topic Re: Loan or Business Credit? in Business Credit

Loan or Business Credit?

JSS3 — Fri, 07 Feb 2020 00:03:35 GMT

A friend of mine is looking to purchase an apartment building. He already has a business(separate from this new venture) that grossed about 60,000(aside from his regular job). He also has excellent personal credit. Now, in the future he is looking for a large limit on either a (business) credit card, Line of Credit, or loan that he can take money out against, then use the money he will be paid(collecting all the rent) to pay said loan back.

What's the best route to accomplish this? Borrowing a large sum, knowing you will have sure money to pay it back rather quickly. Do we look into business credit card, a loan, or a line of credit? What, and which company, will take his 60,000 gross business income(and personal income) into account to give him the highest limit card/loan that he can borrow against for business purchases that'll be paid back, swiftly?

Thanks in advance for all feedback.

Re: Loan or Business Credit?

Anonymous — Thu, 06 Feb 2020 17:46:14 GMT

What limit is friend looking for on a CC? Not many Banks will hand out a large line of unsecured credit, typically start at $25-50K depending on the person's profile.

Is this person needing the funds to purchase said apartment building? if so, then a loan tailored to real etate investment should be sought.

This will also help keep a set monthly payment each month untill they have collected all rent from tenants.

Your friend could also look into a Biz LOC. A CC will not work, in most cases, for this type of venture. Unlkess they used Plastiq perhaps.

Re: Loan or Business Credit?

JSS3 — Fri, 07 Feb 2020 00:08:08 GMT

@Anonymous wrote:
What limit is friend looking for on a CC? Not many Banks will hand out a large line of unsecured credit, typically start at $25-50K depending on the person's profile.

Is this person needing the funds to purchase said apartment building? if so, then a loan tailored to real etate investment should be sought.
This will also help keep a set monthly payment each month untill they have collected all rent from tenants.

Your friend could also look into a Biz LOC. A CC will not work, in most cases, for this type of venture. Unlkess they used Plastiq perhaps.

He is looking for a huge 40-50 credit line so that he could take out about 20,000 or 30,000 with some cushion.

From my understanding(and I will double check), the money he wishes to draw off of his (hopefully) huge line would not be for the apartment building. He does, however, plan to use the income from the apartment building to pay back the loan.

If he did a business line of credit, should he first secure the building?(he has not done so yet). OR will his current 60,000 business income and personal job income(together), suffice to secure a big business line of credit that he can borrow against?

Also, which company should he approach first for a huge business line of credit that will allow him to borrow against it?

Hopefully, I am using the correct terms. I am not well versed in the business side of things or LOCs. I have only learned about personal credit cards.

Re: Loan or Business Credit?

Anonymous — Thu, 06 Feb 2020 18:44:56 GMT

I would suggest that he speak to Biz Loan officer at the bank he holds accounts with, to get a better idea what options he has available.

Any lender is going to want POI, his ablity to pay back said line of credit. And at present, he cannot include rental income. So it would be based on current personal/biz income. He also shouldn't be applying for CC's or any other credit until he secures the loan for the apartment.

You cannot count on revenue that hasn't even been generated yet. So if he cannot afford to pay the building payment without the other credit lines, I'm not sure where that leaves him.

Re: Loan or Business Credit?

JSS3 — Thu, 06 Feb 2020 19:33:07 GMT

Thanks! I will pass all of this info on to him.

Re: Loan or Business Credit?

GApeachy — Fri, 07 Feb 2020 12:11:55 GMT

@JSS3 wrote:
Thanks! I will pass all of this info on to him.

There are online services he could look into like Behalf(pays the invoices-i believe...do a search here) and Kabbage, Bluevine for loc's, easy to get but the limits are kind of low unless you combined. Perhaps Paypal's LoanBuilder. He'd have to just call around or do the online pre-quals to see. Like @Anonymous mentioned, a local bank may be, seems like, the best first step into this new venture. At least your friend will know quickly his limitations.

Re: Loan or Business Credit?

JSS3 — Fri, 07 Feb 2020 14:38:00 GMT

@GApeachy wrote:
@JSS3 wrote:
Thanks! I will pass all of this info on to him.
There are online services he could look into like Behalf(pays the invoices-i believe...do a search here) and Kabbage, Bluevine for loc's, easy to get but the limits are kind of low unless you combined. Perhaps Paypal's LoanBuilder. He'd have to just call around or do the online pre-quals to see. Like @Anonymous mentioned, a local bank may be, seems like, the best first step into this new venture. At least your friend will know quickly his limitations.

Thanks!

Re: Loan or Business Credit?

JSS3 — Fri, 07 Feb 2020 19:15:00 GMT

Ok guys...I got stuff wrong earlier. My apologies, as I realize the advice given can only come from being as accurate as possible.

