Maria asks…
How do I build corporate credit on my LLC?
I have just bought an LLC to start investing in real estate. What is the best way for me to start building corporate credit with my new company?
admin answers:
Unfortunately the business you’re starting doesn’t make use of suppliers, say as a manufacturing company would, so there is little that you can do to build enough credit to purchase properties.
You can apply for credit cards that the business would use, like Office Depot, Staples, Best Buy, etc. They will probably want a personal guarantee, and you’ll probably have to give them one to get started.
Next, in about 3-6 months you’ll start seeing solicitations from credit card companies for corporate cards, such as AX, Citi, Chase, B of A, etc. The credit card companies cull the states corporations databases regularly an usually solicit new companies.
Do you have any working capital to buy your first property? Can you borrow from your house, and lend that to the company? All of that helps in getting your first property, so you can show an income statement to a bank to get your first corporate loan.
Another source: some attorneys, especially real estate attorneys, may lend you money, albeit at a high rate.
What the banks really want to see is that the business can make money. And in RE that’s hard to do unless you have substantial capital to get started.
One last source that you should SERIOUSLY look into are the social lending or peer-to-peer lending sites such as www.prosper.com or www.lendingclub.com . These sites sign up investors (could be ordinary people like you or me) willing to lend to others that either don’t want to borrow from traditional sources, or can’t. In fact, you’ll see groups of investors that focus on lending to people who want to invest in RE, or other businesses they’re familiar with or involved with.
(quick example, you want to borrow $15,000 for 5 years, willing to pay 8%. You submit your request, along with a brief story about the needs for your funds. The investors review your request, and if they like what they see, they bid X amount of dollars towards your loan, at the rate you want, or better, or worse (which you don’t have to accept). Lets say you get 150 investors each willing to put up $100 (they could put up more, or less), at your rate. You get the loan! You make one payment to the lending site, and the site reports your loan to the credit bureaus, so you build credit).
Good luck with your venture!
Linda asks…
I incorporated my business, now I would like to start to build my corporate credit, how do I go about doing ?
I incorporated a new businees 1-02-06 and would like to get corporate credit so I can obtain the needed cleaning supplies and equipment, I’m going to need to get started, could someone please tell me the quickest way to build up my corporate credit without going broke? I would appreciate it . Thank you. Sincerely Submitted
th3750
admin answers:
I just answered a similar question. Check the list to see if you spot it.
Go to a bank and open a business account (checking). Inquire about a business credit card. You will speak to a rep (probably on the phone) and basically complete an application for a credit card as you normally would. This is your business account, but it is underwritten by you. From that point forward, all of your charges on that account will be reflected on your company’s credit report, not yours.
Over time and with some credit, you will be able to do the same for a car loan and maybe even a line of credit; all in the company name.
Best of luck
Betty asks…
Is there a website showing corporate credit ratings from multiple sources?
I want to know a website that shows credit ratings from, for example, Dominion Bond Rating Service Limited, Fitch Ratings, Moody’s Investors Service, Rating and Investment Information, Inc.and Standard & Poor’s in respect of a particular security or corporate bond.
Thank you.
free websites please!
admin answers:
Wall Street Journal has what you want. Www.WSJ.com
Susan asks…
Do you know of a good book on the topic of advanced corporate credit?
I’m looking for a book on an indermediate to advanced level to learn about corporate credit and the bond markets. More specifically, how to analyse companies from a credit perspective by looking at the appropiate ratios, understanding how the bond market works, and generally, how to manage a corporate bond portfolio.
admin answers:
One is “Advanced Credit Risk Analysis: Financial Approaches and Mathematical Models to Assess, Price, and Manage Credit Risk” by Didier Cossin and Hugues Pirotte. It’s a few years old now, but still relevant. Another is “Credit Risk Modeling: Theory and Applications” by David Lando.
Paul asks…
How do I establish and get corporate credit?
I was talking to a business associate and he told me there is a quick way to establish and get corporate credit. This included establishing some trade accounts and also getting a D & B listing or a debix score. Does anyone know how to do this? I have a great start-up company and am making a profit, I am lacking credit to make purchases on items that would surely help me grow and also increase revenue. I am a LLC
admin answers:
The only true way of establishing a credit rating for your business is to go to the bank where you do your checking. Talk to the Finance Manager and work out your companies net worth along with providing them a business plan to outline when, how, and why you need the credit.
If the numbers look good, they will give your company a line of credit. Often if you need equipment that you know will increase your bottom line and can be paid for in short time, often a 30 to 90 day note can be obtained from the bank.
Stay away from credit card gimmicks if you can. It looks better for your business if you can establish a high line of credit from a bank.
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