establishing business credit?

Anyone here have any experience with establishing business credit as an LLC, after your personal credit rating is entirely destroyed? Any thoughts or experiences?

There are a good number of scams out there that claim you can get business credit regardless of your personal credit but it's not that easy. You can buy an aged shelf corporation with good Paydex score and get business credit cards, etc. but these types of aged corps can run into the 5-6 figure range and even then, depending on the type of credit, you may have to submit personal info.

It sounds complicated. I'm hopeful for a way that I can establish credit on a startup with little capital. I'm sure you can tell that personal credit is a problem; signing personally would not work out.

This is not possible. Anyone who tells you otherwise--get solid SOLID proof.

I personally have spent $5,000 trying to accomplish this after destroying my personal credit.

I have a friend who has associates who have spent upwards of $200,000 trying to accomplish this mythical "business credit seperate from personal credit"

The logistics don't work. The teachers who preach that this is possible started with prestine personal credit scores.

I'd venture to guess it *could be done with an aged shelf corp and an incredibly experienced and knowledgeable CPA and Tax Attorney working together with you, but if you are that liquid then you might as well fix up your personal credit....

In my situation I have decided to do what I can as fast--or as slow--as I can with liquid funds. As they build up I can pay to fix my credit situation. It takes time too--but money can fix a lot of things that time cannot, and vis versa....

Kind of feels like it would take more than a lifetime to fix my personal credit at this point. It becomes easy to want a fast and simple fix to the situation.

Have you tried to get a secured CC with only your LLC and an EIN attached to it and not have your personal info attached?

Capital one, HSBC, Orchard Bank... those guys may offer a program like that.

Just a suggestion as I have been out of the commercial financing world for close to 4 years now.

You can't do it with small businesses. There's simply no way.

Every corp starts with zero credit history. The banks/credit card companies do the next logical thing - they check the owners credit history. Typically they are going to check everyone who owns more than 9% of the corporation.

You can do things to speed up getting credit though. Here are a few. You need cash to do this.

Go to a bank and meet with a business loan officer. Tell them you have terrible credit but you want to work on building a relationship with them. To start with you want to secure a line of credit with a cash deposit. In short, you are going to give them $x in a savings account (that you can't touch, at least to start) and they will give you an equal line of credit, with the credit being secured by the cash.

This is a safe deal for the bank - not all of them do it, but lots will.

Once you get this credit start to use it - frequently - and pay it off in full every month.

After a few months - assuming your company has receivables - have another conversation with the bank. Tell them you would like to expand your LOC to finance incoming work. In the past when we did this we knew our profit margin was about 30% - so for every $100 we made it cost us $70 to do the work.

Explain to the bank that you want to finance new contracts/customers at times to fund the work - and use these key words - AND OPTIMIZE YOUR CASH FLOW.

Quick fact - Over 90% of businesses that go out of business are profitable - they just have cash flow problems and run out of cash one day and can't pay their bills. Banks know this and they LOVE LOVE LOVE people who know how to optimize cash flow.

Anyway, the bank will (possibly) let you get advances on new work/customers coming in. So when you sign a new customer the following happens:

1.) Bank sees signed contract
2.) Bank knows your approximate profit margin, for this example 30%
3.) Bank loans you (short term loan, usually < 90 days) 70% of the face value of the contract so you can complete the work.
4.) You can have multiple contracts rolling over at any given time.

Here's the sweet part - you now bill your customers with your name but the bank's address. The bills include the contract number and the checks go to the bank.

The bank takes the check, keeps it's 70% plus interest (usually a low amount) and deposits the rest into your accounts.

Or....do as I have done with my ruined credit--forget about credit for now.

We operate in a world online that doesn't require credit at all.

A paypal merchant account requires NO CREDIT CHECK. This is for invoice billing and for pay through paypal links.

This was a revelation to me as I had been thinking about a merchant account for a long time--but merchant accounts typically require credit checks.

Paypal also offers a virtual terminal--bam...instant credit card transactions.

@Super I don't mind sharing that my credit is ruined for at least another 7+ years.

I don't let this ruin me. In a digital world cash is actually just a click away.

Study the things on this forum--we don't need credit--do not let the fallacy of not having credit ruin your future.

I spent 2 years worrying daily about my credit situation. It was wasted time. Find another way. There are many. I am intent on finding them as well.

BassTrackerBoats said:

Have you tried to get a secured CC with only your LLC and an EIN attached to it and not have your personal info attached?

Capital one, HSBC, Orchard Bank... those guys may offer a program like that.

Just a suggestion as I have been out of the commercial financing world for close to 4 years now.

Click to expand...

I had not considered that; I will look into that option. I did not realize that secured cards were available for businesses. Worth looking at. I will check and post more here shortly.

infinitehorizons said:

Or....do as I have done with my ruined credit--forget about credit for now.

We operate in a world online that doesn't require credit at all.

A paypal merchant account requires NO CREDIT CHECK. This is for invoice billing and for pay through paypal links.

This was a revelation to me as I had been thinking about a merchant account for a long time--but merchant accounts typically require credit checks.

Paypal also offers a virtual terminal--bam...instant credit card transactions.

@Super I don't mind sharing that my credit is ruined for at least another 7+ years.

