Business borrowing

It's important to realize that for most small businesses, any relationship with a bank is virtually the same as the personal banking relationship of the owner. Indeed, it's doubtful that any small business could get bank credit extended to it without the personal credit-worthiness and guaranty of its owners.

Of course, once the business amasses some acceptable financial critical mass -- good ratios and retained earnings on its balance sheet -- that strength helps the business build credit worthiness of its own. Even so, the owner will still likely be asked to sign the note twice: as an officer of the business entity and as a loan guarantor.

Here are a few things to do when trying to establish business credit:

- Of course, you must deposit any loan proceeds in the business' checking account.
- Ask to work with a commercial loan officer, instead of a consumer representative.
- Take out the loans in the business' name
- Ask for business terms, rather than consumer terms