Getting a loan in the USA: a line of credit for your company

You know the feeling: you have a promising business idea, but not the capital to make it happen at full scale. So where do you find the money?

In the USA it has always been far easier than in other countries to get a line of credit, even for a fairly young company.

You don't need to live in the USA as the owner or manager of your US company for it to get a line of credit. Because the US company is a separate legal entity, the credit line goes to the company, not to you personally.

13 factors that get you approved

Companies that get a line of credit act deliberately. From day one, they make sure the company looks good financially.

In the USA, three factors above all decide whether you get credit. You need to keep a constant eye on all three and keep improving in each of them from the day you form your company.

Yes, it takes patience. But it's what success is built on.

2Factor 1: credit score

In the USA, your credit score matters enormously. Most Americans have one, and it decides whether you get a mortgage, an overdraft or a car.

2.1How does a credit score work?

The base FICO score ranges from 300 to 850, and the higher your score, the better.

Credit scores are issued by credit bureaus. Large companies such as banks, utilities, phone carriers and insurers report their customers' payment and purchasing behavior to the credit bureaus, which calculate the score from that data.

Factors include: 

• How promptly bills are paid
• How much credit you have relative to your income
• How high your income is
• Bankruptcies and collections

2.2DUNS number: the foundation of your US company's credit score

Companies can have a credit score too. If you're serious about a line of credit, you take care of it proactively.

The best-known business credit bureau is Dun & Bradstreet (D&B). As a US company, you receive a DUNS number from D&B. It's usually assigned automatically, but that can take a few months. Smart business owners apply for their DUNS number right after opening their account.

For a fee, you can set up a D&B account that lets you monitor your credit score on an ongoing basis.

2.3How to build your credit score

The biggest problem for a new company is that you don't yet have US suppliers whose bills you pay and who report your payment history to the credit bureaus.

So you need to go out and sign contracts with large companies in the USA. That's the only way to build your score.

The monthly amounts don't need to be large. Any contract where you pay an invoice regularly helps your credit score.

Some examples:

• A US cell phone plan
• Insurance
• Office supplies (Staples, OfficeWorld, etc.)

Be meticulous about always paying bills on time. And make sure your outstanding supplier bills stay in healthy proportion to your revenue.

3Factor 2: account activity

Just as important as your credit score is the activity on your US company's bank account (and of course it feeds into the credit score too).

When you apply for the line of credit, you have to convince the bank that your company generates attractive revenue.

To the bank, revenue matters more than profit. So it doesn't matter if most of the incoming money goes straight out to pay suppliers.

Every business is different, but if you're serious about a line of credit, meaningful revenue should be coming into the company account regularly. It can, of course, also be paid by another company you own.

Be meticulous about never overdrawing the account without authorization, even if the bank would let you.

Keep in mind, too, that the line of credit you apply for later is tied to your revenue. The more revenue runs through the account, the higher the credit line you'll get.

4Factor 3: track record & substance

This covers all the "soft" factors that play a part in the lending decision.

It starts with your type of business and your industry. How risky is it? Do you have recurring revenue? Is what you do transparent and easy for outsiders to understand?

Above all, the bank wants to understand what you plan to use the credit line for. Do you have a plan? Can you show a business plan? The stronger and more credible your planning, the better your chances.

As you're a foreigner, the bank will look closely at how much substance you have in the USA. As a rule, more substance means a higher credit line.

For older companies, tax returns also come into play.

Compared with credit score and account activity, the soft factors matter less. Banks prefer to rely on hard facts.

In our experience, the soft factors mostly affect the size of the credit line you're given.

5Talk to several banks, not just your US company's own bank

As soon as you see your company's credit score building up, start talking to banks. And don't stop at your own bank: talk to others too.

The USA has a huge number of small banks and savings institutions, and they're often more flexible about lending. It's well worth reaching out to them. If you like, we can support you at this stage and hold preliminary talks with the banks.

6Take matters into your own hands

If you want money, there's no way around taking matters into your own hands, traveling to the USA and meeting the banks in person. If you like, we'll gladly come along to the meetings.

The banker wants to get to know you and talk about your business. You need to have the key answers ready and win them over as a person.

The banker won't mind that you're a foreigner or that your English isn't perfect. Quite the opposite: European entrepreneurs are popular and respected in the USA.

A lot rides on this meeting, so take it very seriously.

7How to keep your line of credit

Once the line of credit is granted, you will need to keep the bank updated on how your business is doing.

Expect to send the bank quarterly management accounts. You have to keep your business in good shape at all times so the bank does not cut your credit line.

8If the business fails

Of course, nobody starts a company expecting it to fail. But if it does happen and your US company becomes insolvent, business bankruptcy in the US is a relatively quick and painless process.

The American mindset is that failure is not the end of the world. Instead, everything should be done so you can make a fresh start as quickly as possible.

As owner and manager, you ultimately have no consequences to fear, especially if you do not live in the US. This of course assumes you did not deceive the banks when applying for credit. Otherwise (just as in Europe) that would have criminal consequences.

9How Mount Bonnell Advisors can help

We are not credit brokers and have no influence whatsoever on US banks' lending decisions. Naturally, we also receive no fees or commissions from banks or anyone else.

What we describe here is based on experience and is not a promise or guarantee that your US company will actually be granted a line of credit.

That said, we are happy to help with any questions about applying for a line of credit in the US. We can hold preliminary talks with banks and support you in every part of your preparation. The basics of a business account are on our page on opening a bank account for your US company, and the full overview is in our US company formation section. To learn how to build your personal credit score as an immigrant, read our article on the US credit score for immigrants. And our US credit card page shows you how to get US credit cards even without an SSN.

In short

• The line of credit goes to your US company, not to you personally, and you do not need to live in the US to get it.
• Three factors decide: the company's credit score, the turnover on its account, and soft factors such as the business model and substance in the US.
• The company's score starts with a DUNS number and grows with contracts you pay on time against invoice.
• Talk to several banks, including small ones, and expect an in-person meeting in the US and quarterly reports for the bank.

How we help you

• Credit BuilderCredit for your company and for you, built step by step.
• US Bank Account OpeningYour own access to the American financial system, even without an SSN.
• US Company FormationLLC, Inc or LP in Delaware, Florida, California, New York, Texas or Wyoming.
• Company formation consultationEntity type, state and tax consequences, before you commit.