fbpx
Business Credit to Buy Real Estate

How To Use Business Credit To Buy Real Estate

It’s no secret that building solid business credit is a smart move for any business owner—this also includes real estate investors and homebuyers. Good business credit has its perks, too. This primarily includes qualifying for commercial loans in your company’s name, and with good interest rates. When you apply for financing in an investment property loan, lenders will often check personal credit reports and scores. As such, maintaining good personal credit will help you secure better terms and lower rates. This comes with a higher level of risk, as you are putting your name on the loan. With business credit, your level of personal risk is lowered. Rather than checking personal credit information, lenders will review your business credit instead. 

 

➤ Read More: 10 Home-Buying Mistakes To Avoid
➤ Read More: Business Loans and 22 Credit Lines for Startups
➤ Read More: Types of Unsecured Business Loans and Financing
that Every Business Owner Should Know About
➤ Read More: Business Credit Scoring Explained

 

➤ Need Funding or Building Your Business Credit? Click Here
➤ Need to Boost Your Credit Score? Click Here
➤ Connect with us on Facebook: TyeStyle Credit Solutions LLC
➤ Follow The Credit Lady on Instagram: @TyeStyleCreditLady

*Connect with us on Facebook: TyeStyle Credit Solutions LLC
*Follow The Credit Lady on Instagram: @TyeStyleCreditLady

 

 

How To Use Business Credit to Buy Real Estate

After establishing good business credit, you can leverage it to access crucial capital. After investing this correctly, you can generate profits from your real estate business. Here are some major forms of business credit used to purchase real estate: 

  • SBA Loans – SBA Loans, provided by the Small Business Administration, cannot typically be used to purchase apartments or rental properties. Certain SBA Loans, however, can be used to finance commercial real estate investments. Interest rates for this type of business credit are top tier, ranging from a little over 4.5% to 9.5%. Qualifying for this kind of loan, though, can be challenging. This is because lenders typically consider both business and personal credit in applications. This process can also take up to 60-90 days to qualify. 


  • Business Lines of Credit – The best and most practical form of business credit for real estate is a business credit line. These are available from both standard banks and online lenders. Like a credit card, these lines of credit can be used up to the credit limit, the balance can be paid down and the process can be repeated as long as the account is open and in good standing. These forms of business credit are great for purchases which can’t be simply made with a credit card swipe. The ability to qualify for this credit line is usually based on your company’s income and business credit profile. Certain lenders may request to review personal credit and ask you to sign a personal guarantee. Therefore, it’s important for you to keep your commercial and consumer credit reports in the best shape possible. Interest rates for these types of credit lines vary, and after qualifying, you may see APRs from 8% to 35%. This depends on how well you’ve maintained your credit. You also only accrue interest charges when you make purchases on the account. Credit limits are typically based on credit and company financial standing—meaning the higher your profits and business credit is, the better the chances are of you securing a higher limit. Note that limits are typically smaller than mortgage loans, and so you should likely stay within certain asking price thresholds. Consider business lines of credit to be short-term loans, rather than, say, a 30-year mortgage for financing an entire property. Keep in mind that lenders may close your account and convert your balance to a long-term loan if your risk increases. 


  • Credit Cards – As odd as it seems, some real estate investors use credit cards to fund their property purchases. However, this move can be tricky—and sometimes riskier than necessary. There are certain benefits to using these types of business credit for home buying. Credit cards offer instant funding, so you don’t have to wait 30-60 days for access to capital like with other loans. Credit cards also usually offer rewards, such as extra points, miles or cashback for qualifying purchases. These won’t offset interest rate fees, and if you request for a cash advance, you won’t earn rewards on those purchases. Certain expenses, such as renovations, do often qualify for rewards. The greatest benefit offered by credit cards is that they can help build your business credit profile, leading to better rates and loan terms in the future. There are notable risks involved with using credit cards for real estate purchases, however. For instance, they have higher interest rates, with the average being right around 17% for consumer cards. Business credit card applications are also affected based on your personal credit history. Credit limits tend to be lower, and you may not have enough available credit to cover your real estate purchase—even with excellent credit and high profits. Credit cards also have cash advance fees, ranging from 3% to 5% of the withdrawn amount. You do have to still pay your regular interest costs each month on revolving accounts. Another aspect to consider is that your credit score may suffer, even with on-time payments. When your credit report shows high balances compared to your available limit (your credit utilization ratio) your score may drop. With consumer scores, this is especially true. Be mindful of how much you’re spending versus how much you’re allowed! Also, make sure your lender’s agreement terms allow commercial real estate purchases on the card, or your account could be closed. 

