For various reasons, we need to expand our credit line in a hurry (picked up great project that took most of our capital as investment and hard money lender never panned out – small apartment building for rehab). I’ve got good back-end financing to pull a loan when a project is done but am struggling on the front end. The hard money guy wanted ridiculous $$’s (would have come to about 15% to use his money for 6 months). Plus I didn’t meet his criteria anyway (?). So anyway,
We are expanding our consumer credit to handle the renovation on this project. We are looking at a couple offers we threw in a folder for business accounts, and a few for personal accounts. I am worried that we might have trouble getting the personal credit that we need. In that situation – and not wanting to apply for a bunch of cards – which do we have a better shot at getting a good line from? Any actual experience on people applying for the business credit cards, where the one-page application asks your type of business form (corp, partnership, etc.), the business name, etc.?
thanks in advance,
remodeler
Replies
i only have a slight track record as a Corp but the offers come rolling in for ten to twenty thousand lines of credit at decent rates. My personal credit is standing near the crapper door because of the wiofe's medical bills but I could lay hands oin sixty grand in busuness cash in a couple of days.
The thing to be careful of is too many applications all at once rings their bells.
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Any offers for corporate cards I have gotten in the three years that I have been an LLC are still really personal cards. They are issued in the company name but have to be personally guaranteed. So there probably isn't really much difference which you use.
My wife and I did a fix-up and sell rehab about 10 years ago where I put every material purchase on a 20,000 credit limit credit card with a 9 month zero percent teaser rate. We actually sold the house before we paid any interest at all.
However, now I almost always use a commercial line of credit. My bank offers me 1 point over prime and they haven't turned me down yet.
Is the building currently occupied? I have done a few small apartment bulding ( 2 to 4 units ) rehabs thru the years and have always just renovated one apartment at a time as the tenants turn over. Working on a great 4 unit stone house right now.
remo,
I have both. Like Doug said you still have to sign personally for the credit for the business accounts as they will not let a small corp (like mine) stand alone in the credit arena. I am sure in time (its been 5 years) and more income it might be different.
The biggest difference I have seen is you can call up on the phone and ask for an increase on a personal card, not always true on a business. Once in awhile they will give it a small bump but generally they want to review all the tax records of the business etc.
Got any other property with equity? You could draw a business line of credit off that. 15% may seem a lot but I have lent money on a short term basis to a few rehab guys locally and got more than that each time. It is really difficult to finance things as you build up your portfolio as the amount of income vs out go even on a profitable unit is still 50-60% debt ratio and over time it attacks your personal percentages. And bankers are only historians, they don't give a damn about the future profits.
Also Piffin made a good point, you don't want to apply for a bunch of credit cards as they show a "hit" on your credit report and will lower your score. Toughest part of the buy, rehab and rent business in my mind is financing. DanT