Cash Back for Business Credit Cards
Are you looking for ways to raise cash for real estate investing?
When it comes to investing in real estate some of the common funding sources being used are home-equity lines of credit and private lenders, also known as hard money loans.
But did you know another way to get cash is through high limit business credit cards? As far as how to use your credit card, the best way is to take a cash advance against the card. Now using business credit cards will only get you so far in real estate investing because you have credit limits.
With business credit cards you most likely won’t be paying all cash for a $100,000 property. But let’s say you can cash advance $15,000 on one of your business credit cards. There is a quite a bit in real estate you can do with $15,000. You can buy a $50,000 rental property using a mortgage with 20% down. $10,000 for the down payment and $5,000 should cover closing costs. In this example you just bought a rental property using a business credit card.
But what about the fees involved when you take a cash advance against a business credit card?
Glad you asked.
First, in order to get a large sum of cash using a business credit card, you must utilize a cash advance for those funds. Lenders will allow you to cash advance anywhere between 25% to 50% of the business credit card’s limit. Keep in mind this percentage varies from lender to lender.
The challenge lies in the cost of performing a cash advance since cash advance interest rates range from 20% to 24%. So what’s the best way to pull cash out from high limit business credit cards?
The best way to avoid paying those pricey cash advance fees is using the “Balance Transfer” strategy. This entails transferring the new debt due of the “cash advance” onto another business credit card you have with another lender – with a 0% APR promotional rate and low balance (preferably zero). This will allow you to avoid the high “cash advance” rates – but there will usually be a 3% balance transfer fee.
The good news is as a real estate investor or business owner, you can continuously keep doing this as long as you keep paying your debt down. This strategy is a perfect example of why real estate investors and small business owners go through our unsecured business finance program (UBF) so they can obtain 5-7 high limit business credit cards. (Maximum combined credit limits go up to $150k)
Remember, the business credit cards issued via our UBF program only report to the business credit reporting agencies. So anytime you perform cash advances or make purchases, none of those transactions or debts are reporting on your personal credit reports. This enables you to keep your personal credit utilization intact which ultimately protects your personal FICO® scores.
In addition, using our business credit cards for real estate investing allows you to build the creditworthiness of your corporation or LLC. For example, let’s say you have five business credit cards and use them for cash advances, purchases and balance transfers. All the activity across all five of those cards will report to your company’s business credit reports which are a total of five trade lines.
Another advantage with UBF is you are establishing relationships with 5-7 major lenders. As you build these relationships through credit usage and positive payment history you may receive credit limit increases and new credit offers from competing banks.
As you can see getting cash back for business credit cards for the purpose of real estate investing is a viable and effective option when incorporating the “Balance Transfer” strategy. This funding source has a place in real estate investing that every real estate investor should consider adding to their arsenal.
Remember, business credit cards are completely unsecured and do not come in the form of cash – its revolving credit. To qualify for UBF all you need is strong personal credit reports and FICO® scores. There are no financials, no appraisals, no income verification, and no tax returns or collateral.
Keep in mind if you also have strong business credit reports and scores with business credit agencies such as Dun & Bradstreet then you may qualify for much higher credit limits as opposed to applying using personal credit alone.
On a final note, using business credit cards for real estate investing is risky but it depends on your personal comfort level. It’s all about leverage and being smart about how you’re using credit cards and other sources of financing. Be sure to know the terms and conditions of your card and utilize the “Balance transfer” strategy if you plan to do a large cash advance.
Read to apply for high limit business credit cards via our UBF program? Submit your information below and a funding specialist will contact you within 24 hours. Plus receive my FREE business credit seminar audio and newsletter ($597 value)=>
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About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, Business.com, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.