Funding Your Business: Personal Credit or Loan?
The GrowWise Group

Funding Your Business: Personal Credit or Loan?

Whether you’re a small business owner or you’re in the process of expanding an established business, growth can be costly. Without the funds you need to make your business a success, a great idea can end up as a missed opportunity. But it’s also important to get started on the right foot, and that means making sure your funds aren’t a short-term solution with a long-term consequence you’ll regret. That’s why it’s important to make the right decision when choosing where to get your business funding.


That’s where our financial consultant team at The GrowWise Group comes in to help. We’ll talk about the dangers of using personal credit to establish or expand your business and why it’s better to work with an experienced business funding team.

Establishing Business Credit for Small Business Funding

If you’ve already got a well-established personal credit history, it can be tempting to use an existing personal credit line or apply for a personal loan to help fund your business. If you’ve already got the credit line to begin with, this might seem like one less hurdle to jump through in between all of the other steps it takes to establish a new business.


Or perhaps you’re simply not sure how to go about funding a business. While it’s quite common for business owners to kick off their new startup venture with personal credit, it’s not the wisest or best solution available for small business funding. In fact, what seems convenient today can end up costing you tremendously down the road.  

Risks of Using Personal Credit

When you start a business, you’re taking on a risk, no matter how sure of a thing your investment is. Using your personal credit to pay for your business expenses means your credit is intertwined with your business.


No matter how well you plan ahead, all businesses may be subject to cash flow problems when the unexpected arises. With a personal credit line, a late or missed payment will cause your credit score to drop. Once your personal credit is damaged, it can be difficult to recover. However, keeping your business and personal credit separated means that if unexpected cash flow problems come up, they won’t directly impact your personal credit.

Keeping Your Business and Personal Funds Separate

In addition to late and missed payments, there are several additional factors that can end up affecting your personal finances. Even if you are on time with your payments every month, your debt to credit ratio can become too high. This happens when you’re close to your spending limit on a credit line.


Using your personal credit for business expenses overuses your debt to income ratio, which means there’s not much wiggle room if a personal emergency should arise. But there’s another side effect of a high personal credit debt level. Higher debt to income ratios can end up damaging your credit score.

How to Get Funding for Business

When you’re starting a business, one of the wisest decisions you can make is to keep your business credit separate from your personal credit. By establishing a business credit line with a financial advisor that specializes in business funding, you’ll have the opportunity to build your business credit the same way you would a personal credit line. This gives you the opportunity to continue expanding your business down the road and helps to boost your reputation with vendors and lenders.


At The GrowWise Group, we offer business funding solutions for business owners at all stages of the startup process. We’ll consult with you to help create a financial plan, and then we can help you get either secured funding and unsecured funding depending on your needs.

Keeping Your Credit Lines Separate

When you work to build your business credit, your credit information is kept separately for your business and personal credit lines. However, you’ll establish a credit score the same way you would if you used a personal credit card. Unlike personal credit lines, business credit activity is monitored by credit bureaus that deal with business accounts rather than personal consumer credit bureaus.

Keeping your personal finances separate from your business finances is also important when it comes to recordkeeping and can even protect you from future tax problems.

We can help you establish your credit using several solutions like these:

●        Business tradelines

●        Lender offers

●        Establishing credit

●        Non-recourse funding

Connect with a Financial Consultant Today

Are you sitting on a great business idea but halted by the need for funds? While it might be tempting to dip into your personal credit, there’s a better way. At The GrowWise Group, we can even help with business funding for bad credit.


We specialize in helping small business owners turn great ideas into thriving companies. Get started on the path to a better business with our funding application. To connect with our financial consultation experts, call us at 877-244-9809 or contact us online.

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