Business Line of Credit Options

14 Replies

Hey Bigger Pockets! Need some advice on the next step with financing. I currently own 3 single family houses with a business partner. We're both 50/50 split in the venture. We purchased the first two with cash and financed the last one on his personal HELOC. The first two are rented and we're half way through the renovation on the third one. Our goal is to get a business line of credit so we're not using his personal HELOC within the business. Do you have any suggestions on getting a business line of credit that would be secured against the houses and NOT personally guaranteed by the both of us? We'd like to limit our exposure to the business assets if possible.

To give you an idea of numbers we each have $46k in cash invested ($92k total) and the third house will run us around $60k once it's renovated.  I conservatively think the three houses are worth around $200k We're currently getting combined rent of $1400/month on the first two houses and the third house should add around $900/month to that number. 

What do you think?  Any tips? 

Talk to the business lending departments of your local credit unions and banks.  They may still want the loans to be personally guaranteed and the interest rate will more than likely be higher than personal loans or lines of credit.

Thanks @jassem a.  

I think with that amount of equity in the portfolio I'd be able to get a line of credit.  Maybe not as high as if I personally guarantee but at least something. 

I think using a line of credit is a great idea for your situation! I've done the exact same thing and the rates are pretty good, 5% for free and clear houses owned by a LP. I did personally guarantee the loans. If you guys are unwilling to do that, you may have to pay a higher rate and / or be approved for a lower LTV. Good luck!

Originally posted by @Mike Springer :

I think using a line of credit is a great idea for your situation! I've done the exact same thing and the rates are pretty good, 5% for free and clear houses owned by a LP. I did personally guarantee the loans. If you guys are unwilling to do that, you may have to pay a higher rate and / or be approved for a lower LTV. Good luck!

 Hey Mike. Did you get this through the Commercial side of a bank or CU?

HELOC's and lines of credit are coming back as we see more liquidity in the financial markets. I just spoke to a business development rep for a depository bank out here in CA who just rolled out 'no doc helocs' to 50% LTV at prime + 1% (4.25% currently). That's no income docs?!? Here we go again, right? I agree that a regional/ local bank or credit union is a great place to start for the best rate on these types of things... and with a banking relationship/ assets on file, they can sometimes be surprisingly liberal. If you have income documentation to boot, there should be more options than you can shake a stick at.

Hey Keith H.

Not sure if you already got your Biz line of credit, but I just hooked up with one of my previous bank account rep and he has a program that you can get up to $150K @0%.

No VOE, VOR, DTI, Assets. True NO Doc. Need a min 680 fico score. 24 pre-approval with Tri-Merge credit report. If you want more info, let me know.

Michael Prout

Proutax Financial Services

@Michael Prout I am interested in how you got that much. I recently got 10k with no docs because it is backed by the SBA and I have been banking there for years. However everyone else wants business tax returns. I have been an independent contractor for 6 years filing personal returns. To be honest I don't know if I have a business or not. Should I forget the LOC and just apply for several business credit cards?

A small business financing solution, we prepare a list of 5 opportunities that you can get funding, without stepping foot into the bank.

There are a few options where you can get funding:

1) Merchant cash advances

2) Tech-based alternative lending companies

3) Tech-based micro-lenders

4) Peer-to-Peer (P2P) lenders

5) Credit cards

Where should you start?


Study the entire blog posts for more guidance in determining the best plan for your particular business:

http://www.forbes.com/sites/thehartford/2014/11/26/the-top-5-sources-where-small-business-owners-should-look-for-loans

https://merchcash.com/resources/post/small-business-loans-for-individuals-with-bad-credit/

http://www.businessnewsdaily.com/7695-small-business-loan-guide.html

@Emma Watson Hello There,

I recently saw your post in regards to business lines of credit. I'm in the south Florida market, I'm seeking capital for my fix and flip business. At your earliest please give me your feedback. I look forward to hearing from you.

Regards,

@Jonathan J. Miller

I recently saw your post in regards to business lines of credit. I'm in the south Florida market, I'm seeking capital for my fix and flip business. At your earliest please give me your feedback. I look forward to hearing from you.

Regards,

Originally posted by @Michael Prout :

Hey Keith H.

Not sure if you already got your Biz line of credit, but I just hooked up with one of my previous bank account rep and he has a program that you can get up to $150K @0%.

No VOE, VOR, DTI, Assets. True NO Doc. Need a min 680 fico score. 24 pre-approval with Tri-Merge credit report. If you want more info, let me know.

Michael Prout

Proutax Financial Services

 Hello,

I am investing in the south suburbs in Chicago,IL. Would your contact be able to loan out of state? If so, please shoot me his info. Thanks!