Stated Business Line Of Credit For Real Estate

Financing, Hard Money Lenders, Private Money
1

Hey, I am a newbie and have been doing some research in RE and decided to establish an LLC for rental properties and an S-Corp for my wholesale and flipping deals.

I plan on applying for a stated business lines of credit from banks or financial institutions to use in my real estate business.

That said I have three questions;

HOW CAN ONE APPLY FOR SUCH STATED BUSINESS LINES OF CREDIT?

WHAT IS THE PROCESS INVOLVED?

HOW LONG AFTER STARTING A COMPANY CAN ONE APPLY FOR A STATED BUSINESS LINE OF CREDIT?

thanks in advance for your answers

2

there are no such animals that I am aware of that are stated LOC’s, all are verified and low/full doc. they are credit lines, and subject to approval based on your personal credit, not business. there is only one buiness credit card that i know of that will base thier decsision and your credit line on your business credit and that is the Home Depot Mastercard but there are several things you need to do before you attempt to get it. my suggestion is to go to www.creditboards.com and read up on building business credit.

having said that, DO NOT tell any bank or potential lender that you are in the real estate biz, especially flipping when u want LOC’s. most lenders (LOC’s and CC’S) will not approve you for your REI business, even with stellar personal credit. they consider it too risky unless they are writing your mortgage. my suggestion is to form a standard corp, not an LLC for the purpose of doing business everyday. call it whatever you want but be sure to put in the articles of inc under ‘nature of business’, “anything legal”. that covers all bases. now wait 2 years for it to season. or, buy a shelf, aged corp for a few hundred bucks and you have your 2 yr plus corp. google ‘shelf corporations’ and read up on them. folks do it everyday.

all businesses have a seasoning period before you can get credit, even with great personal credit. most lenders want 2 yrs in biz, some want 2-5, depends on your business type. i have a coffee shop and it is considered restaurant business (risky) and I still have to wait another year for a great LOC’s i want. some lenders will verify the INC date w/ the sec of state so be careful not to pad an dates on apps.

EDIT: i just realized I NEVER finished this post! SORRY!! :frowning:

PLease know that you will need to use personal credit to get LOC’s, and major CC’s for your biz. the per credit needs to be good too. some lenders will not even care if you have a biz though, so the 2 yr seasoning period i mentioned above may not matter, but it can’t hurt. ur credit and a 2+ yr old biz can help you get better credit lines, it may not help you just get them. make sense? IOW…i have a 15 yo corp that I rcvd a $20k cc for, but that same bank issued me a $4k limit on my 2 yo biz. both times they pulled per credit too.

3

thank you for your reply, but if this is the case, why do I read and see gurus claiming that one can get stated business line of credit everywhere?

4

After reading your reply you sparked a certain interest in buying a shelf corporation due to the fact that most have been established for about 2 year hence quick access to business line of credit requiring at least that length of time.

My question now to you is what resource do you know of or have used that can help me get on of these so called shelf corporations?

5

i do not know of those that spoke of them, but i guess technically u can get a “stated” business line of credit if you use real estate as collateral, and use a stated loan product to get it, but that would be pulling out equity. the only other way I know of doing a “stated” LOC is to just fill out the application and put your income down for whatever you make. they really cannot check it unless u authorized them to pull your tax return, or give them a pay stub. now don’t get me wrong, i am not advising fraud of any type but this i would consider “stated” becuz if a lender does not require and documention or financials, it is, in essence a “stated” method.

in regards to a shelf corporation, go to www.creditboards.com and read up on shelf corps. there is too much info to get into it here. i have never bought one, but i did have an old corp from 15yrs ago from a biz i closed but the corp was still active. my credit lines i got using that corp were sigificantly higher than the ones i got for my 3 yr old corp. i use that for my consulting biz now, i just changed the name but the charter number is the same, that is what is important. i already know there are going to be some folks here that think this is not a legal practice but it is. u can verify it anywhere on the web.

look at it this way: if u buy a business that is 20yrs old, and u buy the corporate shares of stock as the aquisition, ur benifit is the age of the corp. but be careful, you also buy the negative side of the corp like future IRS tax liens if the former owner was in trouble or irresponsible. same for bad credit, u inherit all that. there are drawbacks.

HOWEVER, there are businesses that just start corps and let them age for the purpose of selling them as shelf corps. do your due dilligence and find one that is reliable. by researching on creditboards, you can get referrals too. hope this helps.

6

Question in regards to Aged co’s:

When I first started in the mortgage business 10 years ago (as l.o.)
I incorporated two mortgage companies with the intention of obtaining
licensing in two midwestern states. I have never used these companies
at all but they are still listed with Sec of State (as dissolved).

Can I revisit opening these companies again and if so what is the normal
proceedure? Will I get to use the 1997 Inc. date or what?

