I want to establish credit for my business- HELP!?
I am in the process in opening a large daycare from home. I am currently renting the house. I live in Southern CA.
My goals are to build my business, build a line of credit for my business, and purchase this house within a year. (The house is worth 0,000 in today’s market, down from 0,000 last year at this time).
I spoke to some companies that promise me lines of credit, but they also want me to incorporate my business and give them 00.00 to help me. I simply do not have that kind of money, and I do not want to waste money on something that is not necessary.
Specifically, I do not see why I need to incorporate my daycare. Can I still build credit without it? I also do not understand how to establish a business line of credit, nor do I know if I will be able to buy a home with it later on.
Lastly, my personal credit is not good, so I cannot rely on that to purchase a home.
Any comments? Suggestions?
Thanks!
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4 comments
Alan E on October 3, 2009 at 9:30 am
You need to incorporate. You cannot build your business credit without incorporating. You need a federal tax id number for the business which is easy to get.
You can see this e-book for more info. bizcreditebook.com
Pronk48 on October 3, 2009 at 9:30 am
Collateral, Collateral, Collateral.
Do you own a house for yourself currently??
Being a realtor, I’m telling you that if you don’t own a house that you have equity in, a bank will never approve you to buy a house to operate a business with, unless you have about 10-20% for a down payment, which in a house like that could be about $15,000 you’d have to have in your pocket.
Wanting to start a business I think you’d have a better plan than this. What are your supplies going to cost, what are you fees for advertising you’d have to pay, fees to have a permit to do this?
If you make no money the first few months, would you have enough money right now to suffer 3 months of losses from starting the business up? You are probably not going to get a lot of business right away.
Why do you think a bank would lend you a line of credit when your current credit is that poor? Why would you tell a bank they should lend you money?
I’m sorry if this is crushing your dreams, and I wish you the best of luck to make this a long term goal. Fix your credit, buy a house for yourself to occupy first if you don’t already have one, and Save, Save, Save!!
Right now you don’t have the assets or the business knowledge judging from your question.
v b on October 3, 2009 at 9:30 am
While your dreams are nice, there is simply no legitimate way that you would get $190,000 of credit on your personal credit history if it’s "not good."
New businesses–even if they incorporate–do not get a brand new credit history. They piggyback on the credit history of their founder. The companies promising you the dream are out to get $3000 for THEIR dream not yours.
Tom on October 3, 2009 at 9:30 am
The only way to establish a business line of credit is to personally guarantee the loans. If your personal credit history is bad, you won’t be able to establish a business line of credit.