Forums: Discussions for entrepreneurs and small business.

Hello everyone.  This looks like a great community for advice and learning.  I've been digging in for a few days now.

Anyways, I am using my experience in internet marketing to start an official internet marketing corporation.  I have formed an LLC, and plan on establishing a business credit profile, then accessing business funding to really take things to the next level.

I have a couple questions regarding this.  I have read a ton about this topic, but there are a couple gaps that I was hoping you all would fill in.

First, I'd like some confirmation on this.  I have learned thus far that I need to:

1. Get the LLC
2. get my EIN and DUNS #
3. Open about 3 business bank accounts
4. Establish at least 5 trade lines that report to D&B regularly
5. Allow time for the D&B and the other agencies to establish positive credit ratings
6. Apply for  business credit cards and gas cards
7. Apply for SBA loans

Does that sound like a pretty basic set of guidelines?

Here's where I'd like advice.  I don't have ANY personal assets, and I ruined my credit awhile ago.  So, if I establish a solid credit profile for my corporation, can I still get funding without any personal guarantee?

Also, what kind of time frame is realistic to accomplish all of this?  I have studied a course on building business credit in this manner within 5 weeks.  Is this realistic?

Thank you for any advice or thoughts you can provide.

-Steve

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Re-read your post! You say the course said it can be done in 5 weeks? Questions:

Trade lines that report regularly? What is regularly? It ain't gonna be often enought to wave a magic wand and say you have great credit in 5 weeks.

Vendors and suppliers - what are you going to ask? What kind of pricing are you going to give me if I buy your product (service)? By the way, do you report to D&B? Isn't that a red flag to the supplier?

No assets - SBA loans usually require the applicant to invest up to 10% to 25% of the amount needed.

Unless the business is on solid footing for a couple of years, chances are a personal guarantee will be needed. If you haven't noticed, the business credit landscape has changed in the last few years.

Start small, and build it little by little. Don't try to get it done yesterday!

So what about Startup Loans?  Are you saying that startup loans are a myth?  Are you saying its impossible to get funding without being a couple years old in business?

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They DO look at the track record of the business.  That's the whole point of having services like D&B, Equifax, etc.  Lenders look first at the credit history of the business in question.  So if I have several trade lines in good standing, and a 80+ D&B score, why would they NOT want to work with me?

They're not going to go straight to my personal credit history.

My previous questions still remain, but from the responses of both of you, it seems like you're telling me:

1. Establishing business credit is nearly impossible
2. Startup loans are a myth
3. Getting any kind of a loan is impossible without being in business more than a couple years
4. Unsecured business loans don't exist
5. Banks and lenders look at your personal credit and not your business' credit
6. Banks don't take into consideration any of the added income and cash flow that may come from using a loan to expand the business

I'd like to ask about that last one.  You said "not based on funds you think you can earn in the future".  Well, isn't that one of the reason banks/lenders want to see a solid business plan?  So they can see how funding the business for growth will increase the income and profits of the business, and it will instill confidence in the lender.  Banks wouldn't want to see a business plan if they didn't care where it was going, or how a particular loan would benefit the business, and ultimately the lender.

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One other thing...it doesn't seem "too good to be true".  Based on my basic outline of steps in the first post, please explain to me why that WOULDN'T work.  Even if it took several months, what reasons can you give as to why that gameplan would fail.

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What you just said about obtaining credit is very true, BUT it's basically catch 22! Think about when you wanted to start building your personal credit history. You probably asked yourself "how can I get credit if no one will give me credit without good credit?" and thats catch 22! Same thing with your business! Best way to start for yourself is with simple trade lines like a FED EX ACCOUNT, UPS ACCOUNT, START A PHONE LINE (in your business name and EIN of course), GET YOUR PHONE NUMBER LISTED IN 411 AND THE PHONEBOOK, START FIXING UP YOUR PERSONAL CREDIT ASAP! Even places like Office Max and Office Depot are great!

The main thing I think you need to know is that no matter how your business is set up EVERY LENDER will look at your Personal Credit regardless if they need a Personal Guarantee or not.

Honestly it will take some time, not years like most people will tell you but minimum 6 months to 1 year typically before your score and history looks good enough to get a Business Loan or Credit Card. Get as many trade accounts as you can and use them vigorously for the next few months but make sure you are paying it before the due date because this is reported as such. It's not reported that you paid on time it's reported that you paid before your due date. And thats what actually boosts your score.

It's a tough task but if you do everything accordingly your plan will work, just not as fast as you may want it to. Good Luck!

We're not saying it can't be done. However, it doesn't happen overnight (or weeks)!

Just because you have a satisfactory account with FedEx or the phone company doesn't mean that a lender will lend you thousands of dollars for your business. As to startup loans - what makes your business unique? Aren't internet marketing companies a dime a dozen? Start up loans are nearly impossible to come by without adequate collateral in today's world.

It is good that you have a business plan but plans are plentiful. You have to show people that you can execute. Lenders and investors are not falling all over themselves to hand out money like they did back in the late 90's with the internet bust (I mean boom).

Thank you for the last couple replies.  Great information there.  I feel confident I can make it happen as long as I do everything to the T.  Working on my personal credit is one area I will plan on focusing on also.

God Bless

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Question (I know I came in late on this discussion), why do you need any business credit, or start-up funding? If you're starting an online marketing company wouldn't your overhead costs be next to nil, and you wouldn't need credit.

Also, if you do get a track record worthy enough of fielding a business loan, wouldn't you have your overhead costs paid for?

Lastly, if you apply for an online marketing LLC line of credit, with trade lines for suppliers...they're going to recognize that you're gaming the system in order to get the credit. Unless you can give a great reason why suppliers of doing a lot of business with a marketing firm.

Just some things I noticed that don't make a ton of sense. I run an online company and only legal matters take up most of my costs.

Yes, my overhead is next to nothing.  I need the funding so that I can take my marketing to the next level.  Marketing and advertising are my main expenses.  I've just never had the capital that's necessary to do the high-end marketing that I'd like to.

I don't see how they would think I'm gaming the system.  Suppliers can be a number of different companies that I could use for my business needs.  Office Max, Office Depot, Home Depot, Lowes, etc.  If I am buying things that I can legitimately use for my business, there would be no reason to suspect anything.  I doubt I'll be opening lines with suppliers that I have no use for.

I have read in several places that lenders offer loans for marketing/advertising purposes.  Is that accurate?

Thanks for the replies.

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