Some of you have actually been emailing me, wondering when I'm going to spill the beans on how to access the hundreds of thousands of dollars in business credit cards that you'll be getting.
After all, getting unsecured business credit cards are actually the easiest thing to get when it comes to business credit provided that you put the time, effort, and appropriate energy into fixing/rebuilding your personal credit to get yourself over that 680-FICO score threshold.
Now, since getting unsecured business credit cards is quite easy to do and it's much easier than you think to get several of these cards that are collectively worth $100,000 within a very short period of time, you're probably wondering how to use this credit as a down payment on a property, for instance.
Many of my students have asked me..."Can I just give escrow my credit card for the down payment?"
Um...no. You can't.
What you can do is this:
1) If you plan on having and operating a functioning business (say a distribution business, for example) then you'll get something called a "merchant account." This merchant account will allow you to be able to charge credit cards which can include your own. (There is a restriction against this in the merchant agreement about running your own credit cards but that's a risk you'll have to take.) It's recommended that you have a different business set up than the company that you are establishing business credit under in order to successfully pull this off without a hitch.
2) You can "pay yourself" through PayPal. For example, if your spouse has a PayPal account and you (or your company that has the business credit established, which is preferred) have a PayPal account, you can have your spouse do a "money request" or send a PayPal invoice for services for whatever amount (cash) you want to take off your business credit card. You can easily get the money off your cards this way. It's recommended that your spouse have a PayPal account set up under a different business name than the one you have business credit under, particularly with a different tax ID number. You don't have to have a corporation to go to the IRS.gov website to get a tax ID number for a "sole proprietor" business. (For example, your spouse could "start" a company called Terry's Flowers and go to the IRS.gov website to get a tax ID for this company using his/her personal social security number to secure this tax ID number. This tax ID can then be used on the PayPal account where the money request is coming from, thus "shielding" your spouse (who probably has your same last name) in the transaction as being someone who is related to you; this makes it look like there is no relation between you and the establishment who requested the money for services from you.
3) Cash advances are limited but are also available for some of your business credit cards. You can "max out" on the cash advance limit for each of your credit cards.
Since getting $100,000 in unsecured business credit with multiple business credit cards is quite easy to do within just a few months' time, you can easily extract $30,000 or more of that money without anyone (mainly your credit card companies) really being any the wiser to what you're doing. And getting a whopping $30,000 is a decent amount of cash if you're buying a "quad" or if you need that 10% down on a commercial SBA loan.
Also, when paying for due diligence (property inspections, appraisals, etc.), you can use these business credit cards to directly pay for these services in many cases as well.
When you borrow this business credit, make sure you have the means of paying it back. If this money is going toward a cash flow property, make sure you understand the interest rates on the down payment money you are borrowing off these credit cards to make sure the property still cash flows. Also, make sure you take more cash off the cards than what you need for the down payment so that you can wait the first 45 to 60 days to start seeing the first of your cash flow after closing without being strapped for the money to pay your credit cards.
See you at the top!