Learn more abou what shelf corporation is all about

1. Shell Corporations- Secrets
Revealed

2. Ty Crandall
Director of Business Credit Services
(877) 600-2487
ty@disputesuite.com

3. Business Credit
• Business Credit is credit that is for a business,
and is in the Business Name
• With business credit the Business builds its
own credit profile and credit score
• With an established credit profile and score,
the business will then qualify for credit

4. Business Credit
• This credit is in the business name and based
on the business’s ability to pay, not the
business owners
• Since the business qualifies for the credit, in
most cases there is no personal credit check
required from the business owner

5. Business Credit
• The business can use its business credit profile
and score to qualify for revolving credit cards
like Staples, Lowes, Sam’s Club, Costco, BP,
Wal-Mart, and many more
• The business can also qualify for Visa, AMEX,
and MasterCard

6. Business Credit
• The business credit profile will also help the
business qualify for secure and unsecure
business credit lines
• The business can also qualify for some
funding, loans, and some with no personal
guarantee required from the business owner

7. Business Credit Benefits
• A credit profile can be built for a business that
is completely separate from the business
owner’s personal credit profile
• This gives business owners DOUBLE the
borrowing power as they have both Personal
and Business credit profiles built

8. Business Credit Benefits
• Business credit assess a business’s ability to
pay, not the business owners
• Since the business qualifies for the credit, in
some cases there is no personal credit check
required from the business owner

9. Business Credit Benefits
• Business credit scores are based only on
whether the business pays its bills on time
• A business owner can obtain credit much
faster using their business credit profile versus
their personal credit profile.

10. Building Business Credit
• A business credit report can be started much
the same as a consumer report commonly is,
with small credit cards
• The business can be approved for small credit
cards to help them build an initial credit
profile
• These types of initial cards in the business
world are commonly referred to as “vendor
credit”

11. Vendor Accounts
• A vendor line of credit is when a company
(vendor) extends a line of credit to your business
on "Net 15, 30, 60 or 90" day terms.
• This means that you can purchase their products
or services up to a maximum dollar amount and
you have 15, 30, 60 or 90 days to pay the bill in
full.
• So if you're set-up on Net 30 terms and were to
purchase $300 worth of goods today, then that
$300 is due within the next 30 days.

12. Vendor Accounts
• You can get products and services for your
business needs and defer the payment on
those for 30 days, thereby easing cash flow
• And some vendors will approve your company
for Net 30 payment terms upon verification
of as little as an EIN number and a 411 listing

13. Vendor Accounts
• Always apply first without using your SSN.
• Some vendors will request it and some will
even tell you on the phone they need to have
it, but submit first without it.
• When your first Net 30 account reports your
"tradeline" to Dun & Bradstreet, the DUNS
system will automatically activate your file if it
isn't already. This is also true for Experian and
Equifax.

14. Vendor Accounts
• You need to have a total of at least five (5) Net
30 day pay accounts reporting.
• Some vendors require an initial prepaid order
before they can approve your business for
terms.
• Your vendors do not necessarily have to serve
100% of your business needs.

15. Vendor Accounts
• Pay your Net 30 vendor accounts in-full and
on-time
• You must be patient and allow time for the
vendors' reporting cycles to get into the
reporting systems
• It typically takes 3 cycles of "Net" accounts
reporting to build credit scores

16. Shelf Corporations
• A shelf corporation is a paper or shell
corporation that is administratively formed
and then "put on a shelf" for several years to
age
• The term "shelf" or "aged" only refers to the
fact that the company has already been filed
and is sitting "on a shelf" waiting to be
purchased.

17. Shelf Corporations
• A Shelf Corporation is a company that was
created years ago for the sole purpose of
being sold in the future simply for the value of
its age
• A person forms a company and does nothing
with the corporation other than file the
annual reports and cover the annual fees
• Once the corporation is a few years old it has
a sort of value for the right person

18. Origin
• Historically shelf corporations were
considered a legitimate way to streamline a
startup
• They were especially useful prior to the
introduction of electronic registration when
setting up new corporations used to take
months to do
• Selling them as vehicles to get around credit
guidelines is fairly new

19. Shelf Corporations AKAs
• Also called
– aged corporations
– seasoned shelf corporations
– off the shelf company
– Shelf corps
• NOT the same as shell corporations
– Shell corporations are completely different entities,
both in scope and in formation
– usually have no significant assets or operational
structure

20. Shelf Corporations
• A shelf corporation doesn't engage in any real
business
• Most shelf corporations have been totally
inactive
• They have never had income, assets or bank
accounts, or had operations or activity of any
kind

21. Shelf Corporations
• During the aging period some efforts may be
undertaken to establish a credit history, file
basic tax returns, open a business bank
account, and other simple actions to
demonstrate some activity
• These types of shell corporations are more
valuable and are sold for more money

22. Shelf Corporation Purposes and
Benefits
• Shelf corporations are legal and do have
legitimate purposes
• They have been used by someone who may
not otherwise qualify for a bank loan, line of
credit, or government contract because they
or their existing company do not have the
required credit scores or a two to five year
established business history.

