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You are here: Home / Archives for build business credit

How Shelf Corporations Improve Business Credit Building

October 1, 2009 By Marco Carbajo

There has been a growing interest in shelf corporations from many of the investors, small business owners and entrepreneurs that I have the opportunity to speak with on a daily basis who are looking for ways to speed up the business credit building process.

I felt that by sharing some insight with you on shelf corporations and what are the key business credit building advantages will better prepare you in making a more educated decision if this is an option you’re thinking about.

Now, let’s first cover the basics.

What is a shelf corporation?

A “Shelf Corporation, also known as an “Aged Corporation” (or “Aged Company” when referring to an LLC, for example) is a corporation that is already formed, but not in use, and ready for “purchase” by a new owner. There are many reasons that people purchase shelf corporations, and there are certain things to look out for when considering one of these “ready-made” corporations which I will cover shortly.

Now one of the questions I’m sure you’re thinking is “Why should I purchase a Shelf Corporation?”

Shelf corporations allow you to engage into business, credit, or real estate agreements as an established company without having to go through the long waiting period of establishing a brand new corporation.

Most potential creditors or business resources are less likely to extend credit or lend to new or up-start corporations. By approaching them as an established corporation or company, the more likely your business has the chances of more access to credit lines, banking relationships, leases, and so on.

For example, during the initial stages of building business credit there are some vendors that will only extend credit to companies that are at least 2 years in business. In some cases they also require a personal guarantee if the business is less than a year old. By purchasing a shelf corporation that’s three or even ten years old can drastically increase the number of credit opportunities available to you.

Now don’t worry if your existing corporation is less than 2 years old because you’ll still be able to obtain business credit, but the amount of banks that you can apply at will be limited. If you’re planning on starting a corporation or setting up another corporation then this may be an option to entertain.

Shelf corporations can also offer a large increase in borrowing power as well as enhanced credibility for your business when talking to customers and lenders.

Remember the age of the owners does not necessarily correspond with the age of the company.

When the H.J. Heinz Company advertises that it was established in 1869, it doesn’t mean that all of the shareholders are well over 100 years old. It simply means that the company was filed in that year. You can take advantage of similar credibility benefits when advertising to customers.

The age of your company can give greater credibility to customers and lenders than a business that was recently established. So, purchasing companies with established credit and existing credit lines can give the business a big financial boost.

Here are the Top 5 Advantages of a Shelf Corporation

1. Saving time and expense of forming a brand new corporation

2. Instant access to contract and government contract bidding. Most states require that your company be in business for a specified minimum length of time.

3. Instant credibility and an appearance of corporate history.

4. More attractive to potential investors and investment capital.

5. Faster and easier access to banking relationships and lines of credit.

If you currently have a shelf corporation then you can use it to obtain credit card funding. As far as purchasing a shelf corporation, given the current credit crunch, banks want to see more than even being a 2 year old corporation. So if your only interest is in applying for bank financing keep in mind Shelf Corporations have no business history, tax returns, financials and existing revenue.

Caution!

There are many companies that sell shelf corporations that have done business in the past, DO NOT buy these! If a shelf corporation has done business in the past and you purchase it you also assume all past liabilities of that company. So if the company has had any lawsuits brought against the corporation from the past you are now liable because you now own the corporation.

It’s critically important that the shelf corporation you are considering not have any inherent or lingering liabilities. For the most part, this can be assured by looking into the history of the corporation and ensuring that the extent of its business activities were limited or non existent except for the application of an Employer Identification Number and maybe the formation of a bank account.

Shelf corporations can be a great option if the proper due diligence is taken and there are many aged shelf Nevada corporations, Delaware corporations, Wyoming corporations, offshore corporations and Canadian Corporations that are available but be sure you do your homework.

Are you considering a shelf corporation?

 P.S If you are interested in a LLC Shelf corporation that’s 1-2 years old let me know and I would be happy to help you. I have several Nevada LLC’s with Wells Fargo bank history. Email ceo@startbusinesscredit.com if you’re interested.

Remember – “Formal education will make you a living; self-education will make you a fortune.” ~ Jim Rohn

About the Author

sp_image-435950341-1242740704.pjpeg

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below To Your Success! =>

Filed Under: Business Credit Tagged With: aged corporation, bank credit, bank history, bank loan, bank loans, banking credit, build business credit, build corporate credit, business credit card, business credit loan, business credit strategy, business finance, business loan, canadian corporation, corporate credit card, credit education, delaware corporation, nevada corporation, offshore corporation, seasoned corporation, shelf corporation, shelf corporations, small business finance, small business financing, wyoming corporation

How Business Credit Can Make A Difference

September 30, 2009 By Marco Carbajo

Credit Card Capacity

Business credit also referred to as corporate credit, is the ability to obtain financing under the name of a corporation or business rather than an individual person. Now I’m happy to tell you how business credit can make a difference in more ways than you can imagine but first you have to realize that the only way you can benefit is by taking action. Start digging your well before you get thirsty! 

