Business credit Real Estate

2 Replies

So I'm looking to obtain business credit to be able to have the capitol I need to invest in real Estate. Now I get the basics of how business credit works.

Questions is though. How do you make yourself creditable as a business if you do not have a property yet?

Also from my understanding you will need to get vendor accounts to build your business credit. Do if I got to the vendors but I don’t have a property yet. Am I supposed to buy things I don’t not need just to try and build business credit? Thank you in advance for the advice.

@Taylor Smith

You would have to be in business a long time with substantial revenues and significant assets in order for your business to stand on its own for loans. Almost always you will have to give your personal guarantee.

Most loans obtainable by real estate investors are based on the value of the property offered as collateral and the creditworthiness of the individual owning the property. Lenders may accommodate the borrower by lending in the name of his entity, but the requirement of a personal guarantee shows they are really lending based on the creditworthiness of the ‘man behind the curtain”.

Quite frankly, despite what some vested parties may tell you, you can’t speed up the process of qualifying your business as stand alone creditworthy. The size your business would have to reach, the way your business would have to operate, makes attempting to do us an exercise in futility.

I can think of only three reasons one might become concerned with their entity achieving a state where the entities credit stands totally apart from the entity owners credit. First is so that the individual has no personal liability on loans, second is if the individuals personal creditworthiness is low, and third is to increase the total amount of financing available by introducing a credit worthy independent entity. All good goals, but extremely difficult to implement.

Business credit is a slow process.  I started with a dun n Bradstreet number, website, commercial address, entity, EIN number, company phone number and small vendors.  The small vendors were the start of creating a history of credit.  It takes time same as personal credit.  You need to legitimize yourself as a company.  I started small with accounts like; Quill, Grainger and Uline.  Easy to get credit established through a business.  The goal is to establish credit as a business and not have to personally guarantee everything where they need to run your personal credit.

Good Luck.