Business Credit...or lack there of

[smalls]

I recently started a new job with a small business here in Helena. When I say the business is small, I mean it as other than the owner...I am the company. I like to refer to my office as "World Headquarters", not that I am getting a big head about it or anything.

The guy who owns the place owns several other businesses and really is pretty well off. Last week he tells me to get a credit card in the businesses name so that I can keep my expenses separate from his other entities. So I start trying to find the best deal in business credit cards only to figure out after a couple of hours that there really is no "best deal" as there is essentially no deal at all. Not one of the major banks I researched were taking applications via online or over the phone, and they all suggested I go to an actual local branch to apply for a business card. I went to a local branch of a major bank to be told that they, too, are not accepting applications.

The owner went to the bank he uses for his other businesses (which are all quite profitable) to set up a line of credit for this new venture and.... denied.

Luckily we have enough revenue to do everything we need right now (like pay me), but when it comes time to purchase equipment or try and expand at all I think we are going to have a tough time unless this credit loosens a bit (or a lot).

Any one else going through any similar small business frustrations?

 

[DRAFTSTUD]

No, I am not seeing that here. I find it strange that his Banker denied his request if he is as you say "Successful". I think it's time to recheck your homework. John

 

[brymoore]

The problem is time in business. Banks don't typically want to lend to a start-up unless the owner is well heeled.

 

[smalls]

No, I am not seeing that here. I find it strange that his Banker denied his request if he is as you say "Successful". I think it's time to recheck your homework. John

The guys does well and his businesses have done well. I think the time in business that brymoore has much to do with it, along with the size of the l.o.c. he asked for and the fact that this bank is trying to reduce the ratio of commercial loans it has out.

I guess the thing that surprised me most is the complete lack of business credit card availability.

 

[JoseCuervo]

I guess the thing that surprised me most is the complete lack of business credit card availability.

Why do you need a business Credit Card? Is there some specific reason you want it in the business name?

 

[smalls]

Mainly for booking travel, plane tickets, hotels etc.

I don't want a personal credit card, I haven't had one for 7 years now and I figure that the type of "stuff" I'd use a cc for I should probably just save enough money to pay cash (ie-not use credit or borrowed money). My wife has a cc for emergencies that has a redonkulous credit limit considering our income... we haven't carried a balance on it since we paid off our honeymoon about 2 1/2 years ago.

This is the first time I've been on this "side" of a business where I've had to manage finances. I left a fairly "safe" job for this, but the reward could be tremendous if it works.

 

[JohnSWA]

Nothing personal, smalls, but run far, far away from this guy! (we need more info on this situation!)

 

[brymoore]

I guess the thing that surprised me most is the complete lack of business credit card availability.

You can find business credit cards easily - but they'll be in your name (or your owner's name) and based off your personal credit score.

 

[ringer]

Bad idea. You can believe what you want but very few small businesses are doing well in the last year. If you get any credit card it will be in your name and on your credit. If he is doing well he can just flip you one of his credit cards to use for business. If you charge up ten grand in expenses and he closes the doors you will have to pay that out of your own pocket. You need to be very careful in your situation and tell the new boss what you have found out. Tell him he needs to provide you with the business card. If he pushes to have one in your name you will likely get bent over.

 

[smalls]

I'm not terribly worried about the situation (my first paycheck didn't bounce, that's a step in the right direction). It's a new gig for me that allows for a whole lot of autonomy (as well as a larger income) and if in a couple of months it isn't working or something smells fishy I have other options. By no means have I or will I front personal money to operate the business. But I do appreciate the concerns.

He isn't trying to convince me to get a card in my name or based on my credit. When I need to buy "stuff" now he just gives me his card to make purchases, but I would like to have a segregated account so that I know expenses are properly being applied to each of his entities (or more specifically, that expenses are non improperly applied to "my" entity)... as suggested, right now it looks like we will apply for the card in his name and use his credit to do it.

Brymoore, if a card is billed to an individual and uses that individuals credit score (and I assume making the "individual" liable instead of the business), what makes it a business credit card? I literally went to the websites of BOA, Citi, Chase, Wells Fargo, US Bank, etc. and upon clicking on their respective "Business Credit Card" links, you literally can't even apply for a card. I'll readily admit to my naivety when dealing with credit accounts, lines of credit, so any insight is appreciated.

 

[brymoore]

Here's a link to a Citi business credit card:

https://www.citicards.com/cards/acq/Apply.do?app=UNSOL&sc=6VVZF9J9&m=3CSR010000W&langId=EN&siteId=BAO&B=V&screenID=3006

You can apply easily but they're basing the decision on your credit score along with checking some of your answers for red flags (time in business). Before the credit crisis, it was easy to get a business credit card in individual names. The credit is based on the person's credit, not the business' performance.

In your case, the owner could try to get a credit card in your business' name.

 

[Steiny]

Sheesh !
If you don't have the discipline to handle your own finances responsibly, how are you going to responsibly handle the expenses of a business?

I'd just get a card in your own name and use it for business expenditures. When you use it, turn in the receipt, let the company reimburse you, and pay it off every month. Meanwhile, if you get the right card, you will be getting cash back or some sort of rewards, plus developing good personal credit.

When you are in business for yourself, if the business goes down, you likely go down too, so what makes the difference?

If you are scared to do this because maybe this partner won't reimburse you, or something like that, then you better re-think the whole partnership.

 

[JB]

solution in this economy....start small, work hard, invest profits back in company and put yourself in a position that you can sustain independently.

 

[Dinkshooter]

I am with Steiny on this one. Get the freebies on their dime.

Banco of Latin America(Bank of America) has the Alaskan Airlines card. I am flying up there in August for free on it. They were running a special and giving 20,000 miles when you signed up.

 

[noharleyyet]

I'm thinkin' smalls's income, obviated intelligence, and resultant vocational marketability is sufficient to overcome his anxiety.

...just a guess.