Aged Corporation Secrets » Business Credit Lines

Applying for business credit without being age of majority?

admin — Thu, 01 Oct 2009 16:58:59 +0000

I am sixteen and running my own business. It is registered in Ontario as a sole proprietorship. I can’t get credit because I am under the age of majority. If I had registered it as a corporation, would I be able to get credit? Since the company would be an entirely separate legal entity.

You cannot incorporate if you are under the age of majority. Someone over 18 would need to register the corporation for you.
The corporation can get credit as long as it is creditworthy, just like an individual can.

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ARC Loans Offer Small Businesses $35,000 For “Immediate Hardship”

admin — Mon, 21 Sep 2009 17:06:59 +0000

from Small business owners have credit lines pulled – BusinessWeek by John Tozzi

Small businesses that have been recently profitable but are having trouble meeting debt payments can now apply for Small Business Administration-backed bridge loans to help. These loans are designed to keep otherwise viable companies from sinking because of “immediate financial hardship.”

The ARC Loan program (for America’s Recovery Capital) offers up to $35,000 in interest-free financing that business owners can use to pay short-term debt obligations that they’d otherwise be unable to meet: loan payments, business credit cards, leases, payments to suppliers, etc. The SBA doesn’t make the loans directly — banks and other lenders do. But the SBA pays interest to the lender and guarantees 100% of the loan. Small businesses can use ARC loans to cover up to six months of payments on another debt. After six months, the borrower’s repayment is deferred for a year, and then repayment of the principal will be spread out over as much as five years.

So, you could borrow $30,000 to make your $5,000 commercial mortgage payment for the next six months. You won’t have to start repaying the $30,000 until a year after your last disbursement. Then the repayment would be spread over five years, with monthly payments of $500. The SBA pays the lender prime+2% interest for the life of the loan.

Eligible businesses need to have positive cash flow in at least one of the last two years. Two-year projections should reasonably show that the company can make all its payments, including ARC repayments. And the funds can’t be used to pay any debt that’s more than 60 days past due. Businesses also have to show evidence of immediate hardship, like a drop in sales, trouble meeting payroll, or a credit line cut off.

The SBA will finance up to 10,000 ARC loans, says SBA spokesman David Hall. That doesn’t sound like much, but I’m not sure how many companies fit into the narrow range that these loans target. They’re not intended to be life support for businesses that would fail in two years anyway, nor are they meant to be attractive financing for companies that don’t need it. Hall said there has been lots of interest in the program since it was announced.

There’s some question whether banks will participate, especially because they’re not allowed to charge fees on ARC loans. (Will the banks that took bailout funds themselves really refuse to make these 100% guaranteed loans because they’re not profitable enough?) More from the Wall Street Journal.

The basics are here. To apply for an ARC Loan, the SBA says you should contact your lender directly. To reach an SBA rep to learn more, fill out this form.

The SBA doesn’t have any numbers yet on how many applications are coming in. If you’re trying to get one of these for your business, let us know what your experience is like. Is your bank participating? Is your company eligible? Will the loan really help? And how long will it take to get it? Tell us in comments below.

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What’s the future of small business credit?

admin — Fri, 18 Sep 2009 16:59:59 +0000

from Small business owners have credit lines pulled – BusinessWeek by John Tozzi

What’s the future of small business credit?

We’ve been writing and thinking a lot about this lately. It’s a peculiar time: We’re in the middle of a recession that was incubated by several years of too-easy credit. When loose lending caught up with banks and other finance companies, they pulled back sharply, and continue to raise credit standards for business borrowers. At the same time, regulators are beginning to get serious about stopping abuses in the credit card industry, though the reforms leave out small businesses.

This morning I read Steve King’s latest installment (PDF) of the Intuit Future of Small Business report, focusing on small business credit. Here are a couple of the trends he points out:

1) Shift toward smaller institutions. Community banks and credit unions are among the most ready lenders right now, because they avoided the riskier securities that blew up the big banks’ balance sheets.

2) Unsecured credit is disappearing. Business owners often use consumer credit – their own credit cards or home equity loans – to finance their companies, but those sources of credit not secured by business assets are drying up.

That second trend is worrying, because small business’s credit needs are changing. More and more companies sell services rather than products, and business takes place online. It takes less money than ever to start these types of ventures, but their costs aren’t things that banks are used to financing. I think of it like this: Secured bank loans are Business Credit 1.0. What’s the 2.0? Instead of vehicle or equipment loans, these entrepreneurs need to pay Web developers and buy server space. Instead of inventory financing, they need to buy Google ads on search keywords. That often means they need less money than companies making widgets, but they don’t have hard assets to use as collateral. Try explaining to your banker that you need a line of credit to buy $20,000 worth of paid search ads each month.

