ForumsFinancing Tips

Yes we have been in touch with SCORE and they have helped us with a number of things along the way. But I will tell you that the SBA loans DO require collateral (i.e. - your home, real-estate investments etc...) which is why we are looking for alternatives. You might be thinking: "Well if you really believed in this business you wouldn't be afraid to put your house up for collateral". And to answer that we do believe in the business but we also want the business to be truly a separate entity.

And we haven't applied for ANY loans with the banks. I've just been calling aound to quite a number of lenders and asking questions. So there aren't any unecessary credit inquires in our accounts.

UNLESS your business has an abundance of liquid (sellable) collateral, banks will require your personal guarantee. If the bank thinks the businesses' collateral could easily be sold to repay the loan, they will not require a personal guarantee.

Their reasoning is that if the business experiences a downturn, you might walk away and leave them holding the bag (a bad debt). Having your personal guarantee improves the likelihood they will be repaid promptly. The personal guarantee demonstrates your commitment to seeing the debt is repaid - and legally makes you responsible for the debt in the event the business doesn't/can't pay up..

By regulation/law, the SBA REQUIRES personal guarantee on their small business loans, and the pledging of your personal residence.

If you were the lender, wouldn't you want this same assurance?

Loans to the business, in the business' name DO NOT show up on your personal credit bureau. The fact that you are a business loan guarantor does not affect your credit bureau score (perhaps it should?).

jg

Hello this is Jamila Serrant (Owner/Founder of Y-Not Magazine),
I too own an LLC and have to agree with your statement regarding "Banks are not in the Business of helping Small Businesses". Who would have thought until you go into business on your own? I am in the process of searching for funding and have hit the same brick walls. However there is a company that claims to have a step to step approach in helping businesses to establish credit as its own entity (using its own EIN for credit purposes). The URL is: www.b2bcredit.com Please perform a Business check on them with the Better Business Bureau because I did not use their services yet. Lastly, I would love to make contact with you since we are both seeking funding for our LLC. Good Luck to us both.

Not sure what banks you guys are working with but most major banks are in the business of helping small businesses. We as business owners mean more in profits to them than the regular person with a checking account. If you have gone to your bank, shown good business credentials and a quality personal and or business credit history and they still won't help you, then it is time to switch banks!

I know personally that both Wamu and bank of america offer business lines of credit where they look at business and/or personal credit histories to make credit decisions.If banks don't lend money, they don't make money, so trust me they are in the business of small business.

There is a wonderful service available that you may want to look into. They will show you how to seperate and establish personal from business credit. They also guide you on how to establish loans for your business. Watch the presentation in the site. It is phenomenal! Yes there is a small fee, but it is well worth it.
http://www.creditcoach101.com

For Luckiest (and whoever else may be interested) I checked out this out, and here's what I found. Anyone, please feel free to post corrections if I misunderstood something.

http://www.creditcoach101.com will take you to a site operated by Corporate Credit Concepts. This company does NOT provide business loans. It sells you, the business owner, a series of credit building programs.

If your credit score is under 680, you must enroll in the Basic Credit Builder Program, where the program "helps" you obtain cash credit (a credit card), mainly by suggesting that you pay your currently overdue bills, and pay your next six months of bills on time. Once you "follow the program" and raise your score to 680 or above, the credit that will be available is estimated at up to $25K, but no minimum amount is guaranteed. The fee for this Basic program is $995 up front and $2,995 once you get a credit card.

Then you move up to the Advanced Credit Builder Program, where the program "helps" you qualify for a corporate line of credit. When you complete this program, the credit that will be available is estimated at up to $100K, but again, no minimum amount is guaranteed. The fee for this Advanced program is $995 up front and $4,995 once you qualify for a line of credit. (This is presumably where the person who posted the original question would begin.)

Then comes the Ultimate Credit Builder Program, with a fee of $995 up front and $6,995 after the program "helps" you establish another company and obtain cash credit for it (more about the reason for that later).

Finally, after two years, you get to the Elite Credit Builder Program, with a fee of $12,995, all up front. This program helps you establish D&B and Paydex files/ratings so you can qualify for up to a $250,000 cash credit line (but as always, this is an estimate, no minimum amount is guaranteed).

So . . . all you need to do is spend $31,000 on these programs and pay all of your bills on time for two years, and you will be able to qualify for a credit card and bank loan! If that sounds like a deal, by all means check it out.

The website frequently mentions that you can get a corporate line of credit in as little as a week. It's true, you can. You purchase what's called a Shelf Aged Corporation -- the attorney in the office next to me creates them and sells them (lots of corporate agencies and attorneys do). The older they are and the better their rating, the more they cost. (It would appear that you'll create one or more of these yourself as part of the Ultimate program.)

Again, if someone has actual experience with these programs and would be able to elaborate on them (or correct anything I might have misunderstood), please post!