Does "EIN" stand for "Employer Identification Number"?
D and B: "Dunn and Broad-street"? This last definition I’m not sure of the spelling.
I am trying to help a friend who owns/operates a small child day-care.
She has been in business for 5+years but has terrible personal credit.
I was asked to research the possibility of getting a Business line of credit for her operation.
When I first asked a similar question on Y/A someone who seemed very knowledgeable about this topic suggested securing an EIN and also getting listed(?) with D and B.
She also suggested that my friend have a phone line listed to the childcare business, perhaps a website for the childcare, or any other "official" listing that my friend can show as proof when she goes for credit at a local business(just for example: Staples).
This kind of information is out of my league so I’m going to the library today to search for books on the operation of small businesses and securing small business credit.
Can anyone suggest good books in this area?
(One title that I picked up on an Internet blog was: "My Book:The Business Credit Bible".
Anyone familiar with this one?
One blogger gave this book a thumbs up
Another blogger said the information was dated.
I will be very thankful for any and all information and advice.
Tony
THANKS TR and RT,
RT: she is licensed in the state of New York for childcare.
TR: If you read this: So she should stay away from DandB for now?
Your best resource for setting up a business is the internet and word or mouth. I started and ran a mortgage company for 3 years and had two partners. One of them had terrible credit and nothing we did would get around having the 3rd partner shoot down our chances of a business credit rating. EIN is an employment number for a business and your friend will need one if she ever sets her company up as a corporation or LLC and it may be a good idea since she has a lot of expenses and personal liabilities that can be offset by setting up an official business.
Even with an EIN, companies will not issue credit to a business unless it has assets and a solid credit rating from other companies, but even to get that started they will want someone with strong personal credit and/or assets to back up the credit line. If she can register the business with the state she will likely get a lot of write-offs for tax purposes, and I’m not sure why, other than convenience, she would need a line of credit for a day-care and I’m fairly certain many potential creditors would wonder that as well. If she can get a Profit and Loss statement for the last few years that shows the business makes a good profit (no less than $2,000 after expenses and payroll), she might be able to convince a local business to give her a credit line for small supplies or services like laundry or a local food service company.
Skip the concern with Dunn & Bradstreet. D&B is mostly for businesses that trade with other businesses or who want credit lines of a few thousand dollars from larger companies. As an example, if you ran a small chain of daycare schools you might want a line of credit with a dairy or food supply chain. It would be nice for the average small business owner to have access to this, but it’s really not practical for someone who has 10 to 15 children at most. D&B takes your credit lines in relation to your assets and business income and expenses to rate your company and that can be expensive and time consuming.
In short, if this is a fairly small, home run day care service I would recommend that she start by setting her service up as a company or LLC and try to get some tax advantages and then if she really seeing a profit she could consider looking into getting credit lines.
It’s Dunn and Brad Street. The rest is correct, If your friend has terrible person credit then she will need to fix this then register for D&B They are only going to use her personal credit rating along with theirs and this will really hurt her in the long run. Build credit small with places like Staples and places that she get her supplies from using her EIN# and Business name Only, then reach for more. Credit Bible is for people who have somewhat good credit.
EIN = Employer Identification Number. These numbers are issued by the IRS. Here’s how to get one http://www.irs.gov/businesses/small/article/0,,id=97860,00.html .
D&B = Dunn & Bradstreet http://www.dnb.com/US/duns_update/ This is a credit bureau that rates businesses.
The rest looks OK. She may also need a business license from her local government and meet certian requirements for a daycare. This she would have to check locally.