Many Black Entrepreneurs Have These 10 Myths and Misconceptions About Business Creditby GDN Shared Post August 21, 2020
Nationwide — Many African Americans are denied business loans when they go to apply at major banks and credit unions, but this doesn’t necessarily mean that they can not get access to business credit. There are many other alternatives such as community-based specialists, programs, Black-owned banks, etc. that can and do help established minority business owners get access to the funding that they need.
Here are the top ten myths and misconceptions that many Black entrepreneurs have regarding business credit:
#1 – Many people think that if they have bad personal credit, that automatically disqualifies them to obtain a line of business credit.
#2 – Many people don’t realize that you don’t need to use your social security number when applying for business credit. You can actually use your business tax ID also known as the Employer Identification Number (EIN) or your DUNS number.
#3 – Most African Americans don’t believe that getting business credit is even possible for them… but it is! Many African American entrepreneurs have access to more than $50,000 in business credit.
#4 – Many believe that it will negatively affect their personal credit or that they need good personal credit to get business credit… but neither of these are true!
#5 – A lot of people think that you can establish business credit within one day, but it really takes six to nine months.
#6 – Many don’t realize that initially you will be given access to a small amount of business credit, but to extend that amount, you have to actively use the credit.
#7 – Many people don’t realize that having business credit brings more leverage to the table if ever you decided to pitch to angel investors and/or venture capitalists.
#8 – Many don’t realize that to be eligble for business credit, you do have to have have an active business registered with the state (DBA, LLC, or Corporation).
#9 – Many people don’t realize that having business credit can be a protection for your company when there are cash flow issues or an emergency of any kind.
#10 – Many people who do have business credit don’t realize that it’s very important to regularly check your business credit report for errors, and also maintain a good credit score. (Even you don’t yet have business credit, you should still regularly check your report for potential inaccuracies!)
Cedric Butler is an African American certified business credit specialist with more than 20 years in the accounting and finance industry. He is looking to help established Black and other minority business owners get funding. Inquire further at www.BusinessCredit.org or call (954) 329-4188.