Corporate Credit
Few Businesses grow and prosper without help from a commercial bank. The financial help that comes from periodic loans, lines of credit or availability to cash remains a key concern for most business owners.
One bank loan may give a business the financial boost necessary to purchase needed vehicles, machinery, tools and trade products to perform and expand in its market area. Another loan may give a business the cash it needs to take advantage of the discounts some trade creditors offer in exchange for early payments for purchases. Still another loan may help boost sales volume up to a level that makes a business profitable.
But no bank loans or bank line of credit comes automatically; your business must qualify for a bank's credit consideration. This program reviews the steps that can help you establish corporate business credit. And eventually eliminate the need for personal guarantee and the personal liability that goes with it.
The Difference between Corporate Credit and Personal funding
Personal Funding
Sole ownership and partnership businesses are funded using personal finances or giving the bank personal guarantees because your social security number is required to qualify for any of these types of business loans.
Examples of funding sole proprietor and partnerships:
- Personal Credit Cards
- Personal Loans from family members and friends.
- Personal savings account (some thing they may have taken years to save up)
- Personal loans from the bank which in turn is limited how much you can borrow, by the following factors:
- FICO Score
- Debt to Income Ratios
- In case of Equity Line of Credit; your Loan to value.
Corporate Credit
A Corporation as a separate entity is able to open up bank accounts with the Corp ID number rather than your Social Security Number. Using the Tax ID Number your corporation is able to obtain credit autonomously. This way of obtaining credit is not limited by your personal debt to income ratio's, your FICO score nor is it based on your LTV (loan to value), if you were to use your home as collateral. In fact if you can, you could work the system well and obtain a million dollar worth of credit (Trade credit as well as Cash credit).
The benefits of Corporate Credit are:
- Ability to stop using your personal credit for your business expenses;
- Limit your personal liability;
- Increase your chances of obtaining a business loan;
- Does not report to your personal credit bureaus;
- Based on tax ID number (EIN), not your Social Security Number;
- Reports to the business bureaus - Dunn & Bradstreet and Business Experian.
Imagine the possibilities if you would have access to that kind of money... without risking your home!
You can use corporate business credit to leverage yourself to thousands of dollars, by building and using corporate business credit.
Using Corporate credit to finance your business is the smart way to financial success.
"It takes money to make money"
Hypothetical: If I were to award you a contract, of say half a million dollars are you able to commence your operations IMMEDIATELY? How much capitol do you think it is necessary up-front to work on this particular project? (1/2, 1/4, 1/5?) Let us say it takes 1/5 of the coast of the project up-front that equates to $100,000 dollars. Do you have access to that kind of money in case a situation like this arises? What would you do to acquire this kind of money?
In order to smoothly run your business, you need to have cash flow. Cash reserves comes in handy to fund your payroll, purchase materials for the job, pay for your overhead, advertise, sustain you personally till such time you get paid in full and you are able to move on to the next project. Most contractors lack this cash reserve and therefore restrict them from going after larger more profitable projects. According to SBA (Small Business Administration), 97% of the small business community goes out of business before the first two years are up because they simply run out of cash and are not able to support the business operations. Therefore having the capitol available till such time the company can sustain on itself is a great way to ensure your long term existence.
The value of having the ability to be able to use credit when and if needed, is a life enhancer and life saver for any business, when used properly.
There is nothing difficult about establishing corporate business credit.
Like any tool or set of tools, credit is an important tool in any business's tool box and must be properly taken care of.
This program is designed to help you and walk you through the necessary steps to establish corporate business credit.