You’ve no doubt already noticed that business credit is tight. In fact, it’s more often than not the proverbial Catch-22. You need business credit to acquire business credit but you have none so no lender takes a chance on you. How in the world, as a new business owner are you to get credit? aged shelf corporations with business credit

Enter the shelf corporation.

The shelf corporation — or an aged corporation, as it’s sometimes called — is a business entity that was created for the sole purpose of sitting on a shelf, aging for several years (perhaps like a fine wine) and then sold to an individual like yourself.

When you purchase a shelf corporation — or any corporation for that matter – you purchase the corporation’s history – both good and bad. In this transaction, the fact that the firm actually has a history may help you get access to the credit you so desperately need at times to run your business. That, no doubt is your motivating purpose in buying such a company.

Other reasons for shelf corporations

In addition to the possibility of acquiring a history for business credit purposes, individuals buy shelf corporations for other reasons as well. Some people view the purchase of this type of business as a money-saving step. It takes far less time – and energy and hassle – to simply buy your business with a name and all the legal aspects all ready for business.

Another important consideration in buying a shelf corporation is that immediately after purchase your firm has the ability to bid on contracts. In many areas, a newly corporate firm must wait a set amount of time before it can even bid on contracts. With a “ready-made” history, you can by-pass that time period.

Some individuals prefer to purchase a shelf corporation simply to avoid the stigma of “being the new business on the block.” When you buy a firm with a history – even a dormant history – you immediately have the appearance of a “corporate history”. This can go a long way in boosting not only consumer confidence, but in instilling confidence in your investors as well.

So, are there any hazards to purchasing a shelf corporation?

Indeed, there are hazards to picking a company off the shelf, buying it and calling it your own. The moment you call it your own, you also own any and all liabilities that may be associated with that business.

That’s one big reason you need to do plenty of research before you buy a shelf corporation. In the large majority of cases, these firms are created with the express purpose of resale to people like yourself. However, you may come across a seller who claims he has a shelf corporation, but has, in fact, a history of poor credit or worse yet – liabilities.You’re stuck with the liabilities. And they could be heavy.

For this reason, make sure the seller has many from which to choose. If he can provide you with a list of multiple firms, you can feel relatively confident that none of those has been abused in the past. Of course, don’t take his word that all of the histories of these firms are clean. Do the research yourself. And then double-ensure your purchase by having him guarantee that the firm is liability free.

When to get suspicious:
shelf corporations with established business credit

By contrast, if the seller only has one company to sell, that should make you a little suspicious. Has he run it in the past, created a bad credit history – and the possibility of debts – only to let it sit and hope someone else will take the albatross from around his neck?

If you buy a company with debt, you buy the debt! If you buy a company with an outstanding lawsuit pending, you’re responsible for the eventual outcome of that lawsuit. This means if the suit doesn’t go in your favor and the corporation owes money – you, as the current owner, must pay. You see how important it is to do research before you buy a shelf corporation.

Along these same lines, do research to ensure that the company you intend to purchase has not had any previous owners. This only increases the odds that the shelf corporation had an active – and perhaps checkered – past.

The very reason you’re buying the corporation – gain a business credit history – may be not even be relevant. Even though you’re buying a company with a history, that history doesn’t include any credit history. So it still may be difficult finding businesses that will extend credit to you.

Only you can decide whether to buy a shelf corporation or to incorporate a brand new company. As you struggle with that decision, remember that it’s not a small decision. Don’t allow anyone to pressure you into making a quick and impulse buy. The consequences are just too large.

Buying improper could be financially a fatal error. Buy contrast, buying wisely could catapult you into the business success you’ve always dreamed of.