They are simple and can be
done by anyone.
Sample of a promissory note
Note that you can get a sample
promissory note on the web
for free. Also, note that Promissory
My; note and agreement
are used interchangeably in the
above illustration
It is better to get your friend
or family to give you the loan.
That way they can fill their name
in the UCC -1
The UCC-1 usually has a
line for the name of the one who
is borrowing the money. There is
typically another column in case
more than one person is borrowing
the money. Note that you
don’t have to enter your social
security number in the UCC-1. It
is not needed.
The third line is for the lender
(the person giving out the money).
The fourth line is where the
collateral is listed. Details of
the collateral must be given as
much as possible to describe it
adequately.
The next thing is to enter
the reference number of your
agreement that you have already
registered with the clerk
of your local Court. This is very
important because the UCC-1
does not record the amount of
money involved in the transaction.
The amount of money is
only contained in your agreement.
This is why there is a column
for reference number. The
reference number is that which
you obtained after registering
the agreement.
To indicate the release of
the collateral, a UCC-3 must
be filled. This is just like updating
the UCC -1 to show that the
agreement has been fulfilled.
The UCC -3 is used to amend
and terminate the collateral. After
repayment of the loan every
month you can fill in the UCC-3
to amend the deleted collateral
and which collateral is left to fulfill
the remaining debt.
After fulfilment of the entire
agreement, that’s repayment of
the whole loan and releasing of
all collateral you fill the UCC-3
and indicate the termination of
the collateral.
This is pretty simple and
straight forward. You still used
the file number used for the
UCC-1.
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A security agreement is
just like a regular agreement
or promissory note. It is called
a security agreement because
it states the use of security for
a debt. That is collateral for a
mortgage. An agreement used
for UCC filing is usually a security
agreement because it often
contains collateral. Please note
that referring to it as an agreement
or promissory note in the
illustration doesn’t change it.
That was done for convenience.
You can use this method in
case you do not want to get your
friend or family involved in your
finances. This method is done
with a corporation.
How does this work?
To start with, you have to set
up a corporation.
To set up a corporation, you
need to get an EIN and a tax
identification number for the
corporation that you set up. Just
like the first process, you do
not need a lawyer for this. Only
search the web for how to get
incorporated, and you can get
companies to help you do so.
Alternatively, you can visit www.
LifeDesignersllc.com and ask
the help desk for an EIN for a
C-corp set up.
What other things do you
need?
A business address
If you don’t have another address,
use your home address
and make it a home-based business.
Wherever you want to
use, just make sure that the mail
comes to that address.
Nature of business
Use something generic. For
instance “Business management.”
Type of business
The type of business should
be a C-corp to allow more flexibility
and make it easier.
Main officer
You are the principal officer
who will sign any documents for
decision making. However, you
can also make any other person
the main officer. It all depends
on your choice. A corporation
has a separate legal entity.
Whoever you make the main officer
has no direct link. It is the
corporation that is seen. But to
make this easily understandable,
let’s stick to you being the
Main officer.
After getting all these requirements,
take the corporation
papers you received containing
the EIN and Tax ID number to
the Office Depot. Order a corporate
kit, which includes the company
seal at the office depot.
This seal is what you will use to
Stamp everything that you sign
in the company’s name.
How is this useful in developing
your tradeline?
In straightforward terms, this
means that you now have someone
(though not a natural person
but a legal entity) that can file a
UCC against you. In case you
want to improve the corporation’s
credit line, you can also file
a UCC against the corporation.
So you can lend money from
the corporation just like you
would have lend from your friend
or family. Then, you go through
the same process listed earlier
in the illustration to register the
agreement and file the UCC,
and when the time comes, you
terminate the UCC. The only
difference here is that you sign
for yourself and also sign for the
corporation as the Main officer.
Note: Always remember to
use the seal to stamp whenever
you are signing on the company’s
behalf.
You can also make the corporation
the debtor and lend it
money. This will help build the
credit of the business.
Yes, there is a little extra
advantage attached to using A
corporation. With a corporation,
you can backdate the debts.
This how it backdating works:
let’s say your company borrowed
money from you or you
borrowed money from your company
two months ago. You can
write in the agreement and the
UCC that the debt was a year
ago. This is because a corporation
is allowed to do business
before incorporation. The fact
that a company does business
before incorporation boosts the
company’s credit more. This
will show that the company has
been doing business for a while.
You can now see that this is
an effective way of boosting your
credit line. This UCC filing method
is legitimate, simple, and
straight forward. However, don’t
get too excited and overdo it.
There has to be a degree of equilibrium
in the way you use this
method. Ensure that the amount
you borrow and the intervals you
borrow are reasonable to avoid
unnecessary attention.
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