Questions on Corps

[chris288]

I am finally ready to jump into the business credit world.  I have been doing a part time business for a couple years, and finally looking to expand and grow.  This has been a side business, but would like to grow this under a corp.  

Which is better?  S, C, LLC?

One of the things I am finding out when searching about corporations and business credit is everyone keeps saying you have to have a 3-5 year old aged corp, otherwise lending is almost impossible.  Is this really true?  Is it worth the money to purchased an aged clean shelf corp?

I plan to PG my own corp with my personal credit scores, so I am not looking for a corp that doesnt need a to be PG'ed.  

Also, I hear about the D & B Paydex building and how that is important as well.  I see there are companies willing to offer this for a fee.  Isnt it something I can do myself, or is it worth having another company do this?  Then Experian and Equifax business bureau building?

How important are the virtual offices to have when getting funding?  Some are pretty inexpense per month and have phone lines and actual office space?

I am not looking for large amount or funding... just a couple LOC's 75-100k for my purchasing in my business.  

If anyone can give me true, accurate, up to date info on what is truly needed now when getting into the business credit world?  Some o these companies offer a lot of promises, but I am skeptical and they are pricey!!! Thousands of dollars.

Thanks for the help.

Chris

[serenitybreeze]

In today's business environment an LLC works fine. It just separates your business and personal assets. Of course if you PG anything, it takes the "wall" away and your personal assets would be available.  There are no short cuts - start out with net 30 account and build carefully.

[chris288]

Thank you for the reply.  So there is no need for the aged corp or any credit building?  Duns or anything?  So just start the LLC then start adding tradelines with my personal credit.  So get net 30 accounts and just start building.

[CreditUnionFan]

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@chris288 wrote:

Thank you for the reply.  So there is no need for the aged corp or any credit building?  Duns or anything?  So just start the LLC then start adding tradelines with my personal credit.  So get net 30 accounts and just start building.

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If you're going to PG, and your personal credit supports it, you don't need to step through a series of Net30 accounts necessarily. Or, perhaps you can make do with a smaller amount initially, to build the LLC's credit profile.

When I formed my LLC, my first application was for the Chase Ink.

[chris288]

 I have been flipping cars for a couple years as I am in the business and have a buyer.  I am wanting to get into higher end vehicles and need LOC's or lines so I can purchase 2-3 25k-50k vehicles at a time and put them out there.  This is my business that I am looking to use the Corp for.

I really need my business to have availability to purchase auto's is all.   I have been using my personal credit, but cannot do the high end vehicles that way and have all the liability.  None of the protection a corp provides.

I just keep hearing how I needed an aged corp, with Paydex score, Experian and Equifax business credit, etc.  Just very skeptical with all I am hearing.

Also, I did not think any business's out there allowed Non PG anymore?  Thank you for the help.

I am open to any suggestions or advice.  

Thanks,

Chris

[peaceonearth]

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@chris288 wrote:

I am finally ready to jump into the business credit world.  I have been doing a part time business for a couple years, and finally looking to expand and grow.  This has been a side business, but would like to grow this under a corp.  

Which is better?  S, C, LLC?

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Varies from State to State...

[peaceonearth]

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@chris288 wrote:

 I have been flipping cars for a couple years as I am in the business and have a buyer.  I am wanting to get into higher end vehicles and need LOC's or lines so I can purchase 2-3 25k-50k vehicles at a time and put them out there.  This is my business that I am looking to use the Corp for.

I really need my business to have availability to purchase auto's is all.   I have been using my personal credit, but cannot do the high end vehicles that way and have all the liability.  None of the protection a corp provides.

I just keep hearing how I needed an aged corp, with Paydex score, Experian and Equifax business credit, etc.  Just very skeptical with all I am hearing.

Also, I did not think any business's out there allowed Non PG anymore?  Thank you for the help.

I am open to any suggestions or advice.  

Thanks,

Chris

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You're right.

You can get a Paydex (85) score in less than 60 days but, does not mean nothing to the lender.

The LLC has to be sold and stable with good revenue on the financial statments.

Lenders may ask the business owner(s) for P&L statments, bank statments etc...

In most cases, If the company is not dealing with Millions of dollars then; the Paydex is not gona help.

I

[scenery_guy]

Why don't you talk to a banker that you would consider as a lender? It's really their requirements that at the most pressing question, everything else is just fluff. Being able to fulfil the needs for a successful LOC should be goal number one. 

Speaking from experience the form of your business is the least important. You point out liability as a concern but I am reading financial liability not general liability (the actual bigger concern). You are worried that if the business fails you will lose your personal assets? What are the odds that will happen in your industry? Take a serious look and see if the typical remedy is bankruptcy and rarely resulting in personal asset seizure (unless you default with the IRS). I weighed the chances and decided simple was the best. 

Also look at the tax benefits (or lack thereof) when considering business structure. Consult an accountant for this one.  

Me? Sole proprietor with substantial sales. One tax return (it's all mine personal and business) not multiple returns. Sure I have had to explain to banks and insurance agencies why I am a sole proprietor but in the end my money is the same color as a corporation. I even do business under my legal name (no d/b/a). Kinda freaks out some clients when they put in a check request or ACH in a real person's name not a company. 

I was able to qualify for a $700K business loan for the purchase of real estate (but ended up deciding the time was not right). DId so as a sole proprietor with slim business credit file but solid personal file and a stack of tax returns and some p&l worksheets. I don't need a LOC but if I did I am sure it would not be an issue.