23. Shelf Corporation Purposes and
Benefits
• A long-established company might qualify for
more credit and funding
• A company that has been open for 10 years
will look more credible than one just opened
this year
• This might help to secure more credit and
funding as the majority of businesses fail
within 4 years, and only a small percent make
it to 10 years or more

24. Shelf Corporation Purposes and
Benefits
• May be more attractive to potential investors
and investment capital
• May or may not have faster and easier access
to borrowing
• Some trade accounts will only approve
companies who have been opened for 1-3
years or more

25. Shelf Corporation Purposes and
Benefits
• Buying a shelf corporation can make it easier
to qualify for a loan, especially if you apply for
less than $150,000
• Most banks do not perform extensive
investigations for loan amounts less than 150k
• Many banks still see shelf corporations as
unethical as many use them to rack up credit
and never pay the bills

26. Shelf Corporation Purposes and
Benefits
• Purchase a turn-key business
• The company can then be sold to a person or
group of persons who wish to start a company
without going through all the procedures of
creating a new one
• By purchasing a shelf corporation, an
entrepreneur now instantly owns an established
company that has been "in business" for several
years without debts or liabilities.

27. Shelf Corporation Purposes and
Benefits
• Have an instant history for a company
• Improve company image
• Faster to pursue business endeavors because
the company is already formed and ready for
immediate delivery
• Faster to obtain business licenses

28. Benefits
• Faster ability to bid on contracts
• Saves time by foregoing the time and expense
of forming a brand new corporation
• Corporate filing longevity

29. Shelf Corporation Purposes and
Benefits
• A company is “founded” when they initially
setup their corporation
• Many potential business resources are
hesitant to engage brand new or up-start
corporations

30. Shelf Corporation Purposes and
Benefits
• The age of your company can give greater
credibility to customers and lenders than a
business that was recently established
• Say you were an accountant for 10 years, but
just opened your business
• By buying an aged corporation that has been
open 10 years, you can then advertise that
you have been in business for 10 years, and
your corporate records also support that

31. Shelf Corporation Purposes
• They are frequently used for holding personal
or business assets
• To show corporate longevity in order to attract
consumers or investors
• To gain access to corporate credit

32. Shelf Corporation Purposes
• To gain the opportunity to bid on contracts
• Some jurisdictions require that a company be
in business for a certain length of time to have
this ability

33. Shelf Corporations
• Often people purchase such companies in
Nevada, Wyoming or California as well as
Delaware due to regulatory considerations

34. What is Included with Shelf Corps.
• Articles of Incorporation
• “Action of Sole Incorporator” document which
transfers the company to you
• Minutes of meetings (blank sample forms)
• A corporate kit (record book)
• Stock certificates (blank, un-issued shares)

35. What is Included with Shelf Corps.
• A corporate seal
• Corporate Bylaws (unsigned forms)
• Registered agent service
• Federal Tax ID Number

36. Negatives of Shelf Corporations
• Shelf corporations are not looked upon
favorably by regulators, lenders, or the
business reporting agencies
• Many say they are unethical, borderline illegal,
and some call them a fraud

37. Negatives of Shelf Corporations
• From Dun & Bradstreet…
• “It is unclear whether it is legal to use shelf
corporations to access credit. It is clear,
however, that this is a deceitful, unethical
maneuver that serious entrepreneurs should
avoid.”

38. Negatives of Shelf Corporations
• If the credit bureaus learn about the company
being under new management, they will list it
on their reports, effectively "re-aging" the
company

39. Negatives of Shelf Corporations
• "Shell and shelf companies…can be created
domestically or in a foreign country. Shell and shelf
companies are often formed by individuals and
businesses to conduct legitimate transactions.
• However, they can be and have been used as vehicles
for common financial crime schemes such as money
laundering, fraudulent loans and fraudulent
purchasing.
• By virtue of the ease of formation and the absence of
ownership disclosure requirements, shell and shelf
companies are an attractive vehicle for those seeking
to conduct illicit activity."
• FDIC Special Alert, April 24, 2009

40. Negatives of Shelf Corporations
• Many lenders now look at the bank account
start date as the corporation start date
• Most shelf corporations don’t come with
established bank accounts
• Some shelf corporations have actual credit
problems making it harder to get funding, not
easier

41. Negatives of Shelf Corporations
• Most lenders know what to look for to see if
the corporation is a shelf corporation
• Things like your business Bank Rating could tip
them off
• Public records also show the change in
ownership which raises red flags

42. Negatives of Shelf Corporations
• They are expensive
• Some companies might charge $500-6k
• Some companies charge $20k or more
• Cost depends on how long company has been
opened

43. Negatives of Shelf Corporations
• If you purchase the corporation, you are now
the owner and responsible for anything bad
that may have happened with that company
since the day it was incorporated
• This includes back taxes, financial audits,
lawsuits, and judgments

44. Negatives of Shelf Corporations
• They really aren’t needed in business credit
building
• Most vendors WILL approve new businesses
for credit, even if they just opened
• The key is to know which vendors can help a
brand new business, and which ones can’t

45. Summary
• Shelf corporations are NOT necessary to build
business credit
• Using a shelf corporation is not the best way
to build business credit
• Due to their expense and potential issues,
they can actually hurt you more than they can
help

46. Summary
• The best way to build business credit is to
work with vendors who approve new
businesses, as many do
• The best way to get funding is to use
collateral, or have your business generating
cash flow
• Other ways to get funding are to use good
credit partners to obtain unsecure financing

47. Getting Started Today by
visiting
www.BusinessCreditExpert.com
Ty Crandall
877-600-2487
ty@disputesuite.com