Business vs LLC

4 Replies

I have several rental property's and would like to continue purchasing. I don't feel I'm ready to start a LLC but could I technically start a business and qualify for a business loan? These loans are at a much better rate and term then the personal lines of credit I've been using.

@Jesse Skidmore ,

Well, an LLC (Limited Liability Company) *IS* a business entity, as is an S-Corp or a C-Corp.

You need to set up a business entity, then establish credit in that entity.

Initially, you'll be giving a personal guarantee on your entity's credit lines and loans. Once it has a strong enough credit profile, it will be able to get some credit on its own with no guarantee. Then, THAT will grow.

Lenders typically like to see two years since the S-/C-Corp or LLC was established. So, start that clock NOW!

Start out with Net-30 accounts and other trade lines. Then you'll be able to get credit cards for your entity(-ies), then they'll be able to get their own credit.

... but it depends on getting that clock started!

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."
- DJ Benedict

It's very hard to get a business loan without at least 6 months of business financial statements.  When I started my small business in 2007, several banks turned me down and one "business friendly" bank refused to even let me open a bank account until I had been in business for 6 months.

If your borrowing personally, I found that penfed credit union offers some very competitive rates.  All you have to do is open an account with $5 online at and you can access all their loans/line of credit products.

Also, peer to peer lending sites like lending club and prosper can be in the 7%-8% interest (fixed loan) range with excellent credit.

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You already have started a business. You have a a business renting properties. That business is known as a sole proprietorship. You can get a name for that business if you choose (DBA or Doing Business As) but you are in business none the less.

There is nothing special about running an LLC. If you have several rentals you are ready for an LLC. That doesn't mean an LLC is required or the right choice for you. But if you business is at that level, you are already at a level where considering an LLC is appropriate.

Great advice. I will start net 30 accounts with all my suppliers under a business name. That should get the clock ticking. I have used personal credit card to fund renovations. Is it possible or important to change those balances to my business name? I assume I need to obtain a business license to make it official? Should the deed to my properties be in my business name? taxes? vehicles? tools? This is going to help simplify things! Thanks for the advice.