As a real estate investor, it’s essential to have access to capital you can use to invest in new opportunities or support existing investments. One option for accessing capital is a bank business line of credit.
A business line of credit provides flexible access to funds you can use for a variety of business purposes. The problem for real estate investors is that most can’t qualify for a business line of credit because they are investors, and that means too much risk for the banks.
Let’s take a look at the benefits of having a business line of credit and the secret for real estate investors getting approved.
Flexibility
One of the most significant benefits of having a business line of credit is the flexibility it provides. Unlike a traditional loan, a business line of credit allows you to borrow money as you need it, up to a certain limit. This means you can have access to funds when you need them without having to apply for a new loan every time. This flexibility can be especially beneficial for real estate investors who may need to act quickly when an opportunity arises.
Low-Interest Rates
Another advantage of having a business line of credit is the interest rates are typically lower than other types of financing such as credit cards or personal loans. This can be especially beneficial for real estate investors who are looking to invest in long-term opportunities that require a significant amount of capital. With a lower interest rate, you can save money on interest charges, which can help improve your overall return on investment.
Improved Cash Flow
Investing often requires a significant amount of capital upfront, which can strain your cash flow. With a business line of credit, you can have access to funds when you need them, which can help you manage your cash flow more effectively. This means you can invest in opportunities when they arise, without having to wait for the funds to become available.
Increased Financial Stability
Having a business line of credit can also help improve your financial stability. With access to capital, you can invest in new opportunities or support existing investments, which can help generate more revenue and increase your overall financial position. This can be especially beneficial for real estate investors who are looking to diversify their portfolio and reduce their risk exposure.
Level Up with the Right Credit History
Finally, having a business line of credit can help you build your credit history, which in turn allows you to leverage your reputation for bigger and better approvals. By making regular payments on your line of credit, you can demonstrate your creditworthiness to lenders, which can help you qualify for other types of financing in the future. This can be especially beneficial for investors who are just starting and may not have an established credit history.
Secret to Approval
As you can see, business lines of credit offer numerous advantages. As mentioned, the biggest challenge is that almost all real estate investors immediately get denied the moment they apply for business credit. They get denied because real estate investing is a high-risk proposition to lenders.
So, the solution is to have a Qualified Funding Entity that banks view as low risk and are happy to lend money to. The Qualified Funding Entity is a company, preferably an LLC, that is created so it will meet the acceptable risk profile and funding requirements of top-tier banks.
The top five advantages of having a QFE are:
- You can get approved for bank money that was never available to you before.
- You are able to keep your real estate investing entities separate.
- Your QFE will be a lower-risk classification.
- You have clear money management capabilities.
- Through simple strategies, your business lines of credit can be used at your discretion.
The bottom line is a business line of credit can be a valuable tool for real estate investors who have a QFE. It provides flexible access to funds, low-interest rates, improved cash flow, increased financial stability, and the opportunity to build your credit history.
Merrill Chandler—a personal and business credit pioneer and co-founder of Lexington Credit Repair Law Firm—became dissatisfied more than 30 years ago with the ineffective results of credit repair.
He discovered that getting approved for personal or business credit did not rely on a credit score but, in fact, was the result of having “fundable” borrower behaviors. With the right strategies, a borrower could “optimize” their financial behaviors to become highly fundable, increasing the frequency and amount of their credit approvals.
He co-founded Get Fundable! to help real estate and business entrepreneurs nationwide grow their businesses the way they want, resulting in his students and clients becoming more fundable and getting more than $250 million in funding.
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