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3 Replies Last post: Apr 22, 2008 11:45 PM by scrapqueen

When are You Separate from Your Company

Apr 22, 2008 4:53 PM

scrapqueen 2 posts since
Apr 22, 2008

Before I started my company I did research on several aspects. The one that stood out the most was the structure you choose for your company. As an individual everything was based on my personal credit so I decided to incorporate. Even now as a corporation for 2 years lenders seem more interested in my personal history than the growth of my company and establishing business credit for the company. I am wondering when will we( my company credit) and business credit be viewed as separate. Are there any lenders with interest in helping a company grow without having the owners personal guarantee? The industry that I've chosen is thriving and if I had the working capital for inventory the ability is endless. The company has started building some credit and we have a paydex score but we need more. Does anyone have any suggestion?

Thanks

Scrapqueen

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LUCKIEST 7,935 posts since
Aug 6, 2007

1. Re: When are You Separate from Your Company Apr 22, 2008 5:12 PM

When are You Separate from Your Company,
Welcome to this web site and yes that is a good question.
I am NOT a banker, BUT lets think like a bank.
The Bank is going to LEND (KEY WORD LEND) you money.
The bank wants to get the money plus interest BACK, SO they look at your
business and they look at you also.
Do you have a Business Plan?? Do you know about SCORE?? SCORE is FREE

LUCKIEST

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Lighthouse24 2,396 posts since
Oct 10, 2007

2. Re: When are You Separate from Your Company Apr 22, 2008 7:07 PM

Here's a fun thought: Suppose that this very minute, someone offered you a six-month trip to everyplace in the world you ever wanted to visit -- with first-class transportation and accommodations, and all expenses paid! Could you leave tomorrow, and if so, is it reasonable to expect that when you came back on Thanksgiving, your business would have continued to profit and grow?

If not, that's why lenders are still looking at you personally and not the company. Until a small business can essentially function with or without the owner/founder, his/her personal guarantee is the only real guarantee a lender has. If you are at that point now, put together a loan or investment proposal document that shows it -- you'll probably have several options for obtaining funds that don't require your personal guarantee.

Hope that helps. Best wishes.

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scrapqueen 2 posts since
Apr 22, 2008

3. Re: When are You Separate from Your Company Apr 22, 2008 11:45 PM

in response to: Lighthouse24

Thank you for your response. To address your fun thought yes I can leave at this second and know that my company will continue to grow and profit. My company's strength is due to my employees and their hard work and effort. My personal guarantee is not the only "real" guarantee a lender has because nothing in life itself is guaranteed. You mentioned putting together a loan or investment document to show it....what lenders use this method because I have yet to encounter one. Maybe it's my area or the bank that I deal with. They seem to lack knowledge and understanding of the industry I'm in.

Regards,

Scrapqueen

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ForumsStarting a Business

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When are You Separate from Your Company

Apr 22, 2008 4:53 PM

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