middle of a global economic frenzy; there is no question about that! We see it in the media and read it everywhere, and have been for a long time! What I would like to see is a Nation pulling together to help one another; a media that would provide educational tools, a publication that poses solutions not just horrifying statistics. This particular article listed a few case studies one of which was: Yi Ping Lai runs an online business, Heart to Heart Gifts, which sells toys and decorations ranging in price from $6 to $100 for girls up to six years of age. Last year, her sales passed $1 million. With the downturn, her revenue will end up about 50 percent lower this year. But she will still turn a profit, she says. In August, she got a letter from her bank canceling her $55,000 business line of credit. She said the bank cited routine credit checks that had reduced her credit score. "All of those credit checks were for legitimate personal reasons," Yi said. "For instance, I move apartment and my landlord ran a credit check on me. I tried to explain that to the bank. But they said I was now a risky option for them." The bank later restored $20,000 in credit. But Yi said she is being hampered in developing a new product line. "I need that cash flow for my business," she said. Susan Lamping, a senior community loan officer at the nonprofit CDC in San Diego, helped Yi obtain $35,000 in credit. moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k moviefree8k "Financing is extremely hard to come by and many businesses can't get help through the banks," she said." This is a perfect example, this is where a solution should have been added (but wasn't). If you read this scenario and pay close attention to the details surrounding her credit reduction, you will see the exact problem Yi Ping Lai is encountering, and no, it is not an issue on the creditor's side, it is actually a mistake Yi Ping Lai is making. Yi Ping Lai is personally guaranteeing the business credit she is applying for. This is a very common mistake made in the business world. We entrepreneurs and small business owners have got to keep up with the times! We have got to stay current! We have got to continue to educate ourselves! This is a new day and age of business. What was typical protocol 5 years ago is long gone! And it is not because the funding is gone. There is money out there. It's just not being acquired because the application criteria has been "upped" and more importantly, personally guaranteeing anything that has to do with your business MUST MUST MUST be a thing of the past for so many reasons! The #1 reason to not co mingle your personal assets with your business: There are no laws to regulate business credit, which means if you are personally guaranteeing any business credit loans, you are personally responsible for payment on these loans. If you cannot withstand this economic downturn, and must close your doors; all of the money's owed via credit cards, loans, vendor or trade credit that is personally guaranteed for your business is still PERSONALLY GUARANTEED! Meaning, YOU still have to repay that debt. YOU are personally liable for any funds you guaranteed even if it was allocated to a failed business, PERIOD. Here are a few more reasons to separate your personal credit from your business credit: o To grow business credit it is absolutely imperative for you to clearly separate your business credit from your personal credit. The rules and regulations for business credit are infinitely different from the rules and regulations of personal credit. o When you use more than 50% of the limit on any personal account, your personal credit ratings decline. However, you can max out business accounts with no negative repercussions to your business credit ratings. o Normal business credit usage will cause your personal credit scores to drop dramatically if they are combined. The solution to Yi Ping Lai's problem is quite simple but still such a mystery to most entrepreneurs and business owners; she needs to separate her business profile from her personal profile. To qualify for business credit, you must complete several steps in the correct order.