The corporate credit process. Though seemingly simple, implementation is critical — rushing or skipping any step can result in being red-flagged and marked high-risk.
Overview
This process assumes you've been in business 2-3 years and have incorporated. The goal: obtain financial credibility to get almost anything you need with no personal guarantee.
Without advanced techniques, it takes 6 months to 2 years of corporate credit building and good payments to develop a solid foundation. But these steps, done properly, can dramatically accelerate the process.
Step 1: Professional Team, Incorporate & Comply
Hire a good professional team (accountant, attorney, financial advisor). Incorporate as a C-Corp. Apply for FEIN. File officers list, minutes, meetings, bylaws, resolutions, seals, business licenses, DBAs & permits. Be in business 2+ years and current on all fees/taxes.
Apply for FEIN at the IRS website before your business license. If anonymity matters, avoid giving your SSN — use an EIN from another company. File the officers list within 90 days of incorporation. Keep corporate records: articles, bylaws, minutes, resolutions, seals. File DBA with county recorder. Be current on all filing fees, license fees, and taxes.
Step 2: Physical Address, Web & Email
Brick-and-mortar office with name strip in lobby directory. No PO boxes or mail drops. Same address used for DUNS, Secretary of State, Yellow Pages, licenses, and credit cards. Website and matching business email.
D&B will base employee count on office square footage — ensure it can accommodate 10+ employees (needed for highest Paydex). More locations = better. Website should match D&B info. Email must use your domain — not Yahoo, Hotmail, or Gmail.
Step 3: Phone, Fax, 800# & Corporate Identity
Local phone, fax, and 800# listed in 411 directory assistance. Live operator answering 9-5. Corporate identity: logo, stationery, letterhead, business cards, brochures.
Phones must be answered in the business name at all times. Main number cannot be a cell phone (forward landline to cell if needed). Area code must match the city of your business license. Voicemails must state the business name. List in business Yellow Pages — credit grantors verify via directory assistance.
Step 4: Seasoned Bank Reference
At least one seasoned business bank reference, 2+ years old, with a low five-figure average daily balance ($10,000+ at all times).
Business and personal funds must be separate. The bigger your opening deposit, the more important the bank considers your corporation. Options if you lack this: (1) Purchase a shelf corporation, (2) Find a financial backer for a joint venture, (3) Add DBA to a personal account with history, (4) Use a business account from another business as a division.
Step 5: Two Years Financials & Tax Returns
Balance sheet and income statement for last 2 years plus year-to-date. Tax returns for prior 2 years matching the financials. Prepared by a CPA licensed with the IRS.
Use compiled financial statements (not reviewed — costly and not as credible). Audited statements make it easier to get credit without PG. Keep liabilities under 40% of assets. At least 10% of net worth should be cash/liquid. Estimates and projections can be used with compiled statements. File amended returns if changes needed.
Step 6: Apply for DUNS Number
Apply at dnb.com. Normal process takes 30 days. D&B's Credit Builder program expedites to 5 business days. CreditBuilder Plus ($599) adds Paydex score. CreditBuilder Premium ($799) allows 12 months of unlimited trade references.
BE VERY CAREFUL — you only get one first impression. Make sure all information is correct before submitting. Have 5-6 vendor names and phone numbers ready for CreditBuilder Plus.
Step 7: Establish 5 Trade References & 5 Cash Lines
Five trade references reporting positive payment to D&B. Five credit cards/cash lines reporting positive payment to Experian. Make small purchases ($50-$500) spaced over days/weeks. Pay 10+ days before due date to achieve Paydex 80+.
Keep balances under 45% of high credit available. Maintain 60/40 debt-to-asset ratio. Most vendors NEVER report good credit — only bad. If references aren't reporting, go through D&B's Credit Builder Program or request reference letters. Set up automatic bill pay to ensure on-time payments.
What If You're Missing Items?
If your business lacks any of the 7 steps, you have options:
Find a Financial Partner
A corporation or individual who puts up their financials in exchange for a fee or shares of stock. You create a consolidated financial statement. They don't manage — they're purely financial. Give them an equity position so their assets can be consolidated into your business.
Purchase a Shelf Corporation
An aged corporation with 2+ year history. Ensure it has: 2-year history, all corporate formalities kept, free of judgments/liens, and a D&B profile.
Do a Leveraged Buyout
Acquire an existing business that meets LBO guidelines. After the LBO, draft a joint venture agreement between the acquired company and your new corporation — the acquired company provides everything your new company lacks.
The $10M Balance Sheet Trick
Form your corporation in Nevada or Wyoming, where state law allows you to assign any par value to your stock. Assign $1 par value to 10,000,000 shares and list them as "assets." Deposit the $10M in shares into an Operating Investment Account. This gives your bank reference an eight-figure balance. Send a current balance sheet to D&B showing $10M net worth — with on-time payments, you can establish a 3A1 Duns Rating.
7-Step Corporate Credit Checklist
Hire CPA, attorney, advisor. Incorporate as C-Corp. File FEIN, bylaws, licenses.
Brick-and-mortar office, matching website and business email.
Business phone, 411 listing, logo, stationery.
2+ year old business bank account, $10,000+ average daily balance.
Balance sheet, income statement, tax returns for 2 years, prepared by CPA.
Register at dnb.com. Be careful — one first impression.
5 trade refs reporting to D&B, 5 credit cards reporting to Experian.
Which of the 7 steps have you completed? What's your next action to build corporate credit?