Business Startup Funds or Personal Lines of Credit
Startup or Personal Lines of Credit are a great way for entrepreneurs, commissioned salespeople, or just anyone to get the money they need to start a business, maintain income during lean months for commissioned sales, or just for anyone who is looking to make a bigger purchase or to have a rainy day fund for emergencies.
But it is important to understand how these programs work because there may be some misconceptions out there. In order to maximize funding certain techniques are used. It is also necessary to understand that there is a route to go without showing any income and solely based on your credit score, but there is also the option to be able to show your income through pay stubs and w2’s that will increase your funding options.
Let’s start with the importance of credit. Now remember if you are really serious as an entrepreneur or really want money to do something else, and your credit doesn’t meet the standards, you must realize that you have to start somewhere. If you never get started at correcting the situation or working towards your goal, you will never obtain it. Even if it takes 12. 18 or even 24 months to get things in place, you will have accomplished something and the time will go by fast. If you do nothing, in 2 years you will probably be in worse shape or even if it’s the same and you feel miserable because you never made the effort to make the changes you needed. So there is no better time than the present! I may seem like I go over this a lot, but I know too many people who procrastinate and never get anything accomplished because they think it can’t happen. Year after year they keep saying that they want to do this or that and yet if they would have started a year ago they probably would have obtained what they were looking for. That’s why you must take driving lessons, you need to understand how the car works, what the laws are and you must learn how to be alert in order to become a proficient driver. And after all that you must pass a road test. That doesn’t happen overnight, nor does education or anything else that you want to become accomplished at. So, today is the day to change your life and become laser-focused on your dreams.
Credit! Personal funding options rely on personal credit. The amount of money that a credit facility is willing to fund is based on the depth of your credit. What does that mean? Credit is looked at not just by credit score, let’s face it you could probably have a 780 credit score by just having three credit cards with low limits and low balances. But this is not going to get that 75k credit line. These lenders like to see what you got as far as credit limits and don’t like to go too far over what a lender already advanced. This means step building your credit to build available credit and find credit facilities that will take a chance on investing in you. It is work and someone should be on top of it for you because doing it wrong can be detrimental. Low balances need to be maintained, this not only helps build your credit score but also has lenders look at you favorably. The balance should be at or below 30% of the available maximum amount. The age of accounts is another consideration. The older the accounts shows that you are responsible and that you are not just opening all new accounts now. Opening too many accounts within a short period throws up flags,
Staying focused on what you want will prove to be beneficial. I knew a young man who had just gone through a divorce and bankruptcy together that totally wiped him out. His goal was to get back on his feet, it took him 2 years but he had 400k in personal lines available to him whenever he needed. He had lines and cash cards with 75 and even up to 150kk limits. He just shows that if you are diligent you can accomplish what you want.
As we were discussing, there are various strategies in order to maximize your funding. There are personal lines offered from various credit facilities, and these range in funding size based on the depth of the credit. Most people applying for these funds do not have the credit depth that is necessary to obtain the higher amounts. Average funding size ranges from $10,000-$40,000. But this can be built on by applying for other funds and cash cards simultaneously. This is the strategy that is used, applying to various credit facilities at the same time to get the approval of funds needed. If for example, one credit facility approves the client for 30k line of credit, another for 20k, and then gets approved for 3 cash cards for a total of 36k, the client is funded for 86k.
This style of funding is called by many in the industry as credit card stacking, only because you are stacking not only credit lines but also cash cards. As we discussed earlier, proof of income might help the client obtain more options. Some lenders or cash card companies may look at the file and based on the information in your credit report or based on their requirements may request proof of income. This is their way of seeing that you can handle the payment responsibility and that you are employed and have a source of income.
It is important that you use a professional, who knows the lenders and cards that you will qualify for. There are new people who pop in and out of the business and who are too busy trying to make money off the prospect by saying that your credit needs to be fixed (see credit requirements below) first and then submitting improperly and destroying your credit. There are less than a handful of seasoned professionals in the industry who stay up with the credit facilities and know where to obtain the most fundings based on the information they have on the client’s credit report.
The market offers many deals that will extend to the client such as 0% interest rates as an introductory offer for 6-12 months. There may be other offers that the client may receive but it’s based on what the client qualifies for.
Let’s talk about qualifications! As we discussed earlier, qualification is not only based on the credit score but the depth of your credit report, but I will provide the basic qualifications…
- 680+ Credit Scores
- Revolving balances below 60% of the credit limit
- At least 3 “open” & “seasoned” primary credit cards
- No more than 4 inquiries per bureau within the last 90 days
- Prior BK must be over 4.5 years
- Collections, Judgments, Late Payments must be over 12 months
A few notes on the above qualifications. 680 credit score is the standard, but the open and seasoned accounts, the lower the balances the more funding options. Inquiries are one of the biggest red flags, so the fewer inquiries the better. Remember that if you don’t meet these qualifications it’s never too late to start building. If you have too many inquiries they can be removed prior to getting set up for funding. This is one of the items I warned you about previously when not dealing with a professional. I have seen companies claim that a client has too many inquiries even though the inquiries were less than the requirements, and they demand that the client pay them $1200 or some other ridiculous amount for removal. This is an unacceptable practice, and this is why I tell you to make sure that dealing with a true professional is important.
Items For Submission
2. Credit Check Total Report
3. Credit Check Username and Password
4. Copy of Drivers License and Social Security Card
5. Copy of Utility Bill (proof of address)
Note- 1-Credit Score reflects the amount that can be funded if below 680 can use a co-signer.
2- When you submit the credit check total, make sure that you include all the sign-in credentials in order to have the underwriter sign in to view the report and gain the necessary information in order to properly prequalify the client.
3- if you can get proof of income include it with the file to maximize funding
- $5,000 – $250,000
- No income verification
- No financial documentation
- All industries are eligible.
- 0.00% interest for the first 6 – 24 months
- Rates start at 4.99% thereafter
- Ideal for startup business owners.
- The minimum credit score requirement is 680. In the event you do not meet the minimum credit score requirement, a co-signer can be used to qualify.
If you are interested in obtaining financing for your business or you just have questions, please contact us at firstname.lastname@example.org. Remember at Ebizmore you will Learn More, Do More and Earn More.