Too many times, small business owners lump personal and business credit together. This presents several problems:

1. Your business experiences ups and downs and those downs can put your personal finances at risk. Missing just one payment can send your interest rates soaring.

2. Using personal credit to cover start-up expenses will drop your credit score, which will, in turn, negatively impact your insurance premiums and the interest rates you can get.

3. The extra money your bad credit will cost you is money you could be investing in your business.

It’s to your advantage to structure your business as a corporation or an LLC, and establish credit in your business’ name. That way, if you max out your business credit card, it won’t affect your credit score.

At some point in your business, you may need to borrow money. That’s why you must plan ahead – so you can get the best deals possible.

To authorize a business credit card, an issuer will likely require a personal guarantee. When deciding with whom to apply, keep in mind these key factors:

Does this card-issuer report to your personal credit report?
-Most don’t, but you should ask to be sure.

What’s their interest rate and terms?
-Don’t just look at the starting rate—READ THE FINE PRINT. Is the rate fixed or does it jump in six months, or if you’re late with a payment? Do you have to make so many purchases to keep the rate low? Understand the terms and conditions, so you’re aware up front what you’ll be paying.