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op25ttfd
08-18-2012, 07:30 PM
I am wondering if anyone knows anything about building business credit. I am trying to see if it is possible to build a line of credit for my business.

SECTLANDSCAPING
08-18-2012, 09:46 PM
not sure about building credit but to get a business line of credit just fill out a app at your local bank.

w0283767
08-18-2012, 11:03 PM
Yea just go to your local bank. You can personally guarantee the business line of credit. What you will be able to get will depend on a variety of factors such as collateral for loan, beacon score, and debt to income ratio.

dpld
08-19-2012, 12:08 PM
Yea just go to your local bank. You can personally guarantee the business line of credit. What you will be able to get will depend on a variety of factors such as collateral for loan, beacon score, and debt to income ratio.


one of the major factors is how much money you make and what profits you turn after expenses including paying yourself.
for the most part the line of credit will be initiated around your personal income and credit.

unfortunately to a bank a business is no better then being unemployed and the only exception to the rule is how much green you make.
once you get over a certain threshold and have developed assets and cash flow they will be more receptive but unfortunately starting or owning a business does not open any new doors credit wise or give you a new lease on life.

if your business pays the bills and keeps you above water but does not leave you much else or even allow you to pay yourself generously 12 months of the year going to a bank is most likely gonna be material for a good laugh at the water cooler.


i am not trying to mock you or belittle you and i certainly don't want to discourage you or anyone else but i am speaking from experience and after 23 years in business and turning a half mil a year i am finally able to have some pull with the banks under my business name.

i don't think you will need to make a half a mil but what they will look for is consistency over a period of 5 to 10 years of not only how much your business made but what is left over.
and if you are not drawing a salary as good or better then a good paying job in the industry for yourself personally they will not be too confident that your business will be able to pay them back.

once again the bottom line is build your own credit as well as build the business along the way because what ever line of credit your business will get will revolve around you personally.

w0283767
08-19-2012, 06:59 PM
DPLD - I dont think the OP was referring to some $100K working capital RLOC to fund large landscaping projects or anything like this. He should be able to get a small line of credit ($1K - $5k) to meet his needs provided his income, beacon, score,etc is decent. Interest rate would probably be high if on an unsecured basis Obviously a bank isn't going to throw a large chunk of money to a start-up company that isn't well established unless he had some valuable unencumbered collateral and an external source of income. It does take years for your business to gain a reputation and for banks to get comfortable extending credit to the business. I bet even yourself has to sign the dotted line personally on whatever credit facilities you have in place for your business as well DPLD.

SECTLANDSCAPING
08-19-2012, 07:04 PM
DPLD is right. The line of credit will be based on your credit not the business. My bank requires a 680 score and it cost $100 a year. The interest is high at 9% but typically your only borrowing for a month.

w0283767
08-19-2012, 07:30 PM
I just run my business expenses through my credit card and pay off before grace period ends. I avoid paying any interest that way. Get a lot of rewards points that way as well.

dpld
08-19-2012, 07:58 PM
DPLD - I dont think the OP was referring to some $100K working capital RLOC to fund large landscaping projects or anything like this. He should be able to get a small line of credit ($1K - $5k) to meet his needs provided his income, beacon, score,etc is decent. Interest rate would probably be high if on an unsecured basis Obviously a bank isn't going to throw a large chunk of money to a start-up company that isn't well established unless he had some valuable unencumbered collateral and an external source of income. It does take years for your business to gain a reputation and for banks to get comfortable extending credit to the business. I bet even yourself has to sign the dotted line personally on whatever credit facilities you have in place for your business as well DPLD.


i know what he was asking and i know he was not looking for a open end line of credit but the fact of the matter is in this day and age you need credit and assets to borrow money whether it be 1 thousand or 1 million.

using your credit card and paying it off is not a business line of credit and using credit cards is just another way to rob peter to pay paul and has no bearing at all of what the OP was asking.

what he can do to build up some credit is the next time he buys a commercial mower or other expensive piece of equipment he can finance it through a sheffield financing or a wells fargo small business equipment loan company.

they will still use his personal credit but it will also look into bank statements and tax records for the business as well as it will listed on the loan as his name DBA, which will get the name of the business on the loan.

then he can also open up a account with a mcmaster carr catalog which is a good resources for all kinds of tools, hardware and too many other things to mention.
start out with little things and business to business credit lines as well as build your businesses bottom line.

you should not need large lines of credit in business other then what you would need to buy a new truck or something expensive but those are loans not lines of credit.

as landscapers we already have a cash generating business and outside of equipment we really should not need money to survive and if you do it is a red flag to a bank.
if we were a factory and we just got a contract to build a million units of a particular product we would need to borrow money to buy the supplies and pay the help until we start fulfilling the order and even when a business like that bills it is payed out in 90 day intervals.
businesses like that have a revolving line of cash flow credit that they borrow and pay back quickly vs a guy like you or me buying a new dump truck and paying for it over 5 years.

as i stated earlier, if you want to build up your businesses credit then build up your own that is the only way because being the owner or president of your corporation it will only go as far as your own name and credit can take you.

op25ttfd
08-20-2012, 02:09 PM
I appreciate all the responses guys. The purpose of asking is because I would love to buy some commercial grade equipment soon and like many others, I do not have that kind of cash to just throw down. Yes eventually I want the business to have enough money to replace that type of equipment or even pay cash for new things like a truck and trailer. Right now though, a commercial mower is the reason for asking about the credit line.

Steve
08-20-2012, 02:12 PM
I am wondering if anyone knows anything about building business credit. I am trying to see if it is possible to build a line of credit for my business.

Would it help to take small steps like getting a business gas card and paying it off every month?

w0283767
08-21-2012, 05:12 AM
Yard card and Sheffield generally offer the best terms for
New purchases. Can usually get zero percent financing for up to 48 months. I just did that for my ferris ztr. Just make sure you pay timely or the rate jacks up on you of you go that route.

LawnBoy0311
08-24-2012, 08:05 AM
I just run my business expenses through my credit card and pay off before grace period ends. I avoid paying any interest that way. Get a lot of rewards points that way as well.

Awesome advice! I can't tell you the amount of free stuff I got. Shop around CC companies too, some have nice deals on points. Bank of america had 5x point offers at one time.

wandfsmall
08-24-2012, 08:54 AM
I am sure I am running a lot more credit month to month then a lot of you guys, and for the most part the business is still tied to my personal credit. It is very difficult to get the two separated on a single owner business. I would think even harder when your dealing with smaller businesses such as outdoor power dealers and nursery's as your main suppliers. But to start the process go to dnb.com and get a number to give the businesses you have credit with.

As for personal credit moving credit cards often is a bad idea, another thing you can do is go to creditkarma.com and monitor your credit and use the tools to help improve your credit report. I personally took my score up almost 20 points since I started really paying attention.

As for buying equipment the best programs currently that I know of are from GE capital, Sheffield, and Yard Card. Depending on the mower line and month as they change often.