Business Credit for new LLC

[Account Closed]

so I have good credit, but even with a personal guarantee, Lowe's would not give my business a line of credit..how do you start getting credit for a new business when even a place like Lowe's willl not give your new LLC a chance?? Also, a second question....with different investors or after so many units, I will create additional LLCs...how do people manage getting credit for their multiple brand new LLCs these days?? thanks

[Jeffrey K.]

If lowe's will not give you credit you have a problem. That is the easiest big box store to get credit at. If these are rentals (in many LLCs), form a management company to collect the rents, own the trucks, own the tools, and pay the bills. I just keep track using P.O.s at the store so I know to what property the money went. This is not 100 percent, but it is as close as you are going to get at my company size.

[Account Closed]

thanks jeffrey..i'll talk to the cpa about this strategy..i wonder if anyone else is having trouble with brand new llcs getting credit? as i said, my personal credit is fine

[Account Closed]

Business credit is very hard to obtain and build for your business, I'm in the process right now myself.

I'm no expert but I'll give some ideas what I have research learned and tried..

Business credit has 3 tiers with each tier being different has far has vendors. Must meet all requirements in each tier to move onto to the next.

Key points to have in tier 1:

Do not have a business address at a P.O. Box have a regular street address.

Free Duns Number ? Go to site listed below:

https://sbs.dnb.com/secure/eupintro.asp?bhc...hcd2=1079765286

Vendors Report to Bureaus & Provide Trade Reference. To obtain a paydex score (credit score) you need 5 trade references. Apply at the vendors listed below.

http://www.kinkos.com/products/accounts/legal.php (Kinkos)

http://www.dhl-usa.com/sbc/smbiz.asp?nav=sb (Airborne Delivery Services)

http://www.uline.com

http://www.viking.com (Office Supplies)

http://www.officefuel.com (Office Supplies)

Retail Credit Requirements

Best Buy ? (800) 811-7276 ? Requirements:
PG: No
Paydex: Yes ? 65+

At least 2 years in business.

Chevron ? (888) 243-8358 Requirements:
PG: Yes
Paydex: No

At least 2 years in business, DNB check revolving acct ? net 30. Apply on-line. Reports to D&B and Experian.

Conoco, Inc. ? (800) 764-9500 ? Requirements:
PG: No
Paydex: No

Net 30-full balance, apply on-line located in 23 states, ask for locations. Reports to D&B and Experian.

Diners Club ? (800) 234-6377 ? Requirements:
PG: Yes
Paydex: No

Corporation accounts (minimum 5 cards) 3 years in business, $200,000 net worth, each card holder gives personal guaranty. Call to apply. Does not report to D&B or Experian.

Exxon Fuel ? (800) 438-3996 ? Requirements:
PG: Yes
Paydex: No

Net 30-full balance, 1 year secured or 3 years in business. Apply on-line. Does not report to D&B. Reports to Experian.

Fry?s Electronics ? (714) 688-3000 ? Requirements:
PG: No
Paydex: No

3 trades, 1 bank trade, net 30-full balance. Must submit financials and balance sheet before approval. Does not report to D&B or Experian

Grainger.com ? (310) 327-7370 ? Requirements:
PG: No
Paydex: No

Net 30-full balance. $1,000 min. credit limit, business license needed along with 1 bank trade and 2-3 other trades. Reports to D&B, but not to Experian.

Home Depot ? (800) 685-6691 ? Requirements:
PG: No
Paydex: No

2 years in business. Revolving account and/or net 30. Apply on-line. Reports to D&B and Experian.

JC Pennys ? (407) 788-4022 ? Requirements:
PG: No
Paydex: Yes

At least 6 months in business and paydex score required with no delinquencies. Call to apply. Does not report to D&B or Experian.

Kinko?s ? (800) 488-3705 ? Requirements:
PG: No
Paydex: No

Revolving account net 30, apply online, will check D&B number and verify business address. Reports to D&B only when requested by D&B. Does not report to Experian.

Lowes ? (800) 445-6937 ? Requirements:
PG: No
Paydex: No

Revolving account or net 30. 3 years in business. Reports to D&B only.

Macys ? (800) 933-6229 ? Requirements:
PG: No
Paydex: No

2 years in business and some credit history. Call to have application faxed to you. Reports to D&B and Experian.

Mobil Gas ? (877) 959-1007 ? Requirements:
PG: Yes
Paydex: No

Net 30-full balance, 1 year secured account or 3 years in business. Apply on-line. Reports to D&B and Experian.

Neiman Marcus ? (800) 685-6695 ? Requirements:
PG: Yes
Paydex: No

Must be in business 2 years and signer on account gives personal guaranty, call to have application mailed to you. Does not report to D&B, but does report to Experian.