I don't let this ruin me. In a digital world cash is actually just a click away.

Study the things on this forum--we don't need credit--do not let the fallacy of not having credit ruin your future.

I spent 2 years worrying daily about my credit situation. It was wasted time. Find another way. There are many. I am intent on finding them as well.

Click to expand...

Thanks so much. Your post really encourages me. I assumed that all merchant accounts required credit checks. That is good news about paypal.

All of my credit problems have kept me from sleeping for months. Two weeks ago my daughter (she is 17) was not able to open a checking account in her own name, because my credit is so poor. This was really the bottom of the barrel for me.

infinitehorizons said:

This is not possible. Anyone who tells you otherwise--get solid SOLID proof.

I personally have spent $5,000 trying to accomplish this after destroying my personal credit.

I have a friend who has associates who have spent upwards of $200,000 trying to accomplish this mythical "business credit seperate from personal credit"

The logistics don't work. The teachers who preach that this is possible started with prestine personal credit scores.

I'd venture to guess it *could be done with an aged shelf corp and an incredibly experienced and knowledgeable CPA and Tax Attorney working together with you, but if you are that liquid then you might as well fix up your personal credit....

In my situation I have decided to do what I can as fast--or as slow--as I can with liquid funds. As they build up I can pay to fix my credit situation. It takes time too--but money can fix a lot of things that time cannot, and vis versa....

Click to expand...

Stop running around promoting wrong information, OP yes you can establish business credit i have done it with a number of LLC's i was suppose to write up a thread exactly how to do it, but i just been so busy. and if u want proof ill screen shot one of my business cards from staples BP etc..i never use my SSN for business purposes sit tight and ill write up a little something for you.

I'll run through a little kinda quick,

1. Must have a LLC or corp
2. You must have a DUNS Number (Duns & Bradstreet) google it
3. Understand what Net30, Net15 companies are and how to use them as tradelines to build your paydex score
4. Everything will take time it's not a overnight thing

I'll even teach you how how to rebuild your credit using passbook loans and tradelines...YES! piggybacking still works depends on what your trying to do with it.

BassTrackerBoats said:

Have you tried to get a secured CC with only your LLC and an EIN attached to it and not have your personal info attached?

Capital one, HSBC, Orchard Bank... those guys may offer a program like that.

Just a suggestion as I have been out of the commercial financing world for close to 4 years now.

Click to expand...

Did a little research. Orchard Bank still offers a secured business CC. Two others I was able to find some info on were Bank of America and Wells Fargo. I'm going to compare fees and look for the best terms. Do you think six months of good history with several of these accounts would lead to unsecured credit?

i'd like to know this as well. OP, i found myself in a similar predicament and decided to explore an alternative. this seems to be going quite well. go after grants instead. it involves quite a bit of work and some very skillful persuasive but i find it to be a better alternative. you will be amazed how much free money is actually sitting out there.

@GreenGoblin I will watch for your thread. A detailed tutorial would be invaluable. I'm sure that some of the best ideas are stopped dead in their tracks when ppl are stuck trying to establish business credit. Is it any more difficult today to establish business credit in this fashion, even in the face of a poor economy?

I took some pics of a few of my accounts with my iphone i just blocked out some of the sensitive information, u know some people want proof...but anyway ill write up something just give me a moment im so busy with releasing apps my head is spinning. One thing i will say is this...when establishing business credit and you get to a nice paydex score don't mess it up cause it takes a few months to rebuild it. I never ever used my SSN for none of these business accounts on my duns# ...I have lowes business account somewhere i never use.

@GreenGoblin After establishing credit for my LLC in this method, would it be difficult to lease a vehicle in my company name without any personal guarantee or use of my own SSN?

sageman said:

i'd like to know this as well. OP, i found myself in a similar predicament and decided to explore an alternative. this seems to be going quite well. go after grants instead. it involves quite a bit of work and some very skillful persuasive but i find it to be a better alternative. you will be amazed how much free money is actually sitting out there.

Click to expand...

I've been curious about grants before, but every time I look for good info, I find myself wading around in sites selling ebooks about grants instead. I just started looking around on a credit forum. Will have to see what info may be available there regarding grants.

supervortex said:

@GreenGoblin After establishing credit for my LLC in this method, would it be difficult to lease a vehicle in my company name without any personal guarantee or use of my own SSN?

Click to expand...

Possible but very hard to do but i have seen it done however a lot of dealerships don't offer that option i think Ford does don't quote me i have to research it, but not many, you have to have some Major trade lines on your business credit profile and you will have to be in business for at least 2 years before they consider it. That's why I mention it's not a overnight process for example if your just trying to get business credit cards it's a lot easier to do, but if your trying to get a Bank loan, or obtain a lease or car/truck under your business entity it's get more complicated not impossible but complicated.

The reason it's hard to get financing is because most banks wanna see financial statements from the last 2 years of the company or business entity before they even look at it, The reason for this is because most businesses fail within the first 2 years of being open, Now a shelf corp can help you with the "years in business" but then u have to make sure the shelf corp is in good standing they have no out standing debts and so on...this type of stuff u have to get a attorney involved like i said there's no quick fix.

hey i would like that info i have a small tee shirt shop

man you rock