That explains why credit cards, an easy source of unsecured debt, became so popular. But credit cards aren’t stable financing. (The NY Times has a good story this morning about what happens to small business owners when their credit card companies reduce their limits.) Most business owners I speak to who borrow on credit cards say they wish they had better alternatives.

It seems like there’s a clear market need for new types of small business financing. So let’s start a discussion. What does the future of small business financing look like?

Here are some ideas to get started:

Kiva and other peer-to-peer lenders. The industry has run into problems with regulators and higher-than-expected charge-offs. But Kiva’s success overseas shows the model’s potential, and the company just began funding US entrepreneurs.

Community development lenders. Focused on lending in communities poorly served by banks, CDFIs are mostly nonprofits and don’t require the same level of returns that commercial banks do. Could the CDFI model be broadened to become a mainstream source of credit for businesses in all communities?

Crowdfunding. Not too far from peer-to-peer lending, but in this case business’s customers are also financiers. An unproven idea to be sure, but it could work for the right type of venture.

What other creative sources of credit are entrepreneurs using? Which ones can scale? What does Small Business Credit 2.0 look like? Tell us in comments or on Twitter.

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Your Personal Credit and Your Business Credit History

admin — Wed, 16 Sep 2009 17:02:59 +0000

By : Pamela Williams – When establishing a separate credit history for your business, does your personal credit matter? Does it make a difference whether or not you have good personal credit? As a business owner, why should you be concerned about your personal credit score?

Your Personal Credit and Your Business

As a new entrepreneur, you may need to apply for a loan in order to finance your business. Without business credit, lenders would be looking at your personal credit history instead to determine whether to approve or decline your application. Thus, having an excellent personal credit or a high FICO score would surely win you an easy approval from your preferred lender. Consequently, if you have a low FICO score or a questionable credit, you may find it more difficult to get approved for a loan.

On the other hand, you may also be able to obtain the loan you need by applying for a bad credit business loan. Lenders who offer poor credit business loans always approve clients regardless of the status of their credit. However, these loans are expectedly more expensive than loans that require good credit.

Clearly, the status of your personal credit score makes a difference in getting the financing you need for your business. But what happens after your loan has been approved? What’s the next step in building your business credit? Why should you establish a separate credit history for your business?

Establishing Your Business Credit

As soon as your loan has been granted, you should take the necessary steps to establish a separate credit for your business. Make sure that you’ve obtained all the necessary permit, licences, tax id numbers, and registration numbers that are required for businesses. Afterwards, register your business with a business credit reporting agency like Dun & Bradstreet or Experian Business.

Remember to submit your monthly loan payments on time to build good credit. At the start, any delays or misses on your payments will also reflect on your personal credit report. Why is this? Since your personal credit history was used on opening up the loan, your credit report acts like a co-signer for your business. Therefore, it is crucial to keep up with your payments not only to build a good business credit but to protect your personal credit as well.

After some time of consistent payments, you should have already established your corporate credit. You may need to wait a year or more before you can completely separate your business credit report from your personal credit report.

New businesses are just like a teenager who’s just starting to build a credit history for himself. At first, a student may need a co-signer to get a loan but once approved, a student can slowly build his own credit history and after a while, he can easily apply for new credit without relying on other people’s credit. Clearly, if you plan to venture in business, preparing your personal credit is a must. Although a good personal credit history isn’t necessary required to start a business, it is definitely an advantage.

Author Resource:- Pamela Williams is a Loan Consultant, Internet Marketer, Writer and owner of BusinessCreditCardSite.com, a finance company in Las Vegas, Nevada that provides support for businesses all across the US particularly with obtaining business credit cards. Visit http://www.businesscreditcardsite.com

Article From Articlebliss (Published: July 2009)

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TOP 5 REASONS TO ESTABLISH BUSINESS CREDIT

admin — Mon, 14 Sep 2009 16:10:59 +0000

Too Many business owners are using their personal credit to finance the launch, expansion or growth of their business. A majority of business owners have no idea what business is or how to establish it. By following a few simple steps any business owner can establishing business credit, therefore, separating their personal credit from their business credit.

When business owners use personal credit card to pay for business expenses, the debt of the business reports back to their personal credit reports which lowers their scores because their business debts hurt their personal debt to income ratio.