7

check with the state they are registered in. i am not familiar with many states but the ones that i have my corps in will NOT allow you to re-register a dissolved corporation. i did have that same idea for another aged corp that i had dissolved

8

Thank you guys for you response but I did it the old fashion way, I decide d to start my LLC from the start, so I went out and registered one. I signed up with a business credit consultant company that is recommended by the IRS as a good company for both startups and old companies to make use of their services to build business credit. They have a great track record.

www.bcscredit.com

Go there make use of their services and tell them Owen from Zenith Property Solutions LLC sent you.

9

I referred a client to BCS last year and he was not very happy with the service. He said that they use high
pressure sales tactics to reel you in but once he signed up they were very hard to reach and took over 60 days
to complete LLc paper work.

10

Well in my case I did the LLC registration by myself, which in my opinion anybody can do. All you go to them for is the Business Credit consultant itself.

11

I know there are negatives and positives with all things. I plan to contact SCORE in the morning and get their opinion of establishing business credit with Business Credit Services, Inc. If you think about it, the guy who had a hangup with getting his paperwork done never did say it didn’t work out.

Imagine, in America we can so easily build such a large credit base as mentioned. That’s pretty amazing to me! In other words if it takes you 6-90 days to get a line of credit of 2,500 even, thats pretty nice isn’t it?

:-*

12

in my experience, it took me just under 60 days to get about $10k in business credit. you have to remember that as i said in an earlier post on this thread, it’s not 100% practical credit for every business. it’s things like Office Depot, Lowe’s, Home Depot, NEBs office supply, Viking Office supply, etc…the only major credit card you can get without giving your SSN is the Home Depot Business Master Card. Getting the cards I mentioned like Office Depot, etc are designed to get you a paydex score on DnB, and a score on Experian Biz.

HOWEVER you have to try to get the highest credit limits you can get on the store cards in order to get a nice limit when you go for the Home Depot Mastercard. That card should be the last one you go for if you are not planning on giving your SSN. Otherwise you’ll end up with a $2000 limit. Not bad but I can do more with $10k.

ALL OTHER LOC’S AND CC’S FOR BIZ WILL REQUIRE YOU TO GIVE YOUR SSN OR DEPOSIT OF FUNDS AND THEY WILL PULL A PERSONAL CREDIT REPORT.

Did I stress that enough?

I am serious folks, you will not get any other kind of biz credit without giving your SSN or deposit $. Also, u have to have the right score/income to get the cards/nice limits. There is no other way unless you are a fortune 500 company or have millions in assets. Period.

Having said that, there is nothing that ANY credit building company, business or otherwise can do for you to get you business credit that will get you major cc’s or LOC’s without your SSN. If they do, I’d seriously question the legality of it. It just is not gonna happen. Why pay a company or someone else to do something you can do on your own with a little research, study and work?

Between my partner and I, we have personally gauranteed our major biz credit cards and LOC’s. We have, together about $100k in biz credit right now, and I am still working on more. I am waiting on his personal score to go up becuz Amex just upped his personal line $12k so the score is gonna go up when they report it. Then I will apply for some LOC that we do not have.

So you have to study the system, and use it to your advantage. I have been working on this for about 1.5 years now. It won’t happen overnight, not even with a business building company.

13

Well not that I am promoting this company or any but they have been recommended by the IRS as a good company to work with. The have a honorary standing with the BBB. The only people who can talk about them are people who have used their services. Hit me up in 6 months and I will let you know if it was worth it or not.

14

well first we need to ask what exactly does the IRS do that is practical to begin with :o and that includes reccommending companies ;D

all kidding aside, my point is not whether they are a good company or not but what exactly they are going to do for you. I would seriously, ask them what SPECIFICALLY they are going to get you in the way of practical business credit, like LOC’s and business credit cards with nice credit limits. that may be something you should know beforehand.

i hope it all works out to your benefit.

15

Ok I suggest anyone with doudts go to their wbesite, they have a brochure that shows you the six months program of how they will get your business through all the tiers of business credit. From the 1st tier to the fourth tier. Dont quote me on this, I was just suggesting that they might be a candidate to us.

check them out.