Nordstroms ? (800) 964-1800 ? Requirements:
PG: No
Paydex: No

Net 30-full balance, 3-4 trades, verify 2 (trades should be net 30 accounts as well) call for application. Reports to D&B and Experian.

Office Depot ? (800) 729-7744 ? Requirements:
PG: No
Paydex: No

Revolving account, net 30. Must be incorporated. Print on-line and fax. Reports to D&B and Experian.

Office Max ? (877) 633-4236 ? Requirements:
PG: No
Paydex: No

Must have some credit history. Apply on-line. Payment has to be made after invoice is received. Reports to D&B and Experian.

Orchard Supply ? (408) 281-3500 ? Requirements:
PG: No
Paydex: No

Net 30, 3 trades with at least 3 months activity and 1 bank trade. Call to get application. Does not report to D&B or Experian

Phillips 66 Gas ? (800) 648-4199 ? Requirements:
PG: No
Paydex: Yes

Duns report pulled, 3 trades, 1 bank trade needed. Reports to D&B and does not report to Experian.

Radio Shack ? (888) 773-2435 ? Requirements:
PG: No
Paydex: No

Revolving Account, net 30. Reports to D&B and Experian.

Sears ? (800) 917-7700 ? Requirements:
PG: No
Paydex: No

2 years in business, revolving acct, net 30, call to get application faxed to you. Reports to: D&B and Experian.

Sinclair Oil Gas Card ? (800) 340-3466 ? Requirements:
PG: Yes
Paydex: No

At least 4 trades, net 30-full balance, personal guaranteed required from each cardholder. Does not report to D&B or Experian.

Speedway Super America Fleet Gas Card ? (800) 643-1948 ? Requirements:
PG: No
Paydex: No

Net 30-full balance, at least 1 year in business.

Staples ? (800) 669-5285 ? Requirements:
PG: No
Paydex: No

Revolving account net 30. Reports to D&B and Experian.

Texaco ? (800) 839-2267 ? Requirements:
PG: No
Paydex: No

Need some credit history. Apply on-line. Reports to D&B and Experian.

Union 76 ? (800) 944-7676 ? Requirements:
PG: No
Paydex: No

2-3 trade references, 1 bank reference, duns check done on large businesses. Does not report to D&B or Experian

Wright Express Fleet Card ? (800) 395-0812 ? Requirements:
PG: Yes
Paydex: Yes

Some credit history, 3 years in business, net 26, full balance. Reports to D&B only.

If you want to build business credit for other LLC's I would suggest to do the same systems to all at once so your leverage is all growing the same

Hope this helps

[Uwe S.]

#1 Gregory, thats a long list, thank you.

Bryan, I become today a mail from the bank next door to my "new" propertie in Cleveland. I asked about opening a business account for a company managed and owned by a foreigner.

The service people told me, its not a problem to open with the EIN and when I wish I can become an overdraft (line of credit) of $7,5k on this account without any hassles and collateral.

I have no credit score and got a credit (not inquired) and you from the US with fine credit score has nothing. Ridiculous.

-Uwe

[Account Closed]

gregory..that was quite informative..how the heck did you get all that info?? and uwe..i agree..it's crazy..so does that mean you are setting up credit cards or lines of credit for the property in the US? i think tha would be a good idea

[Uwe S.]

Bryan

I hadn´t inquired for these line of credit, my goal was/is to open an business account for the rent and all utilities/taxes. But I particularised my situation maybe the decesive factor.

-Uwe

[Leonard Holmes]

An approach that I used for an LLC in a different field was to start with a business bank account and debit card. Use the debit card at Lowes for now. Pretty soon your bank will want you to get a credit card from them too. Once you have a major credit card in the business name Lowes will probably fall in line as well.

[Account Closed]

thanks for the advice...i do use a business account and its debit card religiously..hopefully after a bit of time, the money and offers will come in..thanks again

[Scott Hubbard]

Originally posted by Bryan Alenky:
gregory..that was quite informative..how the heck did you get all that info?? and uwe..i agree..it's crazy..so does that mean you are setting up credit cards or lines of credit for the property in the US? i think tha would be a good idea

Looks like he may have borrowed that information from creditboards.com.

[Josh Green]

Originally posted by Leonard Holmes:
An approach that I used for an LLC in a different field was to start with a business bank account and debit card. Use the debit card at Lowes for now. Pretty soon your bank will want you to get a credit card from them too. Once you have a major credit card in the business name Lowes will probably fall in line as well.

not necessarily true. many banks require a business to be in business for 2 years before they will give any form of credit. ALSO, real estate investing is considered 'high risk' to many banks and may require even more qualifications IF they will even lend to them.

