What is a Business Credit Partner?
The use of Credit Partners is one of the fastest, most effective and well-established methods to obtain business funding. Credit Partners enter into Credit Partnerships that bring together the Entrepreneurs that do the work with the Credit Partner who has good credit to provide the funding that the business requires. Credit Partners are American Citizens and/or legal residents with a FICO score above 680 at all three (3) Consumer Credit Reporting Bureaus. These individuals generally are employed, have no derogatory reporting, a favorable-debt-to-income ratio and a low consumer credit utilization. Entrepreneurs have the sufficient business knowledge to justify a Credit Partnership.
Simply put, Credit Partners are absentee owners for a specific time agreed to with the Entrepreneur and then expect to be bought out for a profit. Credit Partners are ideal for either private companies or SEC Reporting Companies because Senior Management can obtain capital to execute their growth strategies until funds are raised through profits and/or raised from a private placement or public offering.
Capital is raised through unsecured business lines of credit that the Credit Partner agrees to obtain. The Credit Partner authorizes the Entrepreneurs to use their unsecured business lines of credit to meet the Entrepreneur’s capital needs. The Credit Partner is incentivized through an agreement with the Entrepreneur spelling out its compensation for its agreement to become a Credit Partner.
Let’s review some of the most pressing questions a business credit partner has:
Why am I being asked to be a Credit Partner?
One of the fastest and most effective ways to get capital for a business is with unsecured business lines of credit. The Credit Partner agrees to leverage their good credit so that their partner can obtain these business credit lines to grow the business.
Is it safe and legal?
Yes, of course! Businesses bring on partners all of the time. As a Credit Partner you have the added benefit that the unsecured business credit lines do not report to your personal credit reports, reducing the impact of leveraging your credit so that the Entrepreneur can obtain financing.
What are the responsibilities of a business credit partner to the business?
A Credit Partner has no responsibility in the business. Anyone can be a Business Credit Partner but what that entails is completely up to the Business Credit Partner and the Entrepreneur.
Will it affect my personal credit?
These unsecured business credit lines are in the company’s name, so they will not show up on the Credit Partner’s personal credit reports, unless the lines go into default with the unsecured business credit line provider. The minor impact is the initial inquiry into the Credit Partner’s personal credit report when applying for the business credit lines.
Can a Credit Partner be removed as a Personal Guarantor?
Initially it is important to recognize that a personal guarantee is never triggered as long as the unsecured business credit line is never in default. Personal guarantees can also be removed if:
1. The business pays more than the minimum payments;
2. The business reports revenues on its corporate tax returns;
3. The business refinances the unsecured business credit lines into regular business bank debt and repays the unsecured business credit lines in full.
Using a Business Credit Partner is a common strategy used by thousands of businesses across the country to apply for unsecured business credit lines. Businesses can use several credit partners to obtain multiple lines of business credit.
Please feel free to review our website at www.bachcapitalmanagement.com and contact us to explore your specific needs and how you can be better positioned to make more profitable investment decisions.