 

Don’t put your business in a position where you are desperately seeking funds to survive and/or expand.  You will find that banks and lenders are much more likely to extend credit to a business in large amounts that don’t need the funds when they apply. The best time to build busness credit is when you don’t need the money!

 

The advantages of having established business credit range from simple operational issues, all the way up to allowing your company to withstand scrutiny from a potential client or potential business partner who may gauge how reliable and proficient your company is by how well your business credit profile reads.

 

From an operational standpoint, business credit allows you to do several things such as purchase supplies, pay debts, maintain facilities, hire additional staff, compensate for a downswing or upswing in business without depleting your vital cash assets. If you establish business credit you’ll have the ability and the financial resources available to respond to market demands or growth.

 

Another advantage includes the fact that many lenders and lease providers base their interest rates on what the business credit profile and rating is for your company. Having established credit can lead to incredible savings in interest rates and much more favorable lease and loan terms.

 

So let’s suppose that you need $50,000 for a piece of equipment for your business. Without a strong business credit rating, your bank will use your personal credit only. If you get approved, you’ll have an interest rate of let’s say 18%. With a D&B report, you can lower your rate to maybe 10% and you don’t have to guarantee the loan with your personal assets. So these are just a few of the examples on how business credit can benefit your company

 

Finally, instead of putting your personal credit and assets at risk every time your company requires financing you would now be in a position to secure the financing you need with even more favorable terms and lower interest rates without a personal guarantee. That is a major difference from how you may be running your business today!

 

Some other ways that business credit can make a difference include:

 

  • Business credit cards have much higher limits than personal credit cards.
  • Your corporation has the ability to obtain 10 to 100 times the credit then you can obtain personally
  • Having the cash lines available for unforeseen expenses like expansion, equipment, operations or fulfillment
  • Prevent the risk of damaging your personal credit
  • Prevent the limits that lenders will impose on you for personal credit for you and your family’s needs
  • Reduce your tax burden and improve accounting
  • Last but not least you SAVE MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.

 

How has business credit made a difference for you and your business?

 

CLICK HERE to become a member and discover what a difference business credit can do for you!

 

 

To Your Success!

Marco Carbajo

About the Author

 marco-picture-2009-small-pic2

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below To Your Success! =>

Filed Under: Business Credit Tagged With: build business credit, building business credit, business credit, business credit cards, establish business credit, how business credit

What has Business Credit done for you lately?

September 14, 2009 By Marco Carbajo

QuestionDuring the early stages of starting and operating a business, many small business owners have become accustom to using personal credit cards to finance purchases, equipment, and even payments to suppliers or vendors. What’s even more alarming is if you personally guarantee each and every credit card, credit line, or loan for your business then you are putting your personal assets and family at risk!

 

This leads me to ask you “What has business credit done for you lately?”

 

Statistics show that over 65% off all small businesses use credit cards on a regular basis; but the problem is less than half of those credit cards are actually in the business name.

 

The single greatest challenge facing small business owners is awareness. Less than ten percent of business owners in America know about let alone understand how business credit is established or how to even generate a business credit rating.

 

Business credit can do much more than personal credit can or ever should do for your business!

 

So what is business credit?

 

It’s the ability to obtain financing under the name of your business entity without using personal credit. Business credit should be separate and based on the corporation’s credit worthiness not yours! Recently Entrepreneur Magazine was quoted as saying “You should differentiate your personal credit from your business credit.”

 

Entrepreneurs and small business owners who have a separate legal entity for their business have a unique opportunity that no other individual or sole proprietor has. It’s the ability to establish a business credit profile that is completely separate from a personal credit profile.

 

If you think you’re business is doing just fine and you don’t need the credit think again! The reality is that every business will at one point require an influx of cash in order to cover unforeseen operating expenses, development, expansion, legal fees, inventory or a range of other items the business may require in order to grow. Adopting a ‘cash only’ strategy is a good plan but should never be the only plan.

