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Due to the patriot act, all financial institutions are required by law to request the identification of the "person" wanting to borrow the money for the company. The patriot act was put in place to prevent terrorist activities and to prevent money laundering. However, the main confusion amongst people is the requested "personal guarantee". People tend to think that when a bank requests a personal guarantee, then its the end of the road if you have bad personal credit. 95% of banks that request a personal guarantee will look at your personal credit, but this is always not the case. There are very few companies that require you to put down a personal guarantee, but will consider granting you credit if your company's credit meets the criteria and will put your SSN on file in case of default. So please do not feed into the hype that a personal guarantee is the end of the road if you have poor personal credit. There really is no estimated time line that your company has to be in business to obtain financing. Many corporate credit applications note that if you have not been in business x amount of years that you will have to personally guarantee the account. However as long as your corporate business report is sufficient enough, then 9/10 they will skip the personal guarantee. But age definately always helps because 95% of small businesses fail within the first couple of years according to the SBA. Hope this helps. Email me at CorporateCommercialServices@yahoo.com if you have any other questions.
Financing a Start-Up Business
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Have you tried to get a LOC through D&B? If so, how did that go???
I spent decades in commercial lending with some the largest banks in the world and I never, ever use business credit to make a decision. We always pulled personal credit histories of the person responsible for the loan - i.e. business owner, partners, managing members, corporation president, majority shareholder, etc.
Very few lenders use D&B - they don't use it to make decisions nor do they report to it.
What I am trying to say is that all lenders will always pull your personal credit history. They know that people try to hind their poor personal credit by signing up with D&B.
Your best and fastest path to getting your business off the ground is to improve your personal credit history. But, even with that, getting a loan from a bank may still be difficult - banks usually don't lend to start-ups - they want to see three plus years of profitable operation as well as credit and collateral. But, some may participate with the SBA and have programs for you. There are non-bank lenders that only care about credit and repayment ability and some product specific lenders (like equipment lenders) that work and have programs for specifically for start-up companies.
Business Money Today
"Have you tried to get a LOC through D&B? If so, how did that go???"
First of all, DnB does not issue LOC's to businesses. They are strictly a reporting agency. I have been in the business credit industry for a few years now and I can say that for a fact that there are a limited number of companies who will extend loans, LOC's, and/or credit cards to a business who is deemed corporate credit worthy. Yes it is imperative that one has his/her personal credit in order before they apply for any credit because 90-95% of lenders want to look at personal credit of the officer before lending. Now where does the remaining 5% come from? The 5% are the very few companies that extend "cash" credit to borrowers strictly based on your business credit. As I said in another post, the Patriot Act requires that lenders know who their borrowers are which is through their SSN for verification purposes. That does not neccesarily mean that they will run the credit of the borrower. They just want to make sure you are who you say you are. This is a "BIG" misunderstanding amongst people wanting to build corporate credit. An example is someone who is blacklisted with banks to open a checking account if there is some sort of debt owed. That same person can open a corporate checking account which mainly goes based on your tax id number. But to open the account you must present your SSN for verification purposes. The same applies with the few banks that lend based on corporate credit.
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I am searching for financing for my start up company. I'm establishing an LLC through the state of Texas. My question: If I have a business TIN (Tax Identification Number) and establish a business line of credit through D&B can I get approve through the banking institutions using my TIN number only or will I have to used my personal social security number along with the TIN in order to get approved? And if so how long will I need to be established as a company in order to be considered for approval?
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