[Brandon Turner]

Try USBank if you have one near. I have two business C.C. from there and my wife has one. We have decent credit (right around 700) and was approved for around 5500 on each card. Both were new businesses, sole proprietorships, and had no problem at all getting those cards. You still need to get a UBI from the IRS, but that is instant, online, and free.

The best part, those don't report to your personal credit report unless in default. So if you rack up some (responsible) debt from your business (I use mine for repairs on the rehabs I am doing) your own personal credit score won't be affected.

Good luck

[Brandon Turner]

oh, also. Once you have that business card in use for a time it is so much easier to get larger lines of credit with the same bank. Good luck.

[Ryan Mertz]

I am new to BIGGER POCKETS and I want to become a BiggerPocket player in the REAL ESTATE GAME!

I am learning and haven't even made my 1st deal yet but Im doing my home work and getting prepared.
I was wondering about business and credit and was going to start 2 LLC's in the up coming months.
I remember reading a book about a professor at a university who held a class for students interested in business and real estate and was teaching these 18-22 year olds how to achieve a million dollars in credit and actually have cash flow (money in there pockets) of $200 a month or more with $200 start up money. It was amazing and I hope I can summarize this book up in a few short 1,2,3s. even though im going off what i remember of the formula they used!

When you open any kind of bank account regardless if its business or if its personal you want to have atleast $500 in start up money these days in each account (different times,same game I assume)
1.Deposit $500 into both personal/ business accounts
(this shows the bank you have money in your company and that it actually holds a value (at least to them)
and you personally have money saved so clearly your not an idiot.
2.Apply for a business loan of $200 or more. really whatever you need,want,and can afford to pay . bargain something of a low percentage rate so you can work out the numbers at bank and set the loan to be paid back within lets just say 6 months. or really anything you think! its your credit
the numbers and time just mean how big or small your are building.
ALSO
If they deny you any kind of loan it would seem impossible because you are asking them to borrow there money while you have money in there bank!!
You could always offer your account as collateral
say you have $500 in the bank
you should be able to get atlest $500 from the bank.
there risk is minimun in this situation.
They loose nothing and you loose your credit you are trying to build if you default. YOU GUYs FIGA DEAL ME?
also when you think of percentage rates remember your account will also build interest which takes away from your debt interest you will be paying and also maximizes a tax refund in some states if not all for example claiming interest or maybe losses
ok
.Now you have the extra $200
you have 6 months to pay. You can just hold on to the money and pay the loan off and pay the interest out of pocket on the loan. ( this is what i call buying credit) slow or fast !! but you will build this way. it just depends on your hustle.
.Now find another bank that offers free money if you open up a bank account thats if you can (sometimes they will give you $50)
put that $200 in there keep it there get the $50 now you just let another bank pay for your loan.
now go to this 2nd bank and ask them for a personal loan of $100 ( these are such small numbers it would seem wrong for them to deny you)
( i guess the basics of it is this .use your money as collateral for a loan.pay it back exactly to terms no sooner definitely no later. Use the loan money to open another bank account.
ASAP . that way you get the benefits of interest on your accounts.
5.keep doing this using bigger numbers and more banks if you want.
*there is no law saying you cant have bank accounts in all the banks in the world . you better just remember what you have or it will be in the states lost and found property.
6. also if you guys now of any banks that pay for referals let me know
for instance my bank will pay me $25 for each referal
lets network strategize a actuall plan for this formula and start making money and building credit just off using bank loans with a little start up money. and referals so that we can get some money back.
internet banking is great because you can transfer money from bank to bank so easy so you will most likley only have to leave the house on rare occasions. I think my bank even has a loan application on line! SO there it is keep it a secret
THANKS

and all in all you did all this for your business. so hopefully with the extra funds and meeting the loan officers and getting to know them and people /banks beginning to trust your business you can start expanding if you would like and start thinking of other businesses that you may be able to write a plan for and present to maybe a lender who has worked with you before .

Its just a thought.

(also if you need a reason for the loan, simply state you are doing it for credit and that you will gladly pay the interest up from out of you pocket!! That should be straight forward enough. Also if you think it helps tell them that you need the small amount of money to buy materials ,tools, or something of that nature to get a job done and that after the job you will have the money. Its all about socializing. Meeting face to face and being honest.)
I dont see anything hard about this. So if any of you are interested keep in touch.

[Clifton Burse]

Great info

[Account Closed]

Sometimes it's best to go through quality business line of credit (BLOC) brokers to get BLOCs because they have more access to lenders and know how to submit complete applications to the lenders. Even if you have to pay the points (can be paid out of the BLOC) as long as the fees aren't too costly and the terms of the BLOC are competitive I would consider all options.