 

After the recent economic downturn today’s small business owner is facing a new era when it comes to business financing. Banks, lenders, suppliers, leasing companies and others are making adjustments, adopting new rules, and facing new regulations in the lending arena.

 

Now more than ever you need to be pro active and establish a new level of financial preparation including a strong business credit profile, a favorable business credit rating, and a solid bank rating. Wells Fargo states “The longer you delay establishing business credit, the longer you delay taking advantage of business loans.”

 

One of the key advantages of having business credit is instead of putting your personal credit and assets at risk every time your company requires financing you would now be in a position to secure the financing you need with your businesses’ credit. Here are some other benefits of building business credit:

 

1. Any debt you accumulate for the business would only report to your business credit file not your personal credit file.

2. Eliminate the co-mingling of funds–and this includes the “co-mingling” of credit profiles so you won’t jeopardize the protection of the corporate veil.

3. Protect you and your family from personal liability when you get approved solely on your businesses’ credit file.

4. Improve your personal debt to credit limit ratios by transferring the balances of business debt used with your personal credit to your business credit.

5. Eliminate personal liability you have on your existing business debt by balance transfer from personal credit to your business credit.

6. Increase your personal credit limit availability for you and your family.

7. Increase your businesses’ ability to obtain cash credit 10 to 100 times greater than you can obtain personally.

8. Improve the appearance of your businesses’ funding capacity and stability.

9. Eliminate inquiries on personal credit when applying for business financing.

10. Last but not least you SAVE MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.

 

CLICK HERE to become a business credit member and discover what business credit can do for you!

 

To Your Success!

Marco Carbajo

About the Author

 marco-picture-2009-small-pic2

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below =>

Filed Under: Business Credit Tagged With: build business credit, build corporate credit, building business credit, business credit, small business financing, start business credit

How to Build Bank Credit for Your Business

September 8, 2009 By Marco Carbajo

bank-creditRecently I shared the benefits of building business credit with each of the business credit agencies. Separation of personal and business credit is a must for small business owners in order to eliminate personal liability and protect the integrity of the corporate veil.

 

 

While this strategy creates a Paydex, Small Business Credit Risk Score, and Intelliscore for your business it’s not the only rating you should pay close attention to.

 

Your business will also need to establish effective ‘Bank Credit’.

 

Bank credit is totally separate from building business credit and in no way affects your ability to build strong business credit scores.

 

“Bank Credit” makes your business more credible in the eyes of lenders.  In this post, I want to share with you the ‘3 Main Components of Building Bank Credit’ which are:

 

  • Business Bank Account & History
  • Bank Rating Number
  • Obtaining Your First Business Bank Loan

 

So let’s get started!

 

Business Bank Account


The first step in establishing positive bank credit is to make sure that your business name and mailing address, as listed on your business bank account, matches exactly how your business name and address appear on any legal paperwork that’s been filed with the State. It must also match exactly with the name and address that appear on your Federal EIN paperwork. If it doesn’t match you’ll have to correct it immediately!

 

Business Bank History


Most lenders also determine the age of your business by the date you first opened your business bank account and not the date that appears on your Incorporation, LLC, or EIN paperwork.  However, in some instances banks may also require 24 months seasoning from the start date of your business as well.

Your business banking history is vital to your ability of being able to secure larger business loans with banks. Lenders will look to see how long that relationship has been established, so once you get your account set-up don’t change banks!

 

The longer your business banking history, the better the borrowing potential you have.

 

Bank Rating Number

 

 Your business bank account reflects how you manage your cash flow. Lenders want to know that your business cash flow is capable of handling the business debt and expenses on a consistent basis. Bank accounts with low average daily balances, or that show many NSF returned checks, can get your business loan applications declined right away.

 

If a loan amount requires a $1,000 month payments then lenders need to see at least a “Low 5” bank rating. Your “Bank Rating” is based on your average daily minimum balance over the last 3 months.

 

Bank Rating

Account Balance

 

Bank Rating

Account Balance

Low 4

$1,000 – $3,999

 

Low 5

$10,000 – $39,999

Mid 4

$4,000 – $6,999

 

Mid 5

$40,000 – $69,999

High 4

$7,000 – $9,999

 

High 5

$70,000 – $99,999

 
 
 
 
 Bank ratings consist of three factors…

 

 

1.  The first factor is your balance rating. This rating is your average minimum balance maintained in your account over a three (3) month period. $10,000 will rate as “Low 5”, $5,000 rates as “Mid 4”, $999 rates as “High 3”, and so on.  You need to maintain a minimum “Low 5” bank rating ($10,000) for at least 3 months. Unfortunately, without at least a “low 5” rating, most lenders will assume your business has little ability to repay.