To help prevent business owners from damaging their personal credit, every business owner should follow the simple steps of establishing business credit. By establishing business credit the debt of the business will report to the business credit file and not the personal credit file. Establishing business credit will also help the business build a strong business credit file so loans, lines of credit wont require the business owner to sign a personal guarantee.

Here are just a few reasons why every business owner should establish business credit.

1. Establish creditability. You cant expect to walk into a bank and ask for a business loan with no business credit or business history. By establishing a good business credit profile you will be able to secure the financing your business needs.

2. If your business should fail, you would still be legally responsible if you used your personal credit to finance your business.

3. Saving money. Thats right, business credit rates are typically lower than personal credit rates. A few percentage points in interest mean thousands of dollars in the long run.

4. Float your business through tough times. Even though everything make be going great currently, you never know when your company will take a turn for the worse or when economic times might change. By establishing business credit you will be prepared for the down time.

5. Get the money you need. Lets face it, without the money you need to finance the launch or expansion of your business you really wont be in business at all. Dont make the mistake of using your personal finances to finance you business.

The are many, many more reasons why you should establish business credit. We have all heard the saying, “keep business expenses separate from personal expenses,” right? The only way to do that is to set up your business properly in the first place by establishing business credit.

If you are interested in learning…

What rights does a business owner have if there is incorrect information on a credit report?
How do I obtain a business credit score?
What do business lenders look at in order to extend business credit?
Where do you find companies that grant credit?
Which companies report to the business credit bureaus?
What credit cards companies do not require personal guarantees?

Then I suggest you start the education process of learing how to establish business credit!

Corporate Credit Concepts makes it easy to establish business credit. To obtain your free report on how to build business credit and obtain Unlimited Financing CLICK HERE

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How long does it normally take for a bank to approve business credit lines

admin — Tue, 01 Sep 2009 17:57:59 +0000

Also, how long does it take to approve business credit lines and a short-term business loan? I know what the terms are and what you need to bring in with your application…I’m just not sure how long the process takes. Any advice will help. Thanks!
if you gave them all the information maybe 24 -48 hours. they run the credit report in 20 minutes and can give you an answer the next day. or same day if they are fast about it.

