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phil07

posts: 16

Nov 05, 2007 1:56 PM ET Quote Report Abuse

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Ok , my wife and I are running out of ideas. We have a 2yr business in transportation. We started this like most all do, with our personal credit. In the last month we have turned this business into an LLC, got our EIN#, and filed with D&B to get things on the right track for the business to build credit. As soon as we can we will start moving what we have already over to the new credit profile so our personal will be one, and the business will be another. The problem is most of the credit cards will not allow us to switch the open accounts over. I understand why. This is the main reason we want to get a business loan; 1) to pay off what we used for the business on those cards, 2) in time build the credit for the business, 3) last but not least, give us back our personal credit freedom! Every one that sees our credit notes how high our credit to debt % is, but yet we have no problem paying the bills on time. This problem has also stopped us from being able to expand the business. That may sound like we are only backing up, but we are looking to buy raw land so we can build. Not just a home, but a office, shop, stables, wash-pit, loading pens, barn, and a 4-h arena. This in time will be very valuable to the company, not to mention a great investment. As for our credit score (630-678). If any one can point us to the solution, or maybe has an idea.......feel free! WE ARE ALL EARS! Thanks, Have a wonderful day!

robertj

posts: 1461

Nov 05, 2007 2:29 PM ET Quote Report Abuse

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phil07,

You`ve got a lot of stuff (in your post) and I don`t know if there is a single action to get you where you want to go.

Generally speaking, getting the company to borrow money to pay off your personal debt isn`t an easy task because it usually leaves the business burdened with a lot of "new" debt that doesn`t produce any additional revenue.

Sounds to me like you need a more comprehensive "capital strategy" for the business - which begins with the business plan decisions and assumptions.

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

phil07

posts: 16

Nov 05, 2007 3:22 PM ET Quote Report Abuse

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Thanks Rob. If i could borrow from the company, which I could but thats when it would put the business in a pinch. It doesn`t have that kind of capital to lend without operating. However, if we was able to get a loan, line of credit of some sort, im sure the rate would be less than a credit card. Therefore it would only save the company money. If the company saves money, then that to me would be a future investment. I could be looking at this from the wrong side of the fence, and things are sometimes clearer in a "fresh" so to speak mind. Thats why Im asking for others opinions, and it really helps. Thanks again,

robertj

posts: 1461

Nov 05, 2007 4:11 PM ET Quote Report Abuse

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phil,

A fully amortized loan of $50,000 at 9% interest with a term of 7 years would require monthly payments of about $805.

How does that compare with your current situation?

If the company took on this obligation, would you adjust your "salary" accordingly?

phil07

posts: 16

Nov 05, 2007 4:30 PM ET Quote Report Abuse

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That would be nice, and I would only do the terms for 3yrs at around 1500 a mnth. That would be a lot better than where im standing right now! Where can i get that kind of deal?

Roblue

posts: 74

Dec 11, 2007 10:39 PM ET Quote Report Abuse

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Boy does your post bring back memories of some stressful times in my business past. Fortunately for me, it is just that the past.

I was begging, scratching, and scraping for funding to establish my home based business with no success.

I got a referral in SUN for www.thesnaploan.com and tried them. I was approved.

I have been through the process, and I think you have a good chance of getting approved.

Let me know if you have any success with them.

Good luck.

Most importantly, don`t give up.

sokogoose

posts: 5

Dec 13, 2007 12:17 AM ET Quote Report Abuse

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Without a full understanding of your situation it`s extremely difficult to determine what is best for you and how to proceed. But here`s information I can offer, as a business owner, that might help you.

Credit is not easy! The formulas involved vary so greatly that you can never seem to get a good handle on what to do or not to do but here`s what has worked for me.

Research credit and understand it as best you can. For example: You mentioned debt to income ratio. If you are paying those accounts on time then consider the following. If you have a credit card with a $5000 limit and you are using $4000 of it you have a high debt to income ratio. Credit reports do not show how much you earn. They look at how much credit you have to how much you are using. If you have been paying on time with your creditors then you may be able to increase your line of credit. If you request an increase in your credit line in can, not always, change your debt to income ratio. BE AWARE they may run your credit to determine if you qualify for an increase. This can have an negative effect on your score. Not much but every inquiry to your credit can have a negative effect. So decide carefully if you feel that you may be able to increase your line of credit enough to have a positive effect. Citicards for example may increase your line without a credit check if you have a perfect payment history. You can request this online and it might occur immediately without a credit check.

