Denied: 4 credit cards for 4 businesses
What to do when the banks say no
Your Business Credit
Dear Your Business Credit,
I just purchased six new tax offices, each with separate federal employee identification number and separate LLC. I am struggling to find one bank that will issue me six new cards all at once. It's been four months and the previous owner is getting sick of me using his cards. Suggestions? I have gotten two of the six, but have been denied on the rest, more than once, more than one bank. Please help. -- Brian
Wow! Looks like you have a lot to juggle these days. I can understand why you are frustrated that you have to spend time hunting for a bank to issue all of the credit cards at once.
Since you have been turned down repeatedly, I'm going to assume that the banks think that you have as much credit as you can handle at the moment. As you may know, to obtain most small-business credit cards, you have to give a personal guarantee. The banks that are turning you down may have decided that you have reached the outer limits of your capability to pay back your business debts. While you may be annoyed with them at the moment, their caution may be a blessing in disguise that is keeping you from taking on financial risk you might regret later.
Right now it looks like you have a couple of financing options for the four businesses for which you still need a credit card. One is to finance them out of cash flow. I'm going to assume you have set up a separate bank account for each one, so you can write checks and receive payments. If you need to pay for an expense such as lunch with a client, you can use your debit card from that bank account to do so.
Paying cash may mean you have to grow your businesses more slowly, but it can also help you stay disciplined about spending and create healthier, more profitable businesses. To keep enough cash on hand, consider giving customers a discount if they pay you at the time of service, instead of afterward. If you do send invoices, mail them promptly and follow up quickly if payments are late. Even paying bills by check can give you an extra cushion in stretching your cash.
The other option is to find some other source of credit for the time being. For instance, there may be a family member or friend willing to make you a small personal loan if you need one for one of the four remaining businesses that weren't issued a card. You might also consider getting peer-to-peer loans from a site such as Lending Club or Prosper to fund the four businesses, as long as you are not overextending yourself.
In the meantime, I'd do whatever you can to pay your two existing cards on time, keep your credit utilization on those cards low and otherwise try to build a track record of using the cards responsibly. That will help you apply for more credit later.
It may sound like I'm asking you to climb Mt. Everest, but try to be patient about building your credit. Instead of bombarding banks with loan applications, spend your time doing all you can to build revenue and profits at the businesses instead. Then try again in six months. You may be surprised by how much better you fare in getting the credit cards you want. Good luck!
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Published: April 20, 2015
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