Is This Hack Better Than Robbing a Bank??

There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this new series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!

CapForge Founder and Owner Matt Remuzzi reacts to business advice being shared on the internet. In this video, he reacts to this video that suggests a way for business owners to find funding. 

Video Transcript: 

Business Advice Video:

Here’s a small business funding hack that’s almost as good as robbing the bank. A shelf corporation is just an age company that’s been around for a select period of time but doesn’t have any activity yet. So what you can do is buy one of these shelf corporations for as low as a few hundred dollars and then use it to apply for business credit for five or even six figures.

Matt’s Review:

Okay. well, here’s the thing. Most people that have five figures or six figures to lend are not complete idiots. So if you buy a shelf corporation that was set up let’s say five years ago and now somebody’s willing to sell it to you, but literally all that’s happened is they created it and they registered it and they let it sit for five years and then they sell it to you for 500 bucks, it doesn’t actually have history. It has “I was registered five years ago.” But you know what lenders ask for? And creditors ask for? And vendors that are gonna work with you on credit terms ask for? Credit history. “Great, let’s see your bank statement. Let’s see your sales activity. Let’s see your cash flow monthly. Let’s see what you’re actually doing. Can you afford to pay back a loan of $50,000 or $100,000 from your current activity? Oh, you don’t have any current activity. All you have is a shelf corporation that you bought that was started 5 years ago and then nothing actually happened with it.” If you imagine that this is fooling people, the only person being fooled is you. No credible lender is going to give you a business-only loan. Whereas you don’t have to sign personally for it for a shelf corporation just because you spend a few hundred dollars to buy somebody else’s old business, that had no activity. I don’t know if this guy is selling shelf corporations or he’s just not informed about how the world really works. But this is absolutely not a quick way to get a no personal guarantee loan for six figures, because you bought something that was registered 4 or 5 years ago.