Corporate Structure advice for Building Business Credit for Startups

I have talked to many people about this over the years but I never wrote about it until today.

The Scenario

You have a Killer Business Idea but you do not have the capital to properly get it off the ground. You have download the business credit bible and you have read through creditrich.net a few times and you know that it is only a metter of time until you have the cash that you need to start your business. You want to use your Killer Business Name for your Business Idea but you do not want to use to DBA or the random Shelf Corporation name that you have based on the Business Credit advice given before. What do you do? Should you change the business name? What options do you have?

The Structure Solutions

In this situation you have a number of options. The three major solutions that you have for this problem is as follows:

1. Apply for a name change with your Secretary of state. This tends to raise questions within the credit bureaus. Changing teh name of a company without affecting the business credit file of the company is possible but risky.
2. Apply for a DBA. DBA stands for Doing Business As, and this is a name that your company can operate under. For example. My main corporation in which I do business under is called Virtren Holdings Inc and it is incorporated in Fl. I filed a DBA for Credit Rich in order for me to ligally do business under the name Credit Rich. This is a solid option that does not pose any major risks to the credit worthiness of your business.
3. You can use the Shelf Corporation solely to acquire credit and operate under a Brand New corporation with your business name of choice.

So Which Solution Should I Choose?

I never advise to change the name of a Shelf Corp so although this is a possible solution I do not recommend it.

The DBA solution (2) is a good option for someone that does not want to spend the extra money to form another corporate entity.

The final option, Option 3 is the one that I strongly recommend as it has a number of advantages. In this scenario you have two seperate corporate entities. In order for you to use the funds that you have acquired with the Shelf Corp in the Corp you will be doing business under, you can simply create a loan between the Shelf Corp and Your Corp with forable terms. Although you do have the responsibility of paying off the bank for the funds loaned to the Shelf Corp, your main corporation is protected. This is a very simplified explanation of what can be done but the direct advice of myself or an accountant will help you achieve this goal

There are some regulations and limitations that may come up depending on the terms of the loans or the state that you are in but you should seek  the advice of your accountant to deal with these issues.