Do we need to become incorporated?
March 20th, 2011 Filed under: New Business Loans — Small Home Business Author
starflower_me asks the question: We own a small excavating business and recently tried to get a loan for a new dumptruck. They keep saying our personal income to debt ratio is too high. How do other people finance their businesses using their business income? They keep wanting our personal income using our social security numbers. Do we need to become incorporated so that we can use our “business” when asking to borrow money?
Answer:That’s not the answer. Companies have credit scores too and a new company won’t have a credit score to get a loan.
When other people use their business to finance a loan they typically have a lot of assets they can assign rights over. Or shares in the company that can be used as security. In a new company your shares won’t be worth anything as there’s no asset base.
In your position you have to rely on your personal financial circumstances.(Small Business)
