Business Line of Credit

[Andre Taylor]

I am getting ready to start my first rehab project and wanted to know if any STL investors use certain banks for business lines of credit? If so what are some of the requirements and what are the benefits?

[Kathy Henley]

US Bank gave my business a line of credit @Andre Taylor. The qualifications were that we looked good on paper, W-2 jobs and lots of equity in property. Banks don't like to take risks, they want to know that the borrower will pay back the money, one way or another. It was a good tool for a while. The benefit was knowing that we had access to cash if we needed to make an apartment ready for market.

Then there are the small banks, like State Bank of Collinsville. (I don't even know where Collisville is, but somewhere in IL.) Our company qualified for a commercial loan, which means that the income of the property qualified for the loan, not me as a person. This was very liberating. To learn how to make a good presentation to a commercial lender, read, 'Commercial Mortgages 101.' But this isn't what you wanted. You need funds for a rehab.

In general, banks lend money to borrowers with collateral, like equity of a property or a person's good salary.