Business Credit Can Be The Ultimate Startup Capital

A little-known source of capital is business credit. It is easier to get business credit than it is to get personal credit because the rules are different. Anyone in America with decent credit (FICO above 680) can create a brand new business by starting an LLC and taking that business to the bank for “startup capital”.

The beauty of leveraging business credit vs your personal credit is the fact that the credit lines do not show up on your personal credit profile which in turn does not affect your personal Debt-to-income ratio (DTI). Your DTI always needs to be protected because for a lot of personal credit requirements like buying a home or getting cars. Lenders will look at your DTI number to qualify you for financing. On the business side of things, your DTI does not matter. It is not factored in or affected.

This is how I got started buying land and building duplexes in Texas. I used an LLC and acquired about 40K in credit lines to purchase my first lot “cash”. Then I used one of my loan programs by leveraging the equity in the land and my architectural plans to get a loan approval and fund the construction.

You may be wondering, credit lines are very expensive how will I pay that back? Also, how did you pay for land using credit lines? or How much did the lender require you to come up with to finance construction? These are all topics that I cover in my course.