Advantages of Business Credit

There are several advantages to establishing business credit as opposed
to personal credit if you are a real estate investor or business owner in
need of revolving, working capital.

  • Easy to establish, no-doc approach – You can build large amounts of credit by aggregating relatively small credit limits ($50,000) times many accounts.
  • Can Be Used for Any Industry – You can qualify for business credit regardless of what industry you are in.  Funds can be used for any business purpose.
  • Become your own bank (Real Estate) – You can self-finance your own transactions without any loan-to-value restrictions or needing a banker’s approval for each and every purchase you make. All you do is qualify for the line of credit one time, and you decide when and how much to fund. You have ultimate control of the funds.
  • No limit to the number of transactions – Since there is no limit to the number of credit lines you can establish, you have the possibility of having an infinite amount of available cash, which allows you to buy as much real estate as you would like to purchase. In about three to four month’s time, you could establish $200,000 in credit lines under your business, which can be leveraged over the course of six months to a year to total $500,000 to $1 million in credit lines. If you think about it, most people buy properties that appreciate on the average of about 10% per year, but most people’s purchasing power is limited by the amount of working capital they have. The beauty of obtaining credit lines is that you are not limited to the amount of credit you can establish. Accordingly, your purchasing power, or ability to purchase property, is not limited. So, instead of buying $500,000 in real estate, you can buy $5 million in real estate. I would much rather have the same percentage of appreciation on $5 million than on $500,000.
  • Save points on your existing deals – You do not have to pay exorbitantly high points and interest rates from banks or from hard money lenders when you have credit lines. There are nominal fees you pay to maintain the lines, but the fees pale in comparison to other lenders’ fees and points.

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