Business Equity Line of Credit...any real banker's out there?

[Danny_Ocean]

My "banker" (read: saleslady) is offering me a $50k line of credit secured by my sig & UCC. However, this will cost $250.00 for "closing costs" and $500.00 annually to keep the line open, whether I utilize the funds or not...? I understand a higher APR for using funds short-term (equipment purchases, cash-flow, etc.), but paying $500.00 just for the privilege of having $50k available?!?

Is this the norm? Where to find a better deal?

Thanks.

[Joeaksa]

You can do the same with one or two credit cards. Get a high limit and do not use them or if you use them pay them off every month.

You have immediate access to funds and it costs you nothing or next to nothing.

[Danny_Ocean]

I have an AmEx business card, but my limit is only $5k. That helps for the small things, but I could use $50k occasionally for reasons mentioned.

[Danny_Ocean]

Yeah, I've dealt with Capital One before (car loans). I didn't know they offered lines-of-credit. I'll go to their website and check it out. Thanks.

I was hoping to establish a relationship with a medium-sized regional bank (first lesson they teach you in business/real estate school), but I have yet to find a bank that isn't staffed with little sales-bots whose only mission is to sell you something. Are there any "real" bankers left?

[berettafan]

i was surprised when a client of ours was charged 'closing fees' on a LOC/Loan package by a local bank we referred him to. most of the smaller banks we deal with (as in 6 branches total) don't feel the need to charge these fees.

[TerryH]

I just applied for business Advanta MC two days ago and was approved immediately. They are pretty highly rated and offer many perks and rebates. Right now they are offering 2.9% for life on balance transfers with no fees, but they offer other packages to suit your needs as well.

[75'930cab]

I just got a line of credit with no collateral just last week with Citibank! Give them a call or go online.

[pwd72s]

Originally posted by Wayne at Pelican Parts
I have the same thing, a $50K credit line open with Capital One (not a credit card). No application fee, and the annual fee is $100 if I remember correctly. If you're interested, then contact them. These local bankers are looking to make money off of your fees.

-Wayne

The funny thing? I have no need for a "credit line". Mine is past 6 figures...(edit) The thing I can't figure out? I can understand that the more you have, the more willing they are to lend to you...but how do they know what I have??? I never told "them"!

[competentone]

Originally posted by pwd72s
I can understand that the more you have, the more willing they are to lend to you...but how do they know what I have??? I never told "them"!

Your credit limits have nothing to do with what you "have" -- it has to do with your past credit history, mostly your borrowing and repayment records.

I knew an older lady with considerable wealth, who had just paid for everything on a cash basis for most of her life, never building up any credit record. She tried to get a credit card, and it was almost impossible -- even from a bank where she had CDs in the six figures! That bank finally did issue her a credit card (with a $5000 credit limit) and acted like they were doing her some sort of "special favor"!

Most of the bank clerks involved in granting credit have virtually no understanding of wealth, or what is behind "credit risk" -- they just know how to look at your credit score and compare that to the tables they have telling them how much you can afford to borrow.

[Jims5543]

My Amex card recently set my limit to 30K. It is coming in handy right about now.

I also pulled a line against my home about 2 years ago and let it sit dormant. I had to pull 5K on it initially and just plopped it in my savings and payed it off in a matter of months.

I have used it as well recently, as business slowed to alarming rate and is now picking up I expect to pay off these loans buy Aug 2008.

You might want to consider asking Amex to raise your limit and look inot a line against your house. I cannot recall my closing costs on the line but they were minimal, hence my lack of recollection.

[pwd72s]

That's interesting...but some of it must come from my bank. My credit cards, both of which I pay in full every month, keep increasing my "limit"..now past FIVE figures, though I've never charged more than four in any one month. What's up with that?

(edit) And my bank? I get letters from them, offering to "loan" me money. Why??? I don't need or want to borrow any.

[Jims5543]

Originally posted by competentone
Your credit limits have nothing to do with what you "have" -- it has to do with your past credit history, mostly your borrowing and repayment records.

