ForumsFinancing Tips

First, be aware that asking for the social security numbers of the principals does not, in and of itself, constitute your jointly obligating yourselves with your corporation for the credit. The actual loan document set forth whether or not that is the case. In fact, no lender will provide financing to the corporation alone (without personal guarantees of the principals) without seeing that the principals are clean themselves. This is also a KYC (know your customer) and AML (anti-money laundering) mandate.

Think of it from the lender's point of view. Not all borrowers who have built good corporate credit are themselves people you would want to lend to. So often the very element that determines if a lender will make a loan to a corporation by itself, is the credit of its principals. Only your good personal credit can substantiate a lender's decision to lend fund to your corporation without your personal guarantee.

Having said all that, few lenders will provide any credit (other than equipment leases) without a PG. In order to reach the status where you can get such financing, a borrower typically has to be publicly traded with more than 5000 shares a day trading at over $5, or have more than 25 shareholders and net worth of over $5 million, in addition to the strong corporate credit you have built.

Businesses can establish credit in large amounts ($25k or more) with no personal guarantee, without even a credit check, if you agree to hold the proceeds of the loan on deposit. Then you can make monthly interest payments at 4.9% apr for a while, before returning the deposited loan proceeds to repay the loan.

This builds business credit in real dollar amounts because it can be done and reported to D&B and Experian Business Credit. You can have more than one account at a time.

One other possibility: The above lender will give you the option of refinancing their loan to you, using a BofA or other bank loan or bank line of credit. To get it done, the original lender will post an amount equal to your deposited funds as collateral with the bank. Now you become the source of a big deposit and a cash-secured loan or line of credit for bofa or another bank. There is a decent chance that you could get this loan or line with no PG, given your other good credit, if you are willing to disclose your social security numbers, etc.. See http://www.creditloader.com/

BuynSell,

Congrats on you're $2M in sales. I'm a banker and I have to say EVERYONE looks at you differently when you have over $1M in sales!

If youwere told you can only get up to $100K you are talking to the wrong banker. Most branch bankers can only submit loans up to $100K (we call this a streamlined application). You should be talking to someone who can work with larger paramenters. This means lost business to the branch when it gets kicked up, so be prepared to be persistant. An honest branchl banker should give you a proper introduction to the right person. Also, when you do a streamlined app, a computer, not a person is reviewing you're loan. With loan application over $100K, you must include your Financial Statements, which tell their own story....

For you information, that 15% of gross is more like 10% (but that isn't written in stone); banks a little tight with their money right now. 15% was last year. To get approved your FICO should be upward of 675; so you're borderline. Not much you can do with debt to income ratio unless you've recently paid down debt and you can show it.

I know that doesn't answer everything, but I hope it helps.

Regards,
Bryan
www.bankpig.com

Hi Ctal108,

Separating personal credit from business is doable and recommended. You establish business credit just as you do your personal. Open lines of credit under a Dun & Bradstreet number, which you have to purchase. For more information view my blogpage at www.moreheadsconnections.blogspot.com - See Your B2B Credit Coach post.

Take care,
TJ Morehead

We actually work with a program for establishing seperate business credit but even more importantly or primary finance consulting program, The Ultimate Funding Solution, does one better and deals with helping people get funding from the bank they do business with by providing resources to overcome any approval objections (such as no credit, no collateral, no cash flow or bank has reached funding max) If interested in speaking further about these programs, email me your information to ajones@abcsolutions.cjb.net