How to get my S Corp Lines of Credit?

Question

I would like to build the credit of  my company under its own Tax ID. My company was started back in  late 2007 and at that time I had some Investments with partners in Real Estate. Well as you know the crash happened and having partners was not a good idea at that time. My credit has been fixed from my mess back then and is clean with 1 trade line as I rebuild my own personal credit too. But I am more interested in building my companies credit, no issues but no credit either since 2007, recently approved $2k gas credit card for my company, which is a start. So how should I proceed to get unsecured lines of credit? I went the Finance Store, which they charge a % if they get you a loan, I was denied because I only had 1 trade line under my credit, Im still rebuilding it, but its clean and in the 700s

Stanley Whigham · Answer

The fastest way to build business credit today is to bypass vendor credit and go directly to the banks-- unsecured business lines of credit. In 90 - 120 days business owners can obtain $100k to $250k in unsecured business lines of credit themselves.

Follow these simple steps:

1) Establish a strong internet presence for your company by listing it on at least 15 sites-- Facebook, LinkedIn, Twitter, Scoop It, Bing, Manta, 411, Google+, Google Places, etc.

2) Establish a business checking account at 2 banks (with a 700 credit each will offer a business credit card.

3) Make regular deposits into your business checking account for 90 days to establish a favorable bank rating.

4) Add higher level trade references to Dun and Bradstreet to provide depth to your Paydex Score (net 30s are usually lower amounts; you'll need higher approvals from your trade references-- 2k to 4k).

5) Upload your company financials to Dun and Bradstreet to complete your file and create a strong credit profile.

6) After 90 days apply for unsecured lines of credit. Here is why you'll be approved:

* a bank has already loaned your business money (business credit cards); Dun and Bradstreet, Experian Business and Equifax Business have all reported your business credit cards.

* the added trade references will add credit profile depth, as will uploading your financials

* your deposit activity and use of bank products (business credit cards) shows ability to  repay

* bank rating is formed after 90 days of deposit activity

Rob S. · Answer

@Francisco Garcia Jr If your business has documented revenue(tax returns) in the last two years you can be approved for unsecured line of credit in less than one year if you follow some steps and go to the right bank.  Suggested steps: Apply for 1 or 2 business credit cards - start with "BJ's Business Mastercard". Make sure to apply for the BJs card by phone. Provide your company's EIN number any time SSN is requested and tell the rep you would like to apply with no PG. (the BJ's business credit card is easy to get) You will need to enroll in BJs store membership online and pay their membership fee before calling them to apply for their business credit card.

Also try Amex business cards or google "easiest business credit cards to get approved for". If you get denied the first business credit card, open net 30 accounts at Uline and Quill. Use the net 30 accounts and make on time payments for about two months, let them report to your company's D&B credit report. Then apply for a business credit card.   Once you get the business credit card, use and pay in full every month for 4-6 months. Go to your local credit union and ask to speak with the manager or small business specialist. Our local credit union will do unsecured business line up to $250,000 and the loan amount will be based on 15% of your recent business gross revenue. Hope this helps. Ask questions if you need further clarification.

Michael R. · Answer

It takes 3 to 5 years of tax returns and proven revenues through the company from my experience.  Initially you will get credit cards through your company and you just have to work.  It won't happen fast from banks.

Francisco Garcia Jr · Answer

Belinda

Yes and no.....local banks and credit unions are going to want you to have a lot of skin in the game which means more % down.

I have been contacted by many people claiming to be able to get me business lines of credit or unsecured lines of credit for a fee and most of the time this fee is 10% of the line or $10k...Already in debt and not into a flip lol

The other way I can secure a line of credit is to have a company get me different credit cards and liquidate them down to cash, which basically destroys credit and when APR being different on card, this could spell huge bills?

I am still looking for my lines of credit, I just don't like these fee based companies, because most of the time you can do it yourself if your going the credit card route

Belinda Li · Answer

I'm a rookie fix and flip investor in AZ and will be opening an LLC or S-corp. I am also looking for an unsecured line of credit and wondering if you have had any luck with any local banks or credit unions?

Francisco Garcia Jr · Answer

Rob

Thank you for the advice and yes at the present time my gross revenue is more around $5k a month, but I would still like some sort of LOC so I can continue to generate credit and have those funds if needed.

I am being told that the Business Tax Id is different then the person SS when it comes to inquires? I am being told that if you do a inquiry under the Business Tax Id it is less likely to impact the credit score? I feel this is false?

Rob S. · Answer

@Francisco Garcia Jr Your question suggested that you needed advice on how to get unsecured lines of credit for your S-corp. The steps that I outlined above can get you unsecured business line of credit(LOC) of 15% of your company's gross revenue. You don't need to have biz checking account with the credit union before applying for the LOC and the loan amount is not based on your highest credit card limit but it is based on your company's gross revenue. Example: if your company's most recent gross sales/revenue is $1,000,000 as shown in your most recent biz tax return or schedule, you can be approved for unsecured business line of credit of $150,000. The interest rate will be prime/index + whatever points the bank will charge you. The points will be a low of about 1% and a high of about 4% depending on your personal credit score. The biz LOC may not be attractive for you if your company's gross revenue is low or non existent.  And if what you are looking for is a credit card with high credit limit, then that's a different story... My earlier suggestion of opening credit cards before going to apply for the LOC is for you to have trade lines reporting on your business name, the trade lines limit will not affect the amount of the business LOC If you go the route of small banks/credit unions.

Francisco Garcia Jr · Answer

Rob

My company just got approved for a $2k gas card which the company will be reporting to the 3 credit companies. I have not used this gas card yet as I am still expecting, so I am not building credit yet as this would my companies first credit card.  My business is on Dun for about 7 months now. I have tax records for the past 7 years.

I am being very picky to pull credit under my own SS and my business Tax Id as I want to make sure that if it does get pulled I do get approved for something that is over $10k. I bank with Bank of America and Compass currently.

Francisco Garcia Jr · Answer

Thanks for the advice and feedback. The Finance Store was reviewing my options and If they could get me a loan I would pay them a % fee for getting that loan under my business and not my tax ID. In the past I a have been opposed to paying any finders fee, but since I needed credit I thought I would give it a try, its prob best it didn't happen with them.

And Joe you are right I am not looking to pay a 60% APR for anything, I may have only 1 credit card in my name and my credits clean now, that doesn't justify getting raped on a loan. I was offered a pre-approval  loan through my credit check service and they offered me a loan of $10k with 32% APR , which I didn't understand since they are the ones said I had a 715 credit score, I didn't take that loan.

How to get my S Corp Lines of Credit?

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