1. your pockets
2. your savings accounts
3. borrow against a CD
4. borrow against the cash value of a life insurance policy
5. borrow against someone else’s IRA
6. private money
7. mortgage brokers & bankers
8. borrow from your 401(k)
9. seller financing
10. hard money lending
11. private money lending
12. home equity LOC or refinance
13. loans from your family members
14. employer advances
15. prior financing (subject-to)
16. my three friends, Visa, Mastercard and American Express
17. pawnbrokers
18. borrow against future inheritance
19. selling a future stream of income, like rents due to you
20. Matthew Lesko’s unclaimed money sources (this is a brainstorm, all ideas are good!)
21. Sell a note or land contract
22. Aggressively collect bad debts
23. upgrade–dump your least profitable property, even at a discount, to buy a better one.
24. Get a part time job (radical, I know…)
25. Borrow from a pension
26. Barter your skills, services or other items. (I know someone who bought a house with a truck.)
27. Prepaid rents from tenants (this is a common practice commercially, for businesses to get steep rental discounts)
28. try shortsaling your OWN mortgages
29. advances on tax refund
30. in fact, change your withholdings all together to get more cash in each paycheck
31. lawsuit settlements (ok, I grappled with this one. It’s a valid source, but I don’t want to encourage people to be more litigious than average)
32. government grants
33. Small Business Administration loans (only if you have a business– maybe a marketing one that sends postcards and knocks on doors?)
34. acquire with a lease-option
35. venture capitalists (or as my friend says, “vulture” capitalists)
36. partner on deals with other investors who have excess capital
37. consumer finance companies
38. loans from fraternities/sororities or other membership-based organizations
39. local community rehabilitation grants and loans
40. borrow against your car
41. borrow against other valuables like jewelry, fine art
42. margin your stocks
43. sell your underperforming stocks, even at a loss
44. if you have a note or land contract, encourage the borrower to refinance by offering a discount
45. Do a business audit for deductions. Often we let thousands go by without taking advantage of them. Why wants to pay more in taxes than is required?
46. cash in a CD- if the rate of return you receive on your REI is significantly more than the penalty
47. commercial lines of credit
48. borrow against Other People’s Collateral
49. sell a portion of your business to another investor
50. sell your research or license a business system
Have any more suggestions? Let us know in a comment.
Do I have to restore my personal credit in order to establish business credit?
You don’t have to restore or repair your personal credit to establish business credit, but it definitely makes things easier. When you build corporate lines of credit with poor personal credit, you get poor quality credit lines, like we’ll discuss below.
When you apply for corporate credit, especially in the first two years, lenders will always ask for the social security number of the owners of a small business, for the purposes of running a credit check.
Once the credit is obtained, it will only report on your personal credit report if it goes into default. Otherwise, the account doesn’t show up on your credit records. Some people call this a loophole in the credit system. Really it makes sense.
When a new company starts building credit, it doesn’t have a credit history. Just like a teenager buying their first car, it needs a credit reference and cosigner. For your business, the credit reference is your personal credit score. THe cosigner is the personal guarantee you give.
To property build business credit, you must start with a proper business entity structure. You must have a legal entity that’s seperate from you as an individual, like a corporation or limited liability company (LLC).
If you’re a sole proprietor, you don’t have a seperate business legal entity. So even if you’ve been in business for years, you don’t have business credit. Surprisingly, many proper legal entities that have been in business for years may not have business credit either.
When building business credit, usually the business owner will be required to personally guarantee business loans that are offered by banks. In fact, when you’re looking for unsecured lines of credit for business, a personal guarantee is inevitable.
Once you establish and build your business credit, you may be able to obtain more loans without a personal guarantee. However, the most readily available sources of business credit will still ask for personal credit information and a guarantee.
However, there’s another kind of unsecured business credit line available. Some business credit lines are trade lines (credit extended by companies that have business to business products or services) are available without personal guarantees, but they are limited in credit limits and availability. Trade lines has to be used to purchase specific products or services, like office supplies.
When you have bad personal credit you can build good business credit, but your credit lines will be lines for borrowers with bad credit. Which means you’ll pay higher interest rate, have smaller lines available, and they will usually be these trade lines.
The bottom line? While you’re building your business credit trade lines, work on your personal credit, don’t ignore it. Having both a good personal credit score and a good business credit score will ensure that you get all of the financing you need for your small business.
Here’s a great question from a reader..
How can “BookWise” be described as a “Credit Millionaire” business?
Paulie responded so well I decided to place his response in this blog. Here it is.
AHAH!
Great question!
Wow, maybe I’ll turn this into a blog post.
2-reasons.
When you’re getting lines of credit for your business,
One of the key factors that keep most people from getting
The kind of money that they want is sufficient SALES!This is especially harmful if you’re in real estate and you
Do buy and hold.But for example, Donna and I do over $50,000 a month in
Sales together with Bookwise.Because of those new sales we were able to get another
$200,000 line of credit!But, …and this is key… we didn’t PERSONALLY generate
$30K and $20K in monthly sales, our team did much of it
For us…and we working with our team.So it has to do with the fact that over time you get
Sales volume you didn’t have to make!Second, it has to do with the key question of Credit Millionaire.
You know most people would not be better off
If they could borrow 7-figure loans!Why?
Because they don’t have the right learning. They don’t
Know how to invest the money to make more than the
Cost of funds.Because Bookwise is about learning (and specifically)
Financial coaching with Bob Allen, it gives people more
Ways to acquire that special knowledge to make borrowing
Smart.!Great question!
Paulie Sabol!
Did you enroll already? Or were these questions to help
You decide? If I can help you, shoot me a ring at
219-406-4696otherwise, visit BookWise
