Page 106 - Winning The Credit Game Bundle (CK Patrick)

asset to secure a loan may find themselves in very unwelcome
territory if their investor starts demanding changes to their busi-
ness or they encounter problems paying off their secured loan.

TRANSFERABILITY & SEPARABILITY

Two big reasons to build business credit are separability and
transferability. Both refer to the question of whether the capital
or debt you obtain is yours personally, or belongs to your
business.
For business reasons, it may be desirable to be able to transfer
your business’s financial assets, such as its credit history and its
capital, to other owners. This may be useful, for example, if you
decide to sell your business to a new business owner for a large
lump sum of money when you retire, or if you have a business
partner to whom you want to be able to transfer some financial
duties.
It is also highly desirable to maintain your business capital
and debts separate from your personal assets and your personal
credit score. New businesses are inherently risky and ensuring
that debts stay with your business, not with your personal credit
score or your personal assets, means that you can protect assets
like your home and credit score even if the worst happens to
your business.
Generally, transferability and separability go together: if
debts and capital are linked to your business as a separate legal
entity, not to you personally, then you have the power to transfer
them to future owners of your business.

EASE OF ATTAINMENT

Some types of credit are more readily given out than others. This
may be because they are only small loans or credit lines and do
not represent a large risk to the lender, or it may be because the
consequences for failing to pay them back are so severe that the
lenders have a high confidence that they will be paid back.

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