5 Mistakes We Make When Applying For Business Credit

Why is it that we care so much about business credit? There are a couple of reasons, the first one is that business credit doesn’t appear in your personal profile.

You can accumulate that, use it to expand your business, use it to expand your real estate portfolio, and you don’t have to worry about your personal FICO score being negatively impacted because of that debt. 

Additionally, aside from the benefits of the FICO score, business credit usually tends to be approved for more. Why? Because you’re no longer capped at your personal income. In fact, business credit is actually based on the amount of money that you generate in your business or in your real estate portfolio.

Your business typically generates more money than you as an individual, it will get you approved for more money. Your application could be denied for some of these reasons:

1. Applying for business credit with high credit card balances

A lot of times people just want to go and apply and see what they can get and test the waters.

That’s really not the way to go about it. It’s much better to make the pay downs before you apply because that’s going to ensure that you get approved for an actual substantial amount, not just $5,000 or $10,000. 

If you’re over 35%, if you’re 50% pushing 60%, 70% debt to credit ratio, then you’re really going to slow down and hinder the amount of funding that you can get approved for. 

We want to let people know what to do in order to qualify for the maximum amount possible, and paying down credit cards to a 35% across the board is very much ideal and something that we recommend everyone would do before applying. 


2. Paying the minimum payments on their existing credit cards

The banks can see that. They see your payment history, they see the trends and all that. When you go and apply for new credit, if you’re just paying a minimum monthly payment, then that’s going to also slow down the amount that you can get approved for because they see that you’re not aggressively paying it down, what you’ve already got.

business credit real estate
If you use your credit cards all the time, the best thing you could do is to pay them down every month.

They’re going to be a little more hesitant when approving you with a larger amount. Before you apply, you should make a big payment, get them paid down as much as you can, and try not to just do the minimum monthly payment, try to get them paid down. 

3. Having a negative credit remarks

If you’ve got any late payments or charge offs, unpaid charge offs, or collections or bankruptcies judgments, all those things, you want to get those resolved and repaired before you apply because if you apply with that you will be hindering the results you can get. 

This is going to represent a slow down in the long run. Your best bet is to get with a credit repair company and get those items removed and get your scores over 730 before you begin to apply.

4. Previous negative banking relationships

Even when the report looks good, sometimes there’s still stuff that’s going on in the background. Banks still have the history in their system. If you have a previous negative banking relationship, for example, with Chase, you go and apply thinking that you’re just going to get approved for a large amount, they’re going to see that and make a decision based on that. 

They’re going to bring that up and then you’re going to have to work around that. That’s something to keep in mind. If, for example, you’ve only got a negative relationship with one bank, your best bet might be to focus on the other banks that are available. That way, you’re going to get approved and actually get a substantial amount


5. Applying as a brand new business  

In this case, the recommendation is using a sole proprietorship, especially if you’re a newbie. If you’ve just been in real estate for a year to two years, you’ve done one or two flips, but you don’t have an LLC yet. In that case, your best bet when applying for business credit is to set up a sole proprietorship and get your tax ID. You can match the years of industry experience that you’ve got on the sole proprietorship when you set it up.

business credit
Your best bet is to use a sole proprietorship and match the years of industry experience that you’ve got. 

That way, when you apply, you’re going to at least be able to show that you’ve got one or two years of industry experience, which is going to allow you to get approved without having to jump through as many hoops. If you apply with a brand new LLC, that’s going to be a problem.

To prevent all of these from happening that’s why you need to work with an expert in order for them to just jump in and make sure not only that you get approved, but also that you get access to the highest amount of liquid cash available so that you can continue to move on with your business or your real estate investment. 

Some tips when applying for a business credit with a partner

When you get access to all of these funds, it’s great, but if you bring in a partner on board, you can actually maximize those funds even more and have more money to do whatever is it that you feel like, whether it’s to build a new business or to just simply buy more real estate

Being able to bring on the partners is the best option. You can get double the amount of funding that way. If you’ve got someone in your family, a spouse, business partner, anyone that you know who has good credit, then you should definitely bring them on with you into the program because you can get double the amount of funding. 

If you got low scores. You don’t really qualify right now, so you and the expert need to do credit repair. You need to get some balances paid down. If you have a partner or someone who’s close to you that you can bring in, who does qualify now, you can get funding through that partner, and then you can get your credit paired and then apply.

If you and your partner have great credit, then you could apply right away and get double the amount of funding. This strategy has helped many clients to get access to business credit and be able to do more with their business.


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