Entrepreneurs should keep personal and business credit lines separate

2/21/2011

While the economy is on the mend, it is still challenging for many small business owners to obtain credit. Even the entrepreneurs who have been granted commercial loans often do so assuming unfavorable terms. Reuters recently offered company heads some advice when it comes building credit in a post-recession environment.

The key, asserts the source, is to keep things professional. While many business owners have good personal credit, they should try to keep it separate from their business accounts. Moreover, if vendors pay late, orders are canceled or contracts are paid late, entrepreneurs' personal assets could be put on the line.

This is the strategy that Tracy McGuire, owner of T.M. Properties in Atlanta, took to build his credit. "He says he built his credit by starting small with a business credit card, making sure to keep personal credit completely separate," notes the source.

Fortunately, small business owners shouldn't have to deal with an unfriendly lending environment for much longer. According to a recent report from the U.S. Small Business Administration, small business lending practices are expected to normalize over the course of the next year.