What is the best way to establish a line of credit for a startup LLC?
My partner and I have established an LLC as an umbrella company for two online retail companies. One of the companies will be drop shipping products from various suppliers. These suppliers require a credit card since we are a startup company. What is the best way to go about acquiring a line of credit without using personal credit cards? Also, my credit score has taken a beating over the past year.
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Amy B.
Quality Computer Network Support for Businesses with Fewer than 100 Employees.Escalation Support Services for IT Firms.
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As a start up you will need to provide personal assurance that your business debts will be paid. That means putting your personal assets on the line to back a business credit card. Creditors will insist upon it. However, once you have established good payment with your suppliers you should be able to convert them from credit card to net 20 or net 30 in about 6 months. I would also try to show some money accumulating in the bank steadily over that same period. It will take discipline but you can be on your way in 6 months and then continue to grow that credit.
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Jacob D. M.
Chairman, Presidents Council at National Marine Corps Business Network
Some banks may offer a line of credit equal to the amount in your savings account, with that money held as collateral. If you have some cash available, then see if your bank will issue you a credit card, which would be secured by the cash.
Indeed, or we - though not sure about US banks - will also accept your house as collateral. Talk to the your bank, just go prepared and remember that the better prepared and more professional you appear, coupled with collateral you can provide, the better your chances.
Judi B.
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We've been in business for 4 years and had a small line of credit ($5000)with Chase (started when it was WAMU). Chase has now yanked that line of credit. We have good credit scores (high 700s), never missed a payment on the LOC and at the most borrowed $3500 on the LOC.
I tell you this only so you'll be prepared for what you'll likely hear from big banks.
Unfortunately these days suppliers seem less inclined to offer net 30, or even net 15 accounts, and they want everything paid up front with a credit card. It makes it very difficult for small businesses io operate, let alone grow.
Krishnaswami C.
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