Building Credit for your LLC

11 Replies

Does anybody have any experience how your LLC can obtain credit in order to apply for credit cards? I understand the sole manager can apply but how about the LLC/entity . Thank you

Look into a secured credit card from your bank/credit union. The limit on the card is determined by the amount of money you secure the card with. Example, if you want $1,000 limit, you would have to secure it with $1,000.

It may be a capital intensive way to build credit, but it will show people that the LLC pays its bills.

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@Account Closed

If your LLC has its own Federal EIN (tax number), you can apply for credit under that. They'll still run your personal credit, but it will start creating credit for your business. However, you should research and find out which credit cards will report just to your business credit or to your personal credit as well. In other words, some business credit cards will show up on your personal credit report (thus affecting your personal credit score), while others will remain solely on your business credit report. You want the latter if at all possible. If you have good enough credit to apply for your own credit card, you'll likely be able to get a business card.

I find www.nerdwallet.com to be one of the better places to research credit cards. You might need to google to find out which cards only report to business credit.

Best of luck,

Chad

(None of this is meant as financial advice.)

I work for a business bank and underwrite credit cards all the time. For R/E LLCs who want credit cards but don't have any business credit yet we'll look at your personal credit, and any deposit relationship you have with us. Looking at what liquidity you have to service the debt and how you've handled previous unsecured facilities of similar size are what's important to us (my bank, that is). Good to start a business banking relationship with a bank and they'll be happy to help you with a credit card.

Wells Fargo is where I have two entities, one S corp for my Brokerage, and the LLC for the RE Holdings. So, you want BLOC business lines of credit for each entity, credit cards, etc. They will give you 25% of your annual deposits. I found it easy to get a 50k bloc and then a 25k bloc and the cards are around 25k. The absolute best thing to have is a Discover card, and a Chase card, use them and always ask for higher limits. They constantly send 0% rates good for a year. Get those two cards up to around 50k and you will never touch a BLOC which are 10-13% at WF. Also, I use a HELOC to fund rehabs, I only use the BLOC if I need a quick transfer but I avoid rates at any costs. Good luck.

The fastest way to build business credit today is to bypass vendor credit and go directly to the banks-- unsecured business lines of credit. In 90 - 120 days business owners can obtain $100k in unsecured business lines of credit.

Follow these simple steps:

1) Establish a strong internet presence for your company by listing it on at least 15 sites-- Facebook, LinkedIn, Twitter, Scoop It, Bing, Manta, 411, Google+, Google Places, etc.

2) Establish a business checking account at 2 banks (with a 700 credit each will offer a business credit card.

3) Make regular deposits into your business checking account for 90 days to establish a favorable bank rating.

4) Add higher level trade references to Dun and Bradstreet to provide depth to your Paydex Score (net 30s are usually lower amounts; you'll need higher approvals from your trade references-- 2k to 4k).

5) Upload your company financials to Dun and Bradstreet to complete your file and create a strong credit profile.

6) After 90 days apply for unsecured lines of credit. Here is why you'll be approved:

* a bank has already loaned your business money (business credit cards); Dun and Bradstreet, Experian Business and Equifax Business have all reported your business credit cards.

* the added trade references will add credit profile depth, as will uploading 

* your deposit activity and use of bank products (business credit cards) shows ability to repay

* bank rating is formed after 90 days of deposit activity 

@Jake Knight Awesome Advice. Thank you 

@Tony Johnson Great Tip. Curious, was this based only on Bank Deposits or Credit score as well ? 

@Stanley Whigham Good summary, I actually dont have my business on all websites, that is a very good point. Is working to upload your financials with Dun and Bradsheet an easy process ? 

@Account Closed uploading financials to DnB is pretty simple.  Here are instructions from their website:

How can I add or update a Financial Statement in my report?

A financial statement is the best indicator of a company's financial strength. Dun & Bradstreet relies heavily on the financial statement to derive scores and ratings. Supplying minimum financial data will be sufficient for Dun & Bradstreet to calculate scores and ratings; however, to ensure we most accurately portray your company's credit strength, it is highly recommended you provide full financial details. Failure to provide this data may cause our report to not fully reflect your business’ financial strength and may have a negative impact on how other businesses evaluate the strength of your business.

Financial Statements may be directly entered or electronically uploaded using our iUpdate web site. Visit https://iupdate.dnb.com to register. Once registered, select Submit Financial Statement from the Main Menu. 

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