Business as a Co-Signer

4 Replies

I have an applicant who requires a cosigner, so they had a parent submitted all of the paperwork for review.  The credit report came back and they did not meet the minimum requirements.  Now they would like to use their business to co-sign for the property.  I have never had that happen, so am not sure how to proceed.  I do have the businesses Federal ID number, but not sure were to go from there, and how to evaluate credit etc. 

If your rental market will bear it, I would just let these tenants go and keep searching for tenants that will qualify.

If you're determined to continue to try to qualify this tenant, then you need to ask them for the business's Dun & Bradstreet number.  This is the credit identifier number for businesses, not the EIN.  You'll then have to run the business's credit through Dun & Bradstreet for which you'll pay a fee.  If they don't have one, then the business likely doesn't have any commercial credit beyond what its vendors have granted it.

I would also ask to see the last three years of tax returns for the business.

Bear in mind that a business can shut down without going bankrupt and it may be very difficult/impossible to go after the business owners.  

Who owns this business?  If it is the parent, then it is probably no more credit worthy than the parent.  If it is somebody else, ask that PERSON, not the business to co-sign the lease.

@Linda Weygant gives great advice. But you should stop reading after the first paragraph.

Don't rent to these people. It's great that you are screening, and this is what screening turns up. Most applicants won't be qualified. The ones that aren't have a great reason for why they can't qualify.

When it comes time to pay rent, they will have great reasons why they can't pay the whole thing, or why they can't pay some of it. You don't want reasons, you want rent when it is due. They will be difficult tenants at best.

When you need a guarantor AKA co-signer, you want that guarantor to be far stronger than your minimum tenant qualifying criteria; sounds like you have a case here where guarantor couldn't even qualify to be your tenant on their own. PASS on this application ...

My wife ran a DUNS report at work, and guess what???  The business was no more credit worth than the owner.  I guess that was to be expected.  They were denied again based on credit.  They must really like this apartment as they have another cosigner they would like to submit...  This makes $90 in application fees.