16

i looked at thier website before. it is impressive until your end results. no place does it mention getting a biz LOC or MAJOR CC without a PG, it’s all vendor accounts, store cards, etc. here is a snapshot of what they post on the site:

[i]$8,000 Wholesale Goods Credit Line

$7,500 Electronics Store Credit Card

$1,000 Office Supply Credit Card

$50,000 Hardware Store Credit Line

$25,000 Computer Line of Credit

$1,000 Corporate Gas Card

$65,000 Equipment Lease

GM Trucks Vehicle Lease[/i]

Not one of those is a LOC for cash, or major cc’s. sure they may be practical but I can get you those and charge you half of what this company is charging you. how about that? ;D

looking further, after they bait you, it states on another page:

[i]An example of what many of these businesses have been able to achieve individually and in most cases without a personal credit check or guarantee by working with Business Credit Services’ Business Credit Builder Program are:

Computer Line of Credit of $35,000
Equipment Lease of $15,000
Hardware Store Credit Line of $25,000
Electronics Store Credit Card of $7,500
Department Store Credit Card of $5,000
Office Supply Credit Card of $7,000
Corporate Gas Card of $5,000
Printing Company Credit Line of $5,000
Cadillac STS Lease
Unsecured Working Capital Loan of $50,000
Hummer 3 Lease
GM Truck Lease
Business Lines of Credit totaling $400,000 [/i]

note what i put in bold type just above: and in most cases without a personal credit check or guarantee…

ummm, most cases? most means not with a major cc or LOC. again, unless you are a fortune 500 co, you won’t get major biz cc’s or LOC’s without a PG, good credit and per credit check and there is nothing that ths company can do for you that is going to speed it along or make it better. it just can’t happen. I know for myself, I do not need any net 30 accounts for printing and dog grooming, or 3 $5k gas cards.

seriously, why wait 6 months for a program that someone is gonna do when you can get it done for no cost, by yourself and in less than 60 days?

17

So you are telling me you have a better program, ok now spill it out. Take the altar and share with us what you can do for us and what are your rates.

18

now i am sure u know i am not pushing any program. I am a frequent poster/reader at creditboards.com. i have been for about 1.5 years. b4 that i was on creditnet.com for about 3 yrs. that is my program. i work it. it’s free.

HOWEVER, i spoke at length with a gal named Robin at Business Credit Services, the site you are talking about. for $1795 they take u thru 6 mos of this and that. i still do not beleive that they can get you major cc’s and LOC’s with no PG or per credit check, for a small biz.

apparently it’s all about compliance. they make sure you co. is in compliance with local, state and fed rules for corps, biz licenses, this that and everything else and apparently when all this is lined up, and the stars are just right your profile will tell them what banks they can send you to that will give you the HUGE capital that you want. you have to go thru the steps first, by getting the net 30 accounts, the store cards, the gas cards, use them, pay them, get credit limit increases, maintain biz credit scores…just to name a few. these points are all lined out for free at creditboards. i am not the only one that has referred folks on this board there.

if you want to try this Business Cred Svcs, that is of course your decision. If you can do what they say exactly as they say and be able to provide the proof, i will recant what i have been saying. i will beleive it when i see it.

there were lots of holes in what this gal Robin was telling me. direct questions I asked her about LOC’s and major CC’s with no PG were skimmed around with examples and questions back to me. she is a great sales person, that is it.

this company works a lot with investors and angel investors. that is where the no PG or credit check comes in for working capital lines. it’s non-traditional. however, you think these investors are going to loan you money without collateral or gaurantee that they will get it back? of course not. you usually have to give them part ownership in your company, plus the interest rate is normally not favorable. you can find investors on your own if that is the route u want to go.

Robin also told me that regardless of the bank they work with, you will have to give a PG on a loan, becuz ‘it’s a bank’, as she said. it just won’t show up on your per credit. well duh, if you ask this of the bank before you apply, u can determine if you want that bank! i ask that all the time and make my decisions accordingly before i apply. it is, according to her, a NO DOC loan, but that does not mean they are not going to pull a per credit report.

as i said, if you want to try it, go for it. i really do want to know if they can really do this! i just don’t want to pay $1700 to do it.

19

Like I mentioned in my previous post regarding BCS, they are good sales people, they tell you
everything that you want to hear. That is until they get paid and you can’t get in touch with anyone…
Should I say they make it difficult to talk to the right person, Their focus is on SELLING you their
system, not customer service.

It took a couple of months just for them to complete my client’s LLC filing!!! He called called called,
sent e-mails with little to no response from the people he needed to speak to. After @ 4 months they
finally Started setting up his credit lines - but he had to use PG and own credit to get even small lines
(under 3k). To some people a 2 k gas card or office supply account is a big deal, but when you are doing several rehabs at a time as we do, it seems to be a big waste of time & money for what they actually provide. Most of what they do can be completed by you without spending @2 g’s and wasting several precious months to get it done. Try putting that 2 grand into a major secured credit card and see what
your resullts will be, very comparable I would guess!

I just don’t like dealing with people that Promise everything and once you buy they do not deliver results
as promised. I the end my client Did get several small store lines (h.d, mnrds, ctgo, ofc dpt, etc) but
nothign that he could not have gotten on his own… My advice save your money - take the time to learn
and do it yourself…

20

Thanks for all your comments