3 Ways to Acquire Business Lines of Credit

March 19th, 2011

In a previous post, talking about the Types of Business Lines of Credit, I said that there are three ways to get a high PAYDEX score: “You can do it on your own, you can hire a company to teach you how to do it, or you can buy a corporation that already has a credit line.”  I want to discuss the Pros and Cons of each method of acquiring Business Lines of Credit.

Getting Business Lines of Credit on your own

This is the least expensive method of acquiring Business Lines of Credit and it gives you the lowest chance of  getting scammed.  However, unless you already know how to get and build your PAYDEX score and where to find good Business Lines of Credit, this method has a long learning curve.  You have to wonder how many opportunities you will miss while you are focused on learning how to build your PAYDEX score and acquire the Business Lines of Credit.  That will be time that you could have put into growing your business.

Hire a Consulting Company to help you get Business Lines of Credit

Hiring a company to help you can shorten the time significantly.  For one thing, they can coach you on how to go about it.  You won’t wast time going down blind alleys while trying to build your PAYDEX and they will point you to the best Business Lines of Credit for your needs.  This will have some cost involved.  However, the cost is small compared to the cost of spending an extra year sorting things out.  The biggest downside, in my mind, is finding a consultant who will keep their commitments for training you.  There are some very good companies out there and there are some who will spend whatever time it takes to get your money and then leave you on your own.

Buying a company with a Business Line of Credit already in Place

The fastest way to acquire a Business Line of Credit is to buy a company that already has one.  There are firms out there that start companies, build up their PAYDEX score and get a Business Line of Credit.  Then look for someone to buy the company with the Line of Credit.  This is the absolutely fastest way to get a Business Line of Credit (on the order of 30 days).  It is, however, the most expensive.  This method is best if you need the funds to take some action that will bring in revenue like: purchasing product for sale, having product manufactured for sale, rehabbing a home for sale, getting compliant so you can raise investor capitol.  If you aren’t going to spend the funds on something that will raise revenue soon, get any other kind of funding.

Who am I?

I am Jeff Miller. I have 15 years experience in the lending business, three years working with Business Lines of Credit and other Business Credit services. I am in Laguna Niguel, California (south Orange County, about halfway between Los Angeles and San Diego). You can reach me at (949) 249-3673.

I have access to several different types of Business Lines of Credit and other types of Business Credit. I am available to discuss the options available to you by phone. If you are in or near Laguna Niguel, we can meet face to face if that would help you.

Jeff Miller
949-249-3673
Business Lines of Credit in Laguna Niguel

Types of Business Lines of Credit

March 10th, 2011

In this post I mentioned that there different types of Business Lines of Credit. There are also different ways of acquiring a Business Line of Credit.

One way is to start a business (Corporation or LLC are the best for this) and get a Dunn and Bradstreet number so you can start building your PAYDEX score. Then you start with small Business Lines of Credit that have bad terms (often using your own FICO and personal guarantees). Using these lines allows you to build up your PAYDEX score. in 1-3 years, your PAYDEX score will be high enough to get credit at good terms.

There are three ways to so this. You can do it on your own, you can hire a company to teach you how to do it, or you can buy a corporation that already has a credit line. I’ll talk about those options in 3 Ways to Acquire Business Lines of Credit.

Who am I?

I am Jeff Miller. I have 15 years experience in the lending business, three years working with Business Lines of Credit and other Business Credit services. I am in Laguna Niguel, California (south Orange County, about halfway between Los Angeles and San Diego). You can reach me at (949) 249-3673.

I have access to several different types of Business Lines of Credit and other types of Business Credit. I am available to discuss the options available to you by phone. If you are in or near Laguna Niguel, we can meet face to face if that would help you.

Jeff Miller
949-249-3673
Business Lines of Credit in Laguna Niguel

Business Lines of Credit in Laguna Niguel

February 26th, 2011

What are Business Lines of Credit?

Business Lines of Credit are like Home Equity Lines of Credit except that they are based on your business.  They use the businesses EIN number (which, for businesses, is exactly like your personal Social Security Number).  The line will have a limit (typically $100k for starters) and you can borrow up to that limit.  You only pay interest on the portion that you borrow and can pay it off at any time.  Business Lines of Credit use a business’ PAYDEX score (also called a D&B or Dunn and Bradstreet score) just as a personal loan uses your FICO score.

What types of Business Lines of Credit are there?

There are several types of Business Lines of Credit.  Some operate just like a credit card (often, you get an actual card).  Some operate like a checking account and give you checks to use.  Many give both a card and checks.  A few require you to use transfer forms to transfer the funds from your Business Line of Credit to your business checking account before you can use the funds.  Another common form of Business Credit is called a Trade Line.  This is a Line of Credit but only for that vendor’s products (similar to a store’s credit card).  Trade Lines are easier to get than regular Business Lines of Credit but are not nearly as flexible unless you purchase the majority of your product from that one vendor.

What are Business Lines of Credit good for?

Business Lines of Credit are best used for business expenses that will generate revenue.  Thus, if you need to manufacture or purchase your product for resale, a Business Line of Credit lets you make the purchase before you have the revenue from the sale of your items, thus breaking the viscous circle that many starting businesses face.  Business Lines of Credit are also good for businesses that have large swings in their revenue, helping to smooth out the cash flow of the business.

What should you watch out for?

Some “Business Credit Cards” are not Business Lines of Credit.  If the card application asks for your Social Security Number then it is a personal card.  It doesn’t matter that the card has the word “Business” on it.  If it is not using your IEN number and reporting to Dunn and Bradstreet, it is not a Business Card.  Also, some Business Credit doesn’t bother to report your payments to D&B (unless you are late or miss one).  While this isn’t terrible, it certainly doesn’t help you and it does have a slight negative impact on your PAYDEX score since it shows the Credit Line as available to you (a slight negative) without showing on time payments.

Some Business Lines of Credit ask for a personal guarantee.  This just means that if the business goes under, they can come after you for the remaining balance.  While it is preferable to get a Business Line of Credit that does not have a personal guarantee, most lines available to starting businesses will require it.  The good news is that several have a clause that allows you to remove the personal guarantee after a specific amount of time in which you have been a good credit customer (on time payments).

Also, if your business is in trouble and you are looking to Business Lines of Credit to save your business, they will likely just drive you deeper into debt.

Who am I?

I am Jeff Miller.  I have 15 years experience in the lending business, three years working with Business Lines of Credit and other Business Credit services.  I am in Laguna Niguel, California (south Orange County, about halfway between Los Angeles and San Diego).  You can reach me at (949) 249-3673.

I have access to several different types of Business Lines of Credit and other types of Business Credit.  I am available to discuss the options available to you by phone.  If you are in or near Laguna Niguel, we can meet face to face if that would help you.

Jeff Miller
949-249-3673
Business Lines of Credit in Laguna Niguel