I'm going to begin by discussing the first step you should concentrate on when you're building your business credit. The name of your business is my first topic. Choosing a company name is very important. As simple and easy as it may seem, every precaution should be taken when considering your company name.



Depending on what company cycle you're in and what the economy is doing at that time, some businesses are treated differently when applying for a company loan. The banks always have doubts when underwriting your loan application. Some businesses are categorized as more risky than others or more desirable than others.

Yes, the lender does have a black list of businesses they're willing or not willing to do business with. The question is what category do you want your company to be in out of that list?

When structuring a company entity, the entity name choice should always be generic.

Why choose a generic name? Well, a generic name is exactly what it is. When choosing the company name you should keep a few simple rules in mind. It should not describe the type of company you're in or have your individual name in it. In some instances, you can get by with the initials of your individual name.

The primary reason for this logic is to put more space between you and company. The name choice that you filed with the city or county known as a ?doing business as? or dba will be the only name that should describe what your company is about. At this point, some folks maybe questioning what difference does it make which name to give their business? It's OK if you have such a question.

Just make sure you don't confuse my point with the type of company to consider when you're trying to open a company. This suggestion would be impractical. Most entrepreneurs open a company as a result of their education level, God given talent and lifetime experience. I'm not about to interfere with this process.

Allow me to demonstrate why your entity name could hinder your chances to get approved for a company loan. Let us suppose your name is John A. Doe. You structure a corporation by the name of Doe Realty Incorporated. Do you think this name could cause you problems with the banks in today's market?

The answer is absolutely yes. Would you agree with me that just a few years ago, businesses such as: real estate sales, real estate investments and real estate finance were hot businesses to be in? They were so lucrative; banks were practically throwing money at them based on signatures only.

Today, the same banks start running whenever the word real estate is mentioned. It's almost as if the word real estate is forbidden. Well, as much as I hate to say it but at this time it's a bad word.

The ideal way for Mr. John Doe to structure his business should've been to name the corporation ?JD Incorporated? doing company as ?All Realty.? Since JD Incorporated is the legal entity that's responsible to file the taxes and applies for the loans, then the corporation is really what matters not the dba.

You can also add any company related dba's or service conversions related to real estate services. One service in particular is to become a mentor in the real estate field under the same corporation rather than changing your corporation's name.

You can apply this concept to any types of company as long as you take the time to choose your company name carefully. Lenders will view a consultation company as having low overhead and more desirable. Visit our site next week and we will discuss the second step in building your business credit rating. Or you can contact us at mailto:comloans@gmail.com.