Next, you`ve been in business for at least two years, that`s good. Hopefully you`ve had an accountant filing your taxes for you those two years. Having an accountant that can "vouch" for you can go a long way in getting a loan. Even if they simply provide a letter stating you`ve been in business for two years.

Second, if the business EIN does not have any credit established yet there are things you can do to get things rolling. If you have business phones (cell phones) for the business, switch those over to a business account with your provider. It`s easy to do and it will establish credit for the business. You can also consider opening an account with local suppliers. For example Home Depot, under the business EIN. You may not require a Home Depot account for you business but it will establish a creditor for the business. Open an account with a local paint store like Sherwin Williams. Request the highest limit possible. This does not mean you have to use it! Again, the more credit you have "unused" the more credit worthy you can appear.

Look at this way, if you have credit cards all with zero balances then you have the "abilty" to spend up to the maximum of those cards. If you don`t have any balances it can show restraint and control, which banks can feel confident with. Here`s the other side of that coin. If you have all that spending abilty and do get a loan and decide to rack up a bunch of debt on credit cards then you have just that many more payments to make. The bank might also see you as a risk because you have the ablity to spend that money. Like I said credit it not easy.

So what`s the answer? Time. Establish a relationship with a local bank. I mean a local bank. Not a bank in 3 states with 1500 branches but someone you can get to know. Show them what you`ve been doing and your business plan.

One last note. Make sure that you getting the best rate on those credits cards you currently have. If you are making on time payments then call them up and request the lowest rate of intrest possible. If you`re paying too much this could be a quick way to save a few bucks. Push them! They will in most cases help you out. Keep paying everything on time and make sure you pay twice the minimum payments.

Good luck!!

jbigdog

posts: 1

Dec 19, 2007 7:16 PM ET Quote Report Abuse

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Is there any real estate involved? Commercial or Residential?

BigDog Investments

Realestate Private Money Hard Money Specialist

allensmith985

posts: 1

Aug 16, 2010 1:10 AM ET Quote Report Abuse

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If you're in business for yourself, then you know that there may come a time when there is a piece of equipment such as a new computer or some type of software that you need you can't realistically pay out of your own personal budget. Or, business may be doing so well that you may need to look into hiring staff and actually setting up a dedicated office space which require a lease and moving and all the other expenses associated with that. In each of these two instances you may be thinking about getting an unsecured business loan. However, and consider whether or not doing this is the right move? Similarly, how can you tell if an unsecured business loan is right for you?

Sometimes, as business owners, we like to think we are a step above the general workaday public. After all, we have ultimate control over each aspect of our day including want to work on. We also have complete control over how fast or how slow are income and how many clients we take on an even with Johnson. We also have total control or something of our cash flow. However, just because we are business owners does not mean that we automatically perfect. Consider for a moment that if you have troubles dealing with your personal finances, such as: spending money that you don't have credit cards been struggling to pay off the bill or perhaps not making up a budget and being able to stick to, then these traits will most often follow you into the business. And should you have the strings you need to be able to recognize them and deal with the before you consider getting an unsecured business loan. If you can't or won't look at your financial deficiencies then this type of loan can be any business loan may not be right for you.

What I'm saying is this an unsecured business loan is just like any other loan in that you need to pay it back or you're going to have collection agencies handy. And if in your personal life you can't seem to get a handle on paying your bills on time then you want to add to the stress by taking out a loan for your business and then having the responsibility to pay that off in a timely fashion. However, if you have a good handle on your personal finances and bills then getting an unsecured business loan should not be an issue.

unsecured small business loan
small business cash advance

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unlimited22

posts: 75

Aug 16, 2010 1:42 PM ET Quote Report Abuse

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1st pay down/off the personal credit loans.

Start building your business credit by opening accounts at places as Staples, Office Depot etc and get a company gas card.

Then get a secured business loan for let's say $500 and pay it off in 30-45 days. Just open a savings account with $500-$1,000 in your company name and EIN and pay it off. Do this at 3 different banks. You don't have to do it all at once. You can do one per month if you like. 2 Savings acounts and 1 Checking account over 3 months should be fine. Plus tha company gas card.

Don't overwhelm yourself. Just do what you can while you pay down your personal credit loans. Initially unsecured business credit/loans need your personal credit score but with these credit builders eventually you'll be able to obtain unsecured business credit without using your personal credit too.

Good Luck!

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