If you have been thinking of a way to obtain financing for your start-up, then you may have considered buying aged corporations with credit facilities. There are many things that determine a company’s creditworthiness. Even though age is an essential factor when banks evaluate your shelf company’s request for credit facilities, it is not the main thing. You will be a bit more prepared when you have some information on shelf corporations.
What is a shelf corporation?
It is essential first to know what a shelf corporation is. A shelf corporation or an aged corporation is a company that has already been formed but is not in use. The company is available for sale as soon as there is a buyer. Buying a shelf corporation will help your business in the long run. You will not have to wait a long period for establishing a company. When you approach potential creditors with an established company, you can get access to credit lines, leases, and banking relationships.
What an established company can do for your business
Buying an already established company that is more than 2 years old, increases your credit opportunities. Even if you buy one that is two years old, you will still get business credit. The only difference is in the amount you will get. If you are thinking of setting up a corporation, then you seriously need to think about the method of establishment for the business. An established company gives you increased borrowing power. Your business also benefits from enhanced credibility. The credibility will come in handy when you are advertising your company to the customers. You will give your company a financial boost when you buy an established business.
If you are buying the company for a line of credit, you need to prove that your company has been in existence for long. Before you get a line of credit, you need to provide your bank ratings, NSF history, credit history to gain the confidence of the financial institutions. The Paydex score is also an important metric that determines your company’s credit capacity. For more information on the Paydex score and how you can improve this score, click here. When looking for an incorporated company; you need to be careful of the ones that have done business in the past. A company that has done business in the past may have a lot of liabilities. Check if there are lawsuits against the company before you make the purchase. When you buy a company with debts, you will have to repay them. A bit of research on the lingering liabilities and the history of the company will help you determine if it has any pending debts.
Buying a shelf company will be in your best interest if you want to save time. The whole process takes a matter of hours and you will have your business up and running in no time. Look for an established business and reap the benefits it has to offer for your start-up.
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