It would be a time consuming task to go directly to all of the lenders when the broker who has had the experience with the lenders can save the investor the time and energy to guide you directly to the lenders that will approve you and not waste time.

In my view it's all about finding the path of least resistance when it comes to obtaining BLOCs. Wouldn't you want to use the saved time to actually work on deals?

David H.

[Account Closed]

david, you private messaged me to tell me how i can qualify for a business line of credit...why don't you say it here for all of bp to see??

[Account Closed]

Hello Bryan:
Sure no problem. I will share with you the experience my business partner had in acquiring this line of credit. As a note of full disclosure my business partner had to go through a broker to obtain this line of credit.

My business partner completed a two page application form. The bank ran his credit. In two weeks his credit card for the LOC, starter checks, and welcome kit was delivered to his home address ready to use.

Here are the details:

Introduction to Personal Line Of Credit:
-Unsecured Personal Line of Credit
-Up to $50,000 approved.
-No Doc Required
-Approved in 2 Weeks
-Issued from a division of B of A

Details:
-First year interest only payments @ 1.99%
-Open check book up to L.O.C.
-Open credit card account attached to L.O.C.
-800# for wire transfers

Right now form what I've seen in the capital markets is that it's impossible to get any credit for startup companies.

From my experience open up a few LLC's with generic names and build up the paydex scores slowly over a course of 2 years.
After 2 years have passed and you've built up the paydex scores then you should slowly apply for BLOCs.

But for the momment if you do come accross unsecured personal lines of credit from banks then I would use those funds for now until you are able to open up BLOCs under you LLC after two years.

I hope that helps.

David H.

[Account Closed]

in the pm, yousaid that you qualified for the LOC.....

[Bryan Hancock]

Originally posted by Bryan Alenky:
so I have good credit, but even with a personal guarantee, Lowe's would not give my business a line of credit..how do you start getting credit for a new business when even a place like Lowe's willl not give your new LLC a chance?? Also, a second question....with different investors or after so many units, I will create additional LLCs...how do people manage getting credit for their multiple brand new LLCs these days?? thanks

I used BCS Credit:

http://www.bcscredit.com/

several years back prior to the crunch and they were very helpful. I suspect that this is quite a bit harder now. If memory serves Lowes was a 2nd step....we got some extension with others first to show Lowes some decent trade lines. I have a line with Home Depot now, but I don't think I have one with Lowes. I suspect that their credit underwriting is similar since they are competitors.

[Richelle T.]

This thread is super helpful, thanks everyone for the input!

[David Dachtera]

I may have missed it, but I didn't see mention of business credit scores.

The big one is, of course, D&B. They compile a score for your business called "Paydex". It's a scale from 0 to 100, where 80 means you pay as agreed. That's the minimum score you want to target. Always pay before the due date!

There is also Equifax and Experian business. I don't have that info top-of-mind, but they equate roughly to FICO in the personal credit world, only they deal with business credit reporting.

The big one, though, is Paydex. Buy stuff on Net-30, pay it on time and build your entity's Paydex score. Someone posted a list of vendors with which to build your entitiy's credit base earlier in this thread. When you have 7-10 such lines established, that's a good time to start looking for business credit cards.

When you have business credit cards carrying balances and paying on time, THEN you can think about tradelines with vendors like Staples, Home Depot, Menards, Lowe's, etc.

One of my mentors actually teaches business credit: how to establish it, how to build it.

[Emma Watson]

If you want loan for small business then first of all know about the rules of the lender, where you want to take a loan for your small business. Prepare your document as Personal and business credit history, business financial statements, your business plan, Personal guaranties they are important while taking a loan. Check out the eligibility for a small business loan at https://merchcash.com/resources/post/eligibility-for-a-merchant-cash-advance

[Daryl Askew]

When I got a card for my construction company I got it through the bank where I opened my business account. Hope this might help.

[Eric P.]

Awesome thread! Impressive that it's still active after all these years... Also pretty cool that it was started in the height of the credit crisis & people on BP were still working together & helping each other figure out ways to get credit - very cool & yet another sign of how helpful the BP community is!

One thing I didn't really see addressed though was Brian A's 2nd Q about getting credit for each brand new LLC you start... I assume that every time you start a new LLC you have to restart the credit building process for the new LLC, right? Man, what a pain - all this mess just to shield yourself from liability.

[David Dachtera]

@Eric P.,

Just as you had to establish your own credit - rather than ride your parent's "coat-tails", each company in which you intend to acquire assets needs its own credit.

David J Dachtera