Establishing business credit with dormant LLC

[Raheem Akers]

Hello BP family,

I have an LLC that I created in 2010 (not for real estate) which I worked out of for about a year. Since then the entity has been dormant and I was wondering if I could catch up on the taxes/fees (if any) open a new bank account and utilize the time span to jump into getting business credit? Instead of starting from day 1 and needing to waiting over a year to have the time in to start qualifying for business credit I could get going a lot quicker. (Of course Ill need to change the name too) What do yall think??

[Don Konipol]

@Raheem Akers

There are two kinds of business loans.

The first is the true business loan where the business itself qualifies for the loan based on profitability, balance sheet, assets, longevity, risk analysis, etc.

The second was created about 15 years ago when personal interest was no longer deductible from income. It’s actually a personal loan where the individual qualifies based on his personal income, credit scores, etc., but the loan is made to the business (with the borrower’s personal guarantee) so that the interest paid is deductible from the businesses income.