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Business Credit Lines

admin — Fri, 28 Aug 2009 21:46:59 +0000

Statistics show that 94.7% of all small business owners feel their only financial resources are their local banks or personal credit cards… even though their local banks often require them to pledge their personal homes & land as collateral. Here are some tips that can help you with Business Credit Lines. First of all, getting approved for a small business loan is definitely easier than getting personal loans… regardless of your personal credit scores. Additionally, getting the right types of corporate credit is absolutely critical: if you want to protect your personal assets, minimize the risk of a personal lawsuit affecting your business, and to your ability to weather the economic changes that happen overnight. All business owners must be much more proactive about developing relationships with the right types of lending institutions. You usually want to start your application process with out-of-state, national lenders… not your local or regional banking institutions. National lenders typically won’t require a personal guarantee or your social security number. I’ve attached a basic roadmap you’ll need to follow, if you need a small business startup loan, a business debt consolidation loan, a bad credit business loan, or a government business loan. Ultimately, you need to find a competent professional that can help you navigate through the process of building a strong corporate credit rating. Finding a competent business loan expert will give you a head start on your competition & also let you focus on running your day-to-day activities… instead of dealing with the hassles of establishing a strong business credit rating. An excellent business credit score can help your company’s image, overnight. You need to prepare yourself with these very basic questions, before you apply for any business credit. 1. How is your business structured? Is it a sole proprietorship, C-corporation, S-Corporation, Limited-Liability Corporation (LLC), Partnership, or Trust? 2. How long has your business been recognized by your State & Local government? 3. Has your company ever had derogatory information reported against it to either of the two (2) most popular business credit reporting agencies, Dun & Bradstreet or Experian? 4. Are your company permits, licenses and registrations current? 5. Does your business have a physical address, or are you trying to use a U.S. Post Office Box instead? 6. Is your business telephone number recognized by directory assistance? 7. Are your incoming telephone calls professionally answered in your business name? 8. Have you established a business checking account? 9. Have you registered & asked for an Employer Identification Number (also known as an EIN) from the IRS? If your answer to the first question was a sole proprietorship, partnership or trust; I urge you to re-establish your company as a corporation or LLC. I’m not going to provide you with legal advice, but many CPAs and attorneys highly recommend LLCs (Limited Liability Corporations) as a way of protecting your personal assets & estate… in the event of any lawsuits being filed against your company. As a sole proprietor, your personal assets are at direct risk of seizure or forfeiture when faced with most types of legal action. Additionally, if you are applying for business loans in a corporation’s name… most lending institutions will not require you to provide any personal guarantee! A corporation can still face difficulties applying for business credit, if it has been in business less than 2 years or had previous credit problems reported against it. Here are some ways to fix these problems. – Purchasing a “shelf corporation” or “aged corporation” that’s been in good standing with your State government (for longer than 2 years) can drastically improve your chances for small business loan approval. – You can attempt to repair your business credit rating by writing dispute letters to Experian or Dun & Bradstreet, which isn’t always possible. – Some corporate credit experts will help you find, select & purchase an established “shelf” or “aged” corporation, some of which already have strong credit ratings established… saving you alot of hassles! I cannot stress this enough… you MUST have a physical address (not a PO Box) if you want to establish a solid business credit rating. The same thing is said for telephone numbers & the way incoming phone calls are handled. Would you lend money to a company that does not appear to have a physical address or documented telephone number? And, don’t forget to always keep your small business permits, licenses & registrations current… and always keep copies of these documents in case a potential lender asks for this information. Business checking accounts are a must. Again, this proves stability to your potential lenders. Here are a couple of tips for you, in case you’ve had any checking accounts closed by a financial institution. Pay off the outstanding balance (if any) that’s being reported by the bank, or open a checking account at a bank or credit union that doesn’t use the ChexSystems credit reporting system. Most credit unions don’t use ChexSystems, and you can always find a list of banking institutions in your area that don’t use ChexSystems… by simply doing a search on Google, Yahoo or MSN. Small business credit ratings are tracked using your business name, business address and employer identification number (EIN). You can apply for & receive an EIN at the IRS’s website (irs.gov). You can also call the IRS, but be prepared for long waits. Then you’ll want to obtain a D-U-N-S number from Dun & Bradstreet, the largest business credit reporting agency. You can apply for this without any fees at Dun & Bradstreet’s website (dnb.com), and you’ll usually receive this number within thirty (30) days. Do not apply for this number until you’ve prepared your self thoroughly, because any information you give to them… goes into your credit file… permanently. After you’ve obtained your D-U-N-S number, you’re probably ready to start establishing some vendor credit. Vendor credit is where many business owners start establishing business credit ratings. Simply go to staples.com, officemax.com or officedepot.com to get started. Then, you’ll also need to fax your business telephone bill & the credit application to them… on your business letterhead (which you can create using your favorite word processing software if you don’t have expensive stationery). They usually don’t require any personal guarantees (if you’ve followed the outline above), and you’ll usually receive a starting credit line of $750. This is critical & I repeat… critical! Always pay your invoices before the grace periods begin… especially on unsecured credit cards or vendor credit lines. Dun & Bradstreet will lower your credit score for every day a creditor reports your bill as unpaid while you’re within your grace period. Whereas, personal credit scores are not lowered unless you are 30+ days past your due date. Dun & Bradstreet reports what’s known as a Paydex score (your corporate credit score), and a score of 80 is very good… with 100 being the highest score you can achieve. Your Paydex score is issued once you’ve established a known vendor/credit relationship with at least five (5) creditors. There are shortcuts that will help you get much more than $750 alot faster. When using a business credit expert, most small business owners (even startups) can be approved for vendor credit lines of $25,000-$50,000 and open credit lines of $50,000, $250,000, $500,000 or more… in as little as 45-60 days… by using their knowledge of the application process & “shelf” corporations. Now, it’s your choice. Are you going to go against the grain & try to establish business credit on your own (which could prove costly to your business health, growth & survival)? Or, will you choose to utilize a corporate credit expert… allowing you to remain focused on your daily business needs? Most business owners make the mistake of trying to do this on their own… usually trying to find grants, investor “angel” money, or falling back onto the “personal credit card sword”. Don’t be a casualty like the rest. Learn more about how you can use the tools that informed, educated millionaire businessmen have used for years. These are some useful tips on Business Credit Lines check out the other posts under Business Credit Lines

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How to get business line of credit?

admin — Fri, 28 Aug 2009 02:01:59 +0000

I have excellent credit but am trying to establish business line of credit to fuel my RE investment business. Attended a brief seminar on the subject last night but not willing to pay $1,000 for the "package" that goes into detail. Can anyone point me to a website where I can learn the step-by-step details of how to develop unsecured lines of credit for my Sub S corporation?

Looking to get the buying power to help grown your small business and turn it into a large business. Need help running your business efficiently? Here you will find some of the best business credit cards available in the industry.

