Building a business credit without a personal guarantee is not an easy task, but still possible. First, let’s talk about PG, what is PG? A personal Guarantee or PG as we call it is a promise from the person who has signed the contract to be responsible for any obligations that may arise from it.
The purpose of a personal guarantee is to ensure that if the person or company who signed the contract does not honor their obligations, the guarantor will be responsible for fulfilling them. This type of guarantee is typically used in situations where there is no collateral or other security and risk exists that the person or company may not fulfill their obligations. A personal guarantee differs from a corporate guarantee in that it’s given by an individual rather than an entity.
So why would you build your business credit without PG? Most entrepreneurs would prefer to build their business credit without PG to prevent themselves from having personal obligations to their business in case of worst-case scenarios. This is how entrepreneurs keep themselves from being penniless, it’s like how they secure and keep themselves from their own business.
Say for example when a business is declared bankrupt this does not mean that the owner is bankrupt as well, it only means that the business itself can’t generate enough profit to keep the business going. That business could also have obligations or credits to some vendors or banks when it announces its bankruptcy and when it happens the business owner does not owe anything to anyone. So that’s how and why they keep themselves a separate entity from their business
Now that you’ve understood what PG is and why it is best to not have a PG in building your business credit, we can now talk about “How” and what you need.
Create a credit optimization company following specific steps from Tier 1 to Tier 4. But you need to have:
– A Corporation that has at least $2 million in revenue.
Lastly, structure the Tiers so you won’t need a PG.