2007-09-11 04:07:08 · 5 answers · asked by Anonymous in Business & Finance ➔ Credit
If your company has been incorporated, but has yet to actually start showing profits (generally 3-7 years), they want/need the loan/credit to be guaranteed by another source as well.
Think of it as you are the parent of a teen moving into his/her first appartment...you have to co-sign the lease because the teen has no credit history, and is therefor a high-risk debtor. But with "Daddy" (you) on the lease as well, if the kid defaults, they can go after the co-signer.
After the company grows and has built a sterling rating (and the company has documented cash in the bank), they will no longer want your personal credit history to back the credit requests.
2007-09-11 04:39:33 · answer #1 · answered by jcurrieii 7 · 0⤊ 0⤋
Eventually your company will have sufficient credit history that you won't need to personally guarantee.
A lot of places tend to want a personal guarantee even for large corportations. They just feel better, I guess. Besides, if they are set up to pull credit reports, it's easier to pull your personal credit than to go thru the extra effort to check the business credit.
2007-09-11 04:16:18 · answer #2 · answered by bdancer222 7 · 0⤊ 0⤋
Most of the time, they will continue to pull your personal credit file until the number of years you have been in business exceeds 3-5 yrs.
2007-09-11 04:25:06 · answer #3 · answered by Raymond M 2 · 0⤊ 0⤋
Because YOU own your company therefore creditors want to make sure YOU are a good credit risk along with your company.
2007-09-11 04:40:27 · answer #4 · answered by Anonymous · 0⤊ 0⤋
I think I would consult with a lawyer, because I couldn't figure out how Trump claimed bankruptcy on some business deals
but did not suffer personally.
2007-09-11 06:03:33 · answer #5 · answered by Anonymous · 0⤊ 0⤋