The idea of business credit for startups is kind of vague. I mean, a business that isn’t even operating yet can’t exactly get a business credit. The people who want to start the business can get a loan to get going, but it will technically be a personal loan, not a “business” loan in terms of a loan to the business directly.
Business Credit for Startups: Do It Exists and How Do You Get It?
The truth is, a startup isn’t just a business that hasn’t started yet. The term startup also includes any business that is still in its beginning stages. For example, they may be in their first round of financing, or still trying to get ramped up. Surprisingly, some businesses stay in the startup phase for up to two or 3 years.
Why does that matter? Because, if they have been operating for any amount of time, that changes the game. They could then potentially have business credit, which could help them get the funding they need on the merits of their business more so than their personal credit. These would be what we call business loans for startups. For many reasons, it’s harder for startups to get business loans.
Business Credit for Startups: Traditional Lenders
Not surprisingly, a lot of startups will not qualify for business loans from traditional lenders. Some will, but most will have to go the SBA route if they qualify at all. The SBA, or Small Business Administrators ation, offers loan programs through partner lenders. More startups will qualify for these loans. The reason is, their programs are government backed. As a result, the lenders are able to be a little more relaxed when it comes to eligibility and approval.
There is a lot of red tape involved, but it can be worth it if you qualify. Here are some examples of SBA loan programs that may work well for startups.
7(a) Loans This is the Small Business Administration’s main loan program. It offers federally funded term loans up to $5 million. The funds can be used for expansion, purchasing equipment, working capital and more. Lenders include banks, credit unions, and other specialized institutions in partnership with the SBA who process these loans and disburse the funds.
The minimum credit score to qualify is 680. In addition, there is a down payment requirement of at least 10% for the purchase of a business, commercial real estate, or equipment. The minimum time in business is 2 years. In the case of startups, business experience equivalent to two years will suffice.
This is by far the most popular of the SBA loan programs, and the funds are available for a broad range of projects, from working capital to refinancing debt, and even buying a new business or real estate.
These loans are also available up to $5 million and can buy machinery, facilities, or land. They are generally used for expansion. Like 7 (a) loans, private sector lenders or nonprofits process and disburse these funds. They work well for commercial real estate purchases especially.
Terms for 504 Loans range from 10 to 20 years. Unfortunately, funding can take up to 90 days. They require a minimum credit score of 680, and collateral is the asset it is financing. There is also a down payment requirement of 10%, which can increase to 15% for a new business.
There is also 2 year in business requirement, or equivalent experience for management, if the business is in the startup phase.
Microloans are available in amounts up to $50,000. They work for starting a business, purchasing equipment, buying inventory, or for working capital. Community based nonprofits handle SBA microloan programs as intermediaries.
Interest rates on these loans are 7.75% to 8% above the lender’s cost to fund, and the terms go up to 6 years. Similar to other programs, they can take up to 90 days to fund. The minimum credit score is 640, and the collateral and down payment requirements vary by lender.
SBA Express Loans
These loans max out at $350,000. They have a maximum interest rate of 11.50%. In addition, terms range from 5 to 25 years, and the SBA guarantee is less than it is with their other loan programs at 50%. To qualify, your credit score must be above 680. Another requirement is that you must have a debt to service ratio of 1.1 or higher. If the loan is greater than $25,000, collateral may be necessary. It depends on the lender.
The turnaround for express loans is much faster. The SBA takes up to 36 hours to give a decision. Also, necessary paperwork for application is less. As a result, express loans a great option for working capital, among other things, if you qualify.
In today’s market place as a small business owner, it’s a great idea to look for ways to help your company grow and scale financially in business. However, there’s a difference between trying to get ahead and looking for shortcuts. Shelf corporations often, though not always, fall into the latter category.
Shelf companies are either old companies formed for the purpose of being sold off, after an excellent business credit rating has been established.
Our shelf corps come with employer identification numbers (EINs) from the IRS. A shelf corporation also will feature several years worth of filed tax returns and even a business bank account with a real financial institution “on some occasions”.
These steps are taken in an effort to ensure the corp is legitimate and well established in the eyes of others.
The reason a shelf corp is sometimes formed in the first place is with the goal of flipping it down the road to someone or it can as n be acquired filling a sensitive protocol. The buyer is usually someone who’s willing to pay for the value of the shelf corporation’s credit rating and age.
Where are most Shelf Corporations formed?
Shelf corps can be formed in plenty of states throughout the US. But.. they’re often formed in states with either low filing fees, low taxes, easy regulations, or some sort combination of all three.
Some of the most common states where shelf corporations are formed are:
What’s the price cost of Shelf Corporations?
Our prices that we charged for shelf corporations range at different pricing, depending on the age of the shelf corporation and also the Dun and Bradstreet Paydex score.
To learn more or if you would like to inquire about our shelf corporations, contact us at 1-800-998-3452 and one of our reps will be more than happy to assist you.
If you are considering obtaining at least $300,000 business credit without being forced to use your personal credit for approvals; then you may want to consider utilizing a Shelf Corporation to get high end funding from major banks and creditors. A Shelf corporation is a type of company, that was in business and it dissolved or went out of business for personal reason. Some shelf corps were also established only for the purpose of being sold in the near future to a new principal.
The process of registration of such company and its sale is completely 100% legal around the world. As such some companies are formed just for sale and has no activity and their are also some shelf corporations that comes with an established Dun & Bradstreet Paydex score as provided at Credittude Credit Repair. Most known shelf companies as they are established to be put on a “shelf” in order to achieve “age”. It is because age increases the value and worth of these companies & then they can be sold for higher prices in most cases. Those type are called ‘reddi-made paper companies’ which are formed after fulfilling all the legal requirements.
These companies are also very beneficial for both company’s original owner and also to the one who purchases the ‘Shelf Company’. These companies are really important for those who want to start their small business immediately because these companies saves the time for registration process of establishment of new corporation which must be formatted correctly. Such shelf corporations provide several other detailed benefits for those who buy these corporations. Following are few important points that prove shelf companies are very beneficial.
As mentioned above, the most important purpose for these shelf corps is to save the buyer from a oustanding and complicated registration process that is required before the start of any business.
If you want to open a bank account immediately without the mess of establishing and registering a new company to assist with obtain six figures of corporate credit, then purchasing shelf corp is the best possible option for you. In most of the cases, you will be able to open a bank account in a single or couple of days without facing the nuisance of buying new company, Going through the yellow tape’s and red lines to fine-tune your personal situation.
Another important benefit for the buyer of Shelf Corporation is its age. There are several benefits related to longevity of a company! You will get an edge in the market as others will consider the shelf company as an established company and feel secure to do business with. Apart from that, you can easily get leasing equipments as leasing companies prefer to involve with corporations established few months or a year ago. corporate apartments and houses and the list goes on. There are few locations where a minimum period is required for companies to bid on contracts and shelf corporations easily fulfill this condition.
Our shelf companies at Credittude are also helpful in retaining the privacy of business in a legal matter as the whole procedure of formation along with sale and purchase of shelf companies is according to law.
For more details on obtaining a shelf corporation or if you would like to inquire about getting started on buying a shelf company, contact us today at 1-800-998-3452 to speak with a shelf corp expert.