What are the best business structures for building corporate credit?
S-Corporations and Corporations (C Corp)
Bank employees know and understand a corporation. The only difference between a C corp and an S Corp is in the manner it is taxed. C Corporations and S Corporations do very well in obtaining corporate credit.
LLC
LLC’s don’t do as well in obtaining business credit. This is due to many bank employees not understanding what is an LLC. Although the LLC has been around since 1977, many bank employees are unfamiliar with the LLC. Also, the LLC offers much better asset protection. Banks don’t want you to be protected. They prefer that you’re exposed when extending credit. For the above reasons, you’re better with a corporation than an LLC when applying for business credit.
Sole Proprietorship
No good for building business credit. The partners are liable for everything.
Partnership
No good for building business credit. The partners are liable for everything.
