PRIMERA, INC.

SHELF CORPORATIONS & AGED CORPORATIONS

NAME & INDUSTRY ISSUES

The name of the shelf corporation is limited by its availability. First, decide whether you need a name that is industry specific that includes words like, “contracting, consulting, office or software.” Industry specific aged corporations are more difficult to find because providers usually stick to names that are general in nature. Why?
industry name issues

Shelf corporations with general names are easier to sell. We offer industry specific shelf corporations in the following categories:

general name companies sell easily
(1) Automobile

(2) Business

(3) Contracting

(4) Data

(5) Distribution

(6) Entertainment

(7) Financial

(8) Food

(9) General

(10) Health

(11) Home

(12) International

(13) Italian

(14) Japanese

(15) Landscaping

(16) Legal

(17) Marketing

(18) Medical

(19) Patriotism

(20) Photography

(21) Realty

(22) Security

(23) Technology

(24) Telecommunications

(25) Training

(26) Travel

RISKY BUSINESS NAMES AND BUSINESS CODES THAT LEAD TO LOAN REJECTIONS

There are certain industries that are perceived by lenders as extra risky. If your business appears to be part of one of these industries, you could be looking at automatic denial. At the least, you may be subject to stricter underwriting, as well as higher rates and less favorable terms. Lenders make a judgement of what industry your business is based on a couple of things.

First, they look at your business code; this could be a SIC or NAICS code. You need to find a way to avoid automatic denials based on your industry code or business name, while still being honest. Integrity is of the utmost importance, and a lack of it could cause future denials and even criminal charges.

What are SIC Codes

Standard Industrial Classification (SIC) is part of a business classification system. It is a four digit number assigned by the US government to businesses. SIC codes make it easier to identify the primary activity of the business. Lenders use this code as an indicator of the kind of business a company is involved in. The SIC code system was developed by the Securities and Exchange Commission (SEC). The first four digits signify the general industry of a business. Then, the numbers are added to the end of this four digit chain to add specificity.

What are NAICS Codes?

The North American Industry Classification System (NAICS) is a more recently instituted business classification system. It is used to classify business establishments and collect, analyze, and publish statistical information related to the economy of the United States. For each NAICS code there may be multiple SIC codes as SIC codes break down more specifically. While the plan is to fully switch to the NAICS system, many industries still have the old SIC system deeply ingrained.
what are sic codes
difference between sic and naics codes

Key Differences Between SIC and NAICS Codes

SIC codes are developed solely by the United States government. SIC codes group together establishments based on either demand or production and are actively used for business targeting in the private sector. NAICS codes are developed in conjunction with the US, Canadian, and Mexican governments. NAICS codes group together establishments that use the same or similar processes to produce goods or services and are actively used for government statistical purposes.

Codes and the IRS

As a business owner, you select a SIC code to report to the IRS. They will use it to determine if your business tax returns are comparable to other businesses in your industry. If your deductions are not reasonable when compared to other businesses in your industry by SIC code, you could be audited.

Codes and Risk

Certain codes are associated with industries that pose more risk than others. If you happen to choose one of these high-risk codes unnecessarily, you may be denied funding. If you understand how the system works, you can choose the best code the first time to avoid denials. Some examples of high-risk industries include casinos, pawn shops, liquor stores, automotive dealers, and restaurants. As with any business aspect, risk must be taken into consideration. Each industry code has its own inherent issues. Still, some industries are thought to be riskier than others by their very nature. An industry may be seen as risky if there is a high chance of injury, either to workers or customers. It also may be considered risky if there is a high chance of theft. This is true despite how the business is doing and its safety record or security system. Even if a business is doing great, it could be seen as risky simply due to the nature of the industry.

Risk and Funding

If your SIC code or NAICS code indicates your business is part of a risky industry, what does that mean? The main issue is that it could make it difficult to get funding for your business. There are several industries that lenders are hesitant to lend to. Some of these industries are subject to stricter underwriting guidelines. In these cases, the business must seek out other funding options. These options could include angel investors, venture capital, crowdfunding, building business credit, and more.
solution to get fund with risky code

What’s The Solution For Getting Funding With a Risky Code?

It is key to remember that you as the business owner get to choose your SIC code. While you want to be honest, you can be too general. You do not have to be more specific than necessary. For example, restaurants are risky, but if you also sell boutique items, you can use a SIC code related to that aspect. If more than one SIC code can apply, be sure to choose the one that is the least risky to lenders.

Business Names and Risk

As already mentioned, your business name can indicate risk. That is, if it indicates you are part of a high-risk industry. For example, you do not have to name your business “Joe’s Used Auto Sales,” instead you can simply name it “Joe’s”. There is nothing unethical or underhanded in doing this.

Business Codes and Names are Not The End Game

Of course, choosing a SIC code and name that does not indicate risk is not a funding guarantee. There are many other factors that go into a lender’s funding decision, including fundability. However, if you choose the wrong code or business name, the lender may never see how fundable your business really is.

What are the High Risk Industries

High risk industries include: Auto, RV or boat sales; Computer and software related services, including programming; Dry cleaners; Gas stations or convenience stores; Long distance trucking; Mobile or manufactured home sales; Phone sales and direct selling establishments; Real estate agents and brokers; Real estate developers or land subdividers; Restaurants or drinking establishments; Taxi cabs; and Travel agencies.
the alternate use of naics and sic

How Else are SIC and NAICS Codes Used?

Both codes have more purposes than allowing lenders to determine if your business is fundable. The Department of Revenue uses these codes for legislative purposes. These codes can also be used to extend government offered incentives. To keep taxpayers within a specific industry aware of changes to laws. These codes are used by the IRS for multiple purposes. They are used to determine product classes in relation to exchanges of property or depreciation. For comparative purposes, if your information does not track with others under your code, it could flag you for an audit. These codes can also be used by the SBA to categorize your business. This is especially true when it comes to applying for government contracts. You must meet standards for contracts and the SBA assigns a specific size standard to each NAICS code. The SBA also uses NAICS codes to determine eligibility for the Women-Owned Small Business Federal Contracting Program. The SBA keeps a list of qualifying codes.

Recap

Businesses need funding, but if your business is perceived to be part of a risky industry, you may be denied. SIC codes, NAICS codes, and business names all lend to the risk perception of lenders. Choosing the wrong code or name for your business could get you an unnecessary automatic denial for funding.
choose the code wisely
Don’t like the name of the available shelf corporation or shelf LLC? File a Fictitious Name/DBA in the state where you seek to do business. In this way, the age of the company will be respected.

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