Giving loan to your LLC and paying back with business credit card

[Kevin Jung]

I've been thinking of creative ways to fund real estate properties and can anyone tell me if this works or not?

So I have a single member LLC. Instead of ***contributing from my personal bank account to LLC's business account, I know you can give a ***loan to the LLC with the proper note, interest and etc.

Then is it possible for the LLC to use its business credit card + plastiq (paypal, and/or other similar platforms) to pay myself back?
So for example, I give a $10K loan to my LLC from my personal savings. On the promissory note, it might say something like "no payment for 1 month, and full payment + X amount of interest paid back in full on the second month." And on the second month, the LLC would use its business credit card and plastiq to pay me back. Thus, I would have my $10K + few interest (which I believe the interest is taxable) back, and the LLC would have $10K debt + fee from plastiq, on its business credit card.

Would this strategy work? It'll be really cool if it did. I haven't seen anywhere that discusses this method. It seems a bit scratchy, but I don't see why it wouldn't work except for plastiq, paypal, and other platforms not letting you do it.. 

[Joe Villeneuve]

Originally posted by @Kevin Jung:

@Joe Villeneuve Thanks for the reply.

I don't think I mentioned this, but the business credit card would have a 0% apr for at least a year or so. So it would be interest free for at least a year. And at worst case, I could pay off the 10K easily within a year. Or perhaps do a balance transfer. 

I understand even with the minimum payment, it would eat up the cashflow, but even then, it will let me acquire a downpayment on a property. 

OK.  Here's what you are going to get:

1 - One year of 0% interest, and in year two the interest rate climbs to probably 2 to 3 times that of a 30 year amortized loan.  Cash flow is hit very hard starting with year two.

2 - In order to eliminate the interest rate increase, you have to payoff the C.C. within the first year.  That puts you at negative CF in year one, and will probably take at least 10 years to recover the rest of the payoff cash.  You don't start making a profit until you pay off your cost...which is all the cash that comes out of your pocket...in this case, it would be the pay off amount.

3 - If you are late with a payment at any time, most of the C.C's wil/can jump up to double figures in interest rate.  If you are late with a mortgage payment, you get charged a late fee, but it has no impact on any future monthly interest charges.

Mathematically, this doesn't come close to working, and will cost you more from the very beginning, as you will most likely be in the negative until year 10.