Understanding No PG Business Credit Cards: A Way to Fund Your Business Without Using Your Personal Credit

A personal guarantee (PG) is a legally enforceable agreement that requires the responsible party (i.e., the guarantor/business owner) to pay all monies owed, even if the business goes belly up. So, how would a business owner obtain a no PG business credit card? Keep reading to learn more.

What is a No PG Business Credit Card?

Many crafty business owners have learned to manage their business operations using optional credit line provisions from vendors generally known as Net 30 agreements. Interestingly, a Net 30 credit line essentially operates as a no PG business credit card because the credit line is revolving and is offered without a personal guarantee. A Net-30 vendor extends credit to their customers (which in this instance is you, the business owner), that allows you to purchase the vendor’s products and/or services in larger quantities than you would likely be able to without the credit line in place.

The Net 30 credit arrangement has gained in popularity as it benefits both the vendor — they sell more! — and the business owner — who receives interest-free credit without a personal guarantee. However, it should be noted that each Net 30 vendor makes the final decision regarding who is approved for its Net 30 credit deals.

How Do No PG Business Credit Cards Work?

The Net 30 deal is a credit arrangement that permits the purchaser (you, the business owner) to pay for goods and services up to 30 days after the date of purchase. However, each Net 30 vendor establishes the rules of the credit arrangement. These factors include the size of the credit limit, the number of days when a payment is due (i.e. 15, 30, 60, or 90), and the penalties for non-compliance issues.

Net 30 vendors generally follow a vendor-defined approval process for each of its customers. Net 30 vendors make lending decisions based on one’s credit history (doesn’t have to be perfect), business history (if any), and any personal references provided. Generally speaking, Net 30 vendors set forth more lenient approval requirements approval than that of a traditional bank. This is one of the reasons why newer businesses find credit approvals more easily using this method.

Don’t Get No PG Business Credit Cards Confused with Unsecured Business Lines of Credit -They Are Not the Same

As noted above, a no PG business credit card offers a revolving credit line with no personal guarantees required. In addition, these net 30 vendor accounts are also provided without a collateral requirement. An unsecured business line of credit acts similarly to a no PG business credit card as it is opened without a need to pledge collateral and operates as a revolving, reusable account. However, an unsecured business line of credit has the ability to offer more flexible payment options than its no PG guarantee credit card counterparts. You also need a good, established personal credit history to get an unsecured business line of credit. You can have less than perfect personal credit (or no personal credit history) and obtain no PG business credit cards.

Both forms of revolving credit are best used for shorter-term projects but often acts as a stop-gap measure for unanticipated cash flow interruptions. Each type of line of credit remains active until the account is no longer in good standing. A no PG business credit account offers more limited spending options than a traditional unsecured business line of credit as the available credit is only offered for the products and services offered by the Net 30 vendors. Conversely, an unsecured business line of credit offers more spending flexibility as it can be used for purchases from many stores and suppliers. The decision to obtain an unsecured business requires research and time. The concepts can prove challenging so it is recommended that borrowers new to the game of a no PG business credit card speak with a lending professional.

The Benefits of No PG Business Credit Cards

No PG business credit cards offer many advantages –

• Use the funds to purchase supplies to fulfill orders.
• The credit is offered without collateral.
• The approval process is more lenient than traditional lender underwriting requirements.
• You don’t need perfect personal credit (or an established personal credit history to get approved).
• It is a great source of working capital.
• Net 30 vendors may choose to report to business credit repositories, helping you build a business credit history.
• Credit limits may exceed credit limits offered by traditional creditors.

Concerns Using No PG Business Credit Cards

• There are expenses such late fees & interest if the borrower fails to pay on time, or not at all.
• Borrowers must spend cautiously to avoid overspending and unnecessary fees.

How to Get Approved for up to $250k NO PG Business Credit Cards

Without a documented business history to establish creditworthiness, it can be challenging for entrepreneurs to secure business credit from a traditional lender. Choosing to establish a vendor trade line in your business’ name is one of the smartest ways to create a business credit history. When you have your first Net 30 vendor trade line in place and, have managed it prudently for some time, it is time to establish two, three or even four more no PG business credit cards in the business’ name. When several no PG business credit cards are being used simultaneously, a business owner must now cautiously and carefully manage them for at least a year. Prudent credit management includes the following –

• Paying monthly payment on time, every time.
• Attempting to pay the credit line’s balance each month, if possible
• Never maxing out the credit line as this shows a lack of spending control.

These credit management strategies will enable you to get approved for up to $250,000 (or more) in No PG business credit cards (over time).

How No PG Business Credit Cards Help Entrepreneurs Build Business Credit

It is likely that this first vendor trade line will start with a small line of credit; which minimizes the vendor’s potential loss. The next step, however, is critical to your credit building success. You must use the Net 30 line of credit judiciously and often. Consistent, prudent credit use establishes an unblemished credit profile. A stellar credit profile opens the doors to many financing possibilities. In general, it is a smart business strategy to use the funds from Net 30 vendor credit lines for short term financial needs. Vendor lines of credit, which essentially act like no PG business credit cards,are due in payable in either a month (or two or three), which is the very definition of the concept of short-term.