Applying for business credit

[Jason A.]

Hi Folks,

I am getting all my ducks lined up for starting my first flip. I have about 30k saved for my first project and I plan to utilize a hard money lender for purchasing the home. I don't feel 30k may potentially be enough for me to cover all the rehab costs, so I am exploring ways to utilize business credit. 

My personal credit score is 820 and I have two EIN's established. My first EIN is a few years old but was never used for business credit, and the second was just opened a few days ago. I also have a few personal credit cards with 25k, 15k and 18k limits. My question is: What are my best options at getting a higher line of business credit? I've seen stories online of people complaining how they were approved for very little line of credit. Is there some secret formula the banks use to establish their business credit limits? Any input would be greatly appreciated 😁🙏

[Tim Delaney]

@Jason A. That process you laid out may work, but the regular deposits will need to match the actual income of the business on its books. You said you have a couple EINs, but if those companies don’t actually do a consistent and regular business most banks will shy away from lending. Ultimately the bank wants to know how they are going to get paid back - and just having an EIN doesn’t explain to them how that will happen.

Since you are doing a flip and not a BRRRR using your personal lines of credit should be fine. Your credit score will probably dip a little as you use more of the available credit, but once you sell and pay down those lines it will rebound.

Do your first flip in one of your LLCs and deposit your check into your LLCs bank account so your annual revenue goes up.