My friend wants to take out the business credit to borrow about 30,000 off of it FOR THE DOWN PAYMENT of the building. His thought process is that business credit doesn't show up on your personal reports(like a loan would) and raise the debt to income ratio. His debt is super low and he would like his pristine profile to garner the best results(ie highest limits possible).

Let me know if anything stated is erroneous thinking or if it won't matter in the long scheme of things.

Re: Loan or Business Credit?

GApeachy — Fri, 07 Feb 2020 19:18:41 GMT

He ought to check Amex biz loans and see if they have something for him.

Re: Loan or Business Credit?

JSS3 — Fri, 07 Feb 2020 19:39:02 GMT

@GApeachy wrote:
He ought to check Amex biz loans and see if they have something for him.

Are you able to take a cash advance on Amex? Dealing with them on a personal, they're the more scary creditor who doesn't support that...but I only know from personal credit.

Re: Loan or Business Credit?

GApeachy — Fri, 07 Feb 2020 19:44:50 GMT

@JSS3 wrote:
@GApeachy wrote:
He ought to check Amex biz loans and see if they have something for him.
Are you able to take a cash advance on Amex? Dealing with them on a personal, they're the more scary creditor who doesn't support that...but I only know from personal credit.

On a card....omg, I think that's the kiss of death, lol! But a business loan with Amex might be enough for what he needs, or a combo of loans with Amex and/or LoanBuilder or just his local cu or bank or both. Amex and LB do not report to personal just to the biz side as long as it's through his biz. If he has pristine credit they may jump on him with an offer to cover that upfront. He can check their pre-quals.

Re: Loan or Business Credit?

JSS3 — Fri, 07 Feb 2020 20:36:01 GMT

@GApeachy wrote:
@JSS3 wrote:
@GApeachy wrote:
He ought to check Amex biz loans and see if they have something for him.
Are you able to take a cash advance on Amex? Dealing with them on a personal, they're the more scary creditor who doesn't support that...but I only know from personal credit.
On a card....omg, I think that's the kiss of death, lol! But a business loan with Amex might be enough for what he needs, or a combo of loans with Amex and/or LoanBuilder or just his local cu or bank or both. Amex and LB do not report to personal just to the biz side as long as it's through his biz. If he has pristine credit they may jump on him with an offer to cover that upfront. He can check their pre-quals.

Thanks so much! This loan reporting under his business was the key factor for him.

Re: Loan or Business Credit?

Anonymous — Sat, 08 Feb 2020 18:14:59 GMT

I would never do a cash advance on a CC, especially that large of one. I'd go the plastiq route first.

Also, while BIZ accounts in the positive do not show up on personal CRA's. Those lenders you have Biz accounts with have all of your info, and if something pops up on personal that might worry them. That debt will play into their decision on whether AA is necessary.

Trying to hide debt to take on more, probably isn't a good idea. Just a word of caution.

I do think that your friend should talk to a financial expert to see exactly what he can afford to bite off, and still chew.

Re: Loan or Business Credit?

GApeachy — Sat, 08 Feb 2020 18:29:22 GMT

@Anonymous wrote:
I'd go the plastiq route first.

Hey, how does that work? What would you use that for? You got me curious.

Re: Loan or Business Credit?

Anonymous — Sat, 08 Feb 2020 18:46:42 GMT

You haven't heard or used Plastiq yet? It's a service that you can use a CC for almost anything and they treat it as a charge so you still earn points. Such as Rent/Mortgage, Car payment etc.

Like say Amex isn't accepted as payemt method for your landlord's portal, you then use plastiq and they send a check to them. Same with mastercard for Auto lease.

That said, $30K might be a bit steep. But if you're CL is high enough Plastiq would run it as a charge, and you could in theory pay that to the seller.

Re: Loan or Business Credit?

GApeachy — Sat, 08 Feb 2020 18:49:19 GMT

@Anonymous wrote:
You haven't heard or used Plastiq yet?

I've seen it mentioned around here but that's about it. Thanks for responding.

Re: Loan or Business Credit?

Anonymous — Sat, 08 Feb 2020 19:02:34 GMT

Oh the fee is 2.5%, so continued use without any offset may not seem feasible for some. But in my experiance their fee is usually cheaper than what the portals charge.

Re: Loan or Business Credit?

GApeachy — Sat, 08 Feb 2020 19:26:50 GMT

Thank you @Anonymous I might try this, trying to set up an acct. now to see what it's all about. Would be neat to earn rewards, cash back using this...which could offset the fee. I hate sending checks to some of our vendors. pita

Re: Loan or Business Credit?

Anonymous — Wed, 29 Apr 2020 05:13:18 GMT

Not sure if this is a late reply, but your friend should focus on getting a business loan ideally. Second best option is business LOC. Some banks want to pay down the while anoint once a year. Credit cards is last option.