Here is a list of Business credit cards that could help you get your line of credit

http://www.easy-creditcard.com/business-credit-cards/

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How Do I Build Business Credit Lines?

admin — Wed, 26 Aug 2009 12:57:59 +0000

Many businesses are looking to get a loan. They soon realize they did not take the appropriate steps in order to attain that loan. For them, it is back to the drawing board or worse yet, folding. If you do not want to be one of those businesses, then you need to make sure you have all things lined up and in order. As you might have guessed, the first main step is found in establishing good business credit lines.

Please note that building personal credit and building business credit are different. Although they rely on the same principles, there are things in business credit that are not found in personal credit and vice versa.

For example, in personal credit you have laws that help establish and maintain a correct credit score. With business, there are no laws to protect you. It is up to the business owner to monitor their credit and make the necessary corrections.

1. You need to first establish a sound business structure. Make sure you are a corporation or LLC per DUN prerequisites. Establishing a solid business structure requires all licensing and tax obligation papers, etc. You want to show you are compliant with law and regulations

2. Make sure you establish and build credit by purchasing from companies that report to the major credit bureaus: Dun and Bradstreet, Experian and Equifax. You can do this by establishing a net 30 account with these companies.

There are also some aspects you should avoid when looking to build business credit. There are companies out there that look to trick the unknowing. If you are browsing through information and come to one that says you can build your business credit for a certain amount of money, you are looking at a scam. Stay far away from those as possible. Here is what some of them look like.

1. You can buy trade accounts. This is extremely against the law. If the credit agencies find out about this, they will purge your credit history. This will also not allow you to establish very good credit history later on, as it will be a permanent blemish on your business credit history. No one likes to deal with a cheat or liar.

2. There are companies out there that are called shelf companies. They will basically guarantee you a loan based on their credit rating. This is wrong for two reasons. One, you want to build your own credit and relying on someone else is the wrong way to do it. Two, they more than likely will not have the credit to obtain that loan either.

3. Make sure you have good personal credit as well as good business credit. Do not just rely on good personal credit as a back fall. Remember, you want to keep personal and business completely separate.

If you follow the steps outlined above, you will ensure that you have a good solid foundation to begin establishing business credit that is necessary for advancement and growth.

To Learn more and start building Business Credit Lines Click Here

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Getting Approved for Business Credit Lines

admin — Tue, 25 Aug 2009 23:00:32 +0000

One of the leading causes of business failure is insufficient start-up capital. But the sad reality is banks rarely loan money to those that most need help. Instead, loans are more likely to go to businesses that have been in operation for two years or more and are profitable.

An estimated 95 percent of entrepreneurs open businesses with capital from their own pockets and from relatives, friends, and others in the community. As a result, business owners need to be prepared and persistent if they want to land a business loan. For a thorough overview of this topic, make sure to read our Step-by-Step Guide to Getting a Business Loan.

The most important criterion banks use in determining whether to loan money is the company’s ability to repay. Like other corporations, banks must answer to investors and stockholders. And unpaid loans make them look bad.

When a bank processes a business loan application, it will typically ask some version of the following questions:

* How much money does the business want?

* Is the business profitable enough, and does it have enough cash flow, to service the debt?

* Does the business have collateral to cover the loan?

* Is there a reasonable balance between debt and equity?

Banks also want and expect business owners to risk their own funds in the venture. They won’t likely take a risk when the business owner hasn’t.

The types of businesses most likely to receive loans are those with a history of success in paying their bills, demonstrating their ability to meet financial obligations.

Regardless of status — as a startup or an established business — the first step in trying to obtain financing is for the business owner to develop a rapport with the people who can provide the most help. For instance, by inviting the target bank manager to open a file on a company, the business owner can then send quarterly or yearly profit and loss statements, and when his or her business becomes eligible for financing, the bank will already know the company.

A bank will also check, and double-check, a business’s credit history. Looking at old debts and repayment histories is one of the only ways to determine creditworthiness. Small business owners with a shaky credit history (either personal or professional) have little chance of landing a loan.

It’s a good idea for business owners to check their credit histories before trying to get a loan. Correcting erroneous data or resolving any inconsistencies before applying for a loan will increase a business’s chances of getting one. For more information on your credit information, read our comprehensive Step-by-Step Guide to Understanding Business Credit.

Small businesses also need a solid business plan to inspire potential lenders’ confidence. Generally, the plan covers business operations, marketing efforts, competition, management ability, and financial projections for three years, plus a cash flow projection and balance sheet demonstrating the worth of the business. The plan also precisely identifies goals and serves as a resume for the owners and management team.

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