Benefits Of Building Business Credit For Real Estate Investments

While there’s no question you can qualify for great deals on properties with personal credit loans, there are many opportunities possible by building a solid business credit profile. For instance, utilizing business credit can reduce your personal risk exposure. Depending on if personal guarantees are required, you could protect your personal assets from being seized in the event of a catastrophe. You can also be protected from lawsuits tied to the property. Good business credit can also open doors for other financial options. You may need additional capital as a real estate investor for appliances, repairs or upgrades. Good business credit will give you the funds you need in your company’s name, rather than in yours. You also won’t have to link your property as collateral to secure your funds. 

In a nutshell, personal credit loans are a viable (albeit risky) option for real estate investors. However, seeking business credit may be the strongest option for you in your home buying journey! 

 

➤ Read More: 10 Home-Buying Mistakes To Avoid
➤ Read More: Business Loans and 22 Credit Lines for Startups
➤ Read More: Types of Unsecured Business Loans and Financing
that Every Business Owner Should Know About
➤ Read More: Business Credit Scoring Explained

 

➤ Need Funding or Building Your Business Credit? Click Here
➤ Need to Boost Your Credit Score? Click Here
➤ Connect with us on Facebook: TyeStyle Credit Solutions LLC
➤ Follow The Credit Lady on Instagram: @TyeStyleCreditLady

*Connect with us on Facebook: TyeStyle Credit Solutions LLC
*Follow The Credit Lady on Instagram: @TyeStyleCreditLady

 

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest

Leave a comment

Through your finance suite you can:

  • Walk through all the necessary steps to setup your business credibly to meet credit issuer and lender approval criteria
  • Get access to your Experian Smart Business data so you can track your business credit building in real time
  • Learn how your business credit reports and scores work, and access paid credit monitoring through Dun & Bradstreet, Experian, and Equifax
  • Get access to vendors who will give you credit that reports to the business reporting agencies, even if you have no credit reported now
  • Get HIGH limit, revolving, store credit cards in your business name including Amazon, Walmart, BP, Chevron, Staples, Office Depot, Sam’s Club, BJ’s, Best Buy, and most other major retailers
  • Get access to fleet credit, cash credit cards, and auto vehicle financing without a personal credit check or personal guarantee

Setup your business credibly, establish a positive business credit profile and score quickly, obtain vendor, store, fleet, and cash credit in your business name with business reporting, and become more lendable by building your business credit.

Easily Get Credit & Financing to start & Grow!

We help you get business credit for your company EIN that’s not linked to you personally, or your personal credit. Secure HIGH-limit vendor, store, fleet, and cash credit in your business name without a personal guarantee or personal credit check. No collateral or cash flow is required for approval.

We also help you secure business loans and credit lines with great terms, even if you’ve been told “no” at your bank. Access low interest credit lines and long term loans, and get funding in 72 hours or less. We help you get approved even if you are a startup, have credit issues, or have no collateral.

Complete the quick form to the right for your no-cost business credit and financing consultation to learn more about the credit and financing you can qualify for now.

Free Business Credit & Loan Consultation

Enter your information for your no-cost business credit & loan consultation 

Need To Get More Customers?

Whether you’re just getting started, need more customers, or want to scale your business, let us help you generate better results.

GMT Credit Solutions - Business Credit Solutions
NEED TO BUILD YOUR BUSINESS CREDIT?
SCHEDULE A CONSULTATION WITH OUR CREDIT EXPERTS ​