Updated: Jan 17
Everyone is online teaching people how to access business credit without the use of their personal credit. Which is cool. But it's not the most effective way. What I'm teaching people instead is how to optimize their personal credit profiles and build strategic banking relationships in order to access high limit business credit cards at 0% interest for extended periods. And we're talking anywhere from $50K to $150K or more.
This way you don't need things like a 90 Paydex score, over 10 Net30 vendors, over 2 years in business and even business revenue. Not to say that these things don't help or that they are non-essential. It's just that, by optimizing your personal credit, you don't necessarily need all of these things in place to qualify for high limit 0% interest business cards that can be used to fund any business.
How It's Done
The process is simple. You want to first start out by optimizing your personal credit profile. Which means that you want to take a look at how many accounts you have. How many recently opened credit card accounts within the last 6 to 12 months. The average age of your accounts. And the total size of your credit limits.
When building your personal credit profile, you want to stay away from applying for too many personal credit cards too quickly. For one, it makes you look risky too lenders. Secondly, it lowers your average age of credit. You also want to stay away from applying for personal credit cards that won't benefit you in the future.
You want credit cards from the top banks in the industry. Chase. AmEx. US Bank. And Bank of America. Having these types of personal credit cards helps you build the relationship with these banks so that in the future when you apply for business cards with them (these banks offer the best business credit cards) they trust you more than coming to them from other banks.
The Best Banks And Credit Cards For This
Chase and Amex are known to give the highest limit business credit cards. So, you want to apply with them first so that you can build more, what they call, "comparable credit". If you have higher limit personal credit cards, then you will be able to qualify for higher limit business credit cards.
Which leads me to the point that this is why you should always try to get the highest limits on personal credit cards with banks that offer 0% interest business credit cards as opposed to getting low limit personal credit cards with banks that don't even offer high limit 0% interest business credit cards. In the long-term scheme of things, it's a waste of time.
Some of the best personal credit cards that give the highest limits are the "co-branded" cards. Like the AmEx Delta Gold Card (AmEx Marriot & AmEx Hilton) and the Chase Freedom Unlimited. You want to have at least a 690 FICO score but ideally a 720+. Bank of America has the Cash Rewards card that gives decent limits. This BOA card and the AmEx Delta allow you to increase your limits fairly easy compared to the other cards too. And these are the ones that I recommend when starting this journey.
What They Look For
One of the most important components in this whole strategy is when you apply for these business credit cards, instead of applying in person with a teller or online through a portal where your application is determined by an algorithm, you want to go through what's called a "commercial banking relationship manager". Their job is to help structure, underwrite, negotiate and manage complex credit relationships. This is one of the biggest deciding factors when it comes to whether or not you will qualify for $25K or $75K on one card.
What they look at to qualify your business for these cards is your personal credit profile, previous banking relationship, bank account liquidity, the age of the business and the type of business/risk determination (NAICS Code). This is why it's tougher for real estate and other high overhead type businesses can have a hard time getting funding. Businesses like Consulting, Marketing Agencies and eCommerce usually do better. So even if you have a high-risk business type, you can always start a new low risk type business and use it, along with your optimized personal credit score to then qualify for the funding that your high-risk business needs.
When it comes to liquidity, oftentimes if you can put at least $5K in a business bank account and let it sit (or add to it), for at least 30 days. The more you are able to fund the account, the better. I recommend a minimum of $5K.
The other benefit of utilizing business credit is that even though it requires your personal credit to qualify (and you will end up with a hard inquiry), it does not report to your personal credit. In some cases, even with the hard inquiry on your report, you can often times dispute it get it removed without affecting the account. And that's because, even though it's an open credit card account, that was acquired using your personal credit, the account is not reporting on your personal credit profile.
It's also important to not have more than two to three hard inquiries on your personal credit report within the last 6 to 12 months. And as far as where to start with this, I would recommend, Chase bank first. They give the highest limits at 0% for the longest period for business credit cards.
And credit cards are not the only business credit products that you can qualify for. There are also business lines of credit. So technically you can have a $50K - $75K limit business credit card, a $30K - $40K business line of credit and a $!0K - $15K limit personal credit card with one bank with a total spending power of about $100K. And that's just one bank with one business. You can run this play with one business across multiple banks. And with multiple businesses across those same banks. Think about it this way, if you ran this play with ten businesses across ten banks, that $100M in credit.