 

2.  The second factor is the bank rating cycle which is three (3) months. You’ll want to have at least a low 5 for the three months prior to applying for larger loans.

 

3.  The third and final factor has to do with how you manage the account.  NSF (bounced) checks destroy bank ratings.  From this point forward, NSF checks are something you can’t let happen. I would suggest that you add overdraft protection to your account as soon as possible.

 

Obtaining Your First Business Bank Loan

 

Getting your first business loan from a bank can seem like an impossible task. The majority of the business loan applications at banks get declined because banks won’t lend to just anybody … or will they?

 

This one business bank loan strategy provides a powerful boost to building business credit fast. The business bank loan needs to be in the exact name of your company. It should be under your Federal EIN and report to the business credit agencies, specifically Equifax Small Business and Corporate Experian.*

 

So how do you accomplish this? Under this Bank Loan Program you will be securing a business loan with a certificate of deposit (CD) at the bank that is extending the business loan.  You’ll make a deposit into a CD account at an SBA preferred lending bank. Then, you receive a business loan for 100% of the value of the CD.

 

This process works very well and works every time as long as you’re personal credit scores are not in the low 500 range. If your scores are in the low 500’s, it’s best to try smaller business banks and talk to an individual banker first.

 

The Benefits of a Secured Bank Loan

 

  • It will appear on your business credit report just like any other loan.
  • There will be no note in the file, or on credit reports, that show it as “secured”.
  • It will make your business credit report stand out to other lenders and creditors who obviously know how difficult it is to get a business bank loan.

 

If you’re personal credit is a large issue and you just can’t find a business bank to do the CD program for you … don’t worry. You can still build your business credit without the bank loan; the bank loan just makes it faster. 

 
 

 *N.E.C. members are provided access to our list of banks who have done the CD-Secured Business Loan program

 

  

Remember – The secret of business is to know something that nobody else knows. ~ Aristotle Onassis

 

 
To Your Success!

Marco Carbajo

About the Author

sp_image-435950341-1242740704.pjpeg

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below =>

Filed Under: Business Credit Tagged With: bank credit, bank history, bank loan, bank loans, bank rating, banking credit, build business credit, build corporate credit, business credit agencies, business credit card, business credit loan, business credit strategy, business finance, business loan, business plan, business planning, business plans, corporate credit card, credit education, intelliscore, paydex, personal credit repair, personalcredit, small business banking, small business finance, small business financing

How To Build Business Credit With Bad Personal Credit

September 1, 2009 By Marco Carbajo

Credit ReportAfter presenting to REIA of Macomb last week it was clear to me that building business credit was a HOT topic for real estate investors. It was interesting to find that small business owners and real estate investors have similiar questions when it comes to business credit.

 

As a result of the economic downturn many find themselves being faced with less than perfect credit.  While credit repair companies are springing up all over the country there are few like United Credit that can truly deliver.

 

But in the meantime can you start building business credit with bad personal credit?

 

Absolutely!

 

There are vendors, suppliers, leasing companies, and even cash credit issuers that will extend credit to your business solely based on your businesses credit rating.  In order for you to obtain cash credit without a personal guarantee first requires you to start establishing strong business credit with vendors & suppliers.

 

The key is identifying which vendors & suppliers offer the following:

  • Credit with no personal credit checks
  • Credit with no personal guarantee
  • Credit for start ups (great for new entities)
  • Monthly payment reporting to business credit bureaus

 

If this part leaves you scratching your head don’t worry we have all this work already done for you if you’re interested. As long as you understand the fact that cash credit without a personal guarantee can only happen once you have established a strong business credit profile.

 

Here’s a quick comparison on personal credit vs. business credit.

Business Credit Comparison.png.jpg

As you can see there are HUGE differences and the one in particular that should get you really excited is the unlimited amount of business credit files you can establish! 

 

For a complete list of our preferred business credit sources join my business credit community today!

 

Remember – Abundance is not something we acquire. It is something we tune into. ~ Wayne Dyer

 

To Your Success!

Marco Carbajo

About the Author

sp_image-435950341-1242740704.pjpeg

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below =>

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Submit Your Email and Receive ‘8 Steps to Building Ultimate Business Credit’ audio FREE ($597 Value)


Filed Under: Business Credit Tagged With: build business credit, build corporate credit, building business credit, business credit, business credit building, business credit help, business credit strategy, business credit without a personal guarantee, how to business credit, start business credit

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