I haven't seen the infomercial however I would imagine the gist of it would be to set up an LLC as many of us are doing for small business and real estate investments. With a new LLC and no credit history the risk goes up so the price goes up in the form of APR. Just my thoughts.

Hi minigreenhouse,

I am just curious that who would need tones of credit? Moreover, if one can not offerd the loan, what benefit does corporate credit do?
Any input is appreciated.

I have not seen the infomercial, and not sure what you mean by "tones" of credit (unless that was a typo meaning "tons"... which, in retrispect makes more sense...) ANYWAY....

Establishing "Corporate credit" is nothing magical... but I can see how it could be turned into a hot infomercial product. On it's face, it APPEARS to offer what so many infomercial watchers dream of;

An extension of credit (infomercial watchers think of credit as "free money") without any accountability to the person spending the money...

IN REALITY, corporate credit is exactly as described above... but in order for a corporation (or LLC, or limited partnership, etc.) to actually QUALIFY for such credit, it must have profitably existed (not just a file on a shelf, but actual operating cashflow on verifiable tax returns, etc.) for a substantial period of time (generally 24 months,) and have proven vendor accounts in good standing (leases (meaning it's not a spare-bedroom-business), shipping accounts (FedEx, UPS, etc. some of which will not pick-up at homes,) and/or supplier accounts, etc.) for those 24 months.

In order to show sufficient vendor accounts (which virtually always required the personal credit guarantee of the business owner in the first place) "in good standing" as well as a commercial lease in good standing, the owner must already be quite responsible with credit account payments and leverage management. This is the "hidden evidence" that allows a bank to extend "non-guaranteed corporate credit" to a company it's first time... the fact that the credit guidelines could ONLY have been met IF the company's principals were good at managing their personal credit in the first place.

THIS is what eliminates most of the "something for nothing" infomercial audience from ever REALLY being in a position to get themselves (or the lenders) in trouble by actually BEING APPROVED for such non-recourse corporate credit... While most of the watching audience is looking for a way to borrow money on someone else's (or nobody else's) credit... these people have long ago trashed their own personal credit, and are generally unproductive (let alone having any sense of business management skills.)

As to the question of "who would need 'tons' of credit"... the answer would be; Business people who have mastered the ability to find opportunities whereby they can legitimately earn far more returns than the costs of the "OPM" they may borrow (the 'corporate credit') to achieve those returns.

The banks aren't stupid... they love earning interest, and hate losing principal... so they know how to seek out the "good corporate credit risks."

Happy New Year!!!
Dave Donhoff
Strategic Equity & Mortgage Planner

Yay Dave for a good discussion of the fact that banks are not dopey enough to give credit to a corporation that doesn't even do any business and the corp president has no personal credit. I have told that to clients for years but in the West there are infomercials that claim if you go to their seminar they will show you how to buy boats, houses, castles with corporate credit even if you have no money and no credit yourself. The one who really makes out on these is of course the person running the seminar, who sells books, tapes, corporate or LLC packages.
But the answer to who needs tons of credit-is people who couldn't borrow another nickel on their own credit and need money, and prefer not to pay it back.
Marge

marge427,

You're kidding!

There really are people who are reluctant to pay off their loans?

Hope you all have a delightful New Year.

ole joyful