I knew an older lady with considerable wealth, who had just paid for everything on a cash basis for most of her life, never building up any credit record. She tried to get a credit card, and it was almost impossible -- even from a bank where she had CDs in the six figures! That bank finally did issue her a credit card (with a $5000 credit limit) and acted like they were doing her some sort of "special favor"!

Most of the bank clerks involved in granting credit have virtually no understanding of wealth, or what is behind "credit risk" -- they just know how to look at your credit score and compare that to the tables they have telling them how much you can afford to borrow.

I do not believe that. If she had 500K in the bank then she could set aside 50K and open a line against it and establish vredit that way, even have a Visa Check Card to use against it.

It is so much easier to get credit when you have mone yin the bank.

I might have been borderline when appying for loans but when my savings and checking accounts were verified suddenly my loans went through without a hitch.

I am Italian to a fault if I get pissed at a creditor I will screw with them until it ruins my credit I cannot help myself. Right now I am at war with my Visa bank they switched from Bank One to a new company and I am locked out of my online payment ability. After 5+ phone calls to them trying to strighten it out I stopped paying my bill because I am Italian and have a temper, when they call to tell me I am late w/ a payment I keep saying over and over, unlock my onine payment and I will pay you.

They still have not unlocked it.

[competentone]

Originally posted by Jim Cesiro
I do not believe that. If she had 500K in the bank then she could set aside 50K and open a line against it and establish vredit that way, even have a Visa Check Card to use against it.

There was mention of using a secured card to build up a credit rating, but the fact that the clerks could only think "she has no credit record and therefore does not qualify for a credit card" -- while being completely oblivious to her assets -- demonstrated the "mindset" of those in the credit issuing business (at least at that particular bank).

My point was, and is, the formulas used to set your credit card limits really have little to do with your assets/net worth.

[competentone]

Originally posted by Jim Cesiro
I am Italian to a fault if I get pissed at a creditor I will screw with them until it ruins my credit I cannot help myself. Right now I am at war with my Visa bank they switched from Bank One to a new company and I am locked out of my online payment ability. After 5+ phone calls to them trying to strighten it out I stopped paying my bill because I am Italian and have a temper, when they call to tell me I am late w/ a payment I keep saying over and over, unlock my onine payment and I will pay you.

They still have not unlocked it.

The old saying "cut your nose to spite your face" comes to mind with those comments!

Edit: You know that if your account was sold and your old online account was closed, the new bank probably has no ability to "unlock" your old online account. You have to set up a new online account with the new company. (And that is the way you probably want it to be for security reasons!)

[Jims5543]

Originally posted by competentone
The old saying "cut your nose to spite your face" comes to mind with those comments!

Edit: You know that if your account was sold and your old online account was closed, the new bank probably has no ability to "unlock" your old online account. You have to set up a new online account with the new company. (And that is the way you probably want it to be for security reasons!)

I understand that and tried to fix the lockout and /or new setup on 5 occasions and gave up.

[75'930cab]

Jim Cesiro
I had the exact same problem with BankOne. Chase bought them or my loan and I was no longer able to pay online. What a fickin' pain in the ass!!!

[Steve Carlton]

Originally posted by Jim Cesiro
I am Italian to a fault if I get pissed at a creditor I will screw with them until it ruins my credit I cannot help myself. Right now I am at war with my Visa bank they switched from Bank One to a new company and I am locked out of my online payment ability. After 5+ phone calls to them trying to strighten it out I stopped paying my bill because I am Italian and have a temper, when they call to tell me I am late w/ a payment I keep saying over and over, unlock my onine payment and I will pay you.

They still have not unlocked it.

You're out of your mind to torch your credit to try and make a point to someone who couldn't give a *****. If you're over 30 days late from the payment due date, your credit score for the next year or so will be dramatically affected. Hopefully, you won't need any new credit in the near future.

[pwd72s]

Originally posted by Steve Carlton
You're out of your mind to torch your credit to try and make a point to someone who couldn't give a *****. If you're over 30 days late from the payment due date, your credit score for the next year or so will be dramatically affected. Hopefully, you won't need any new credit in the near future.

Exactly...But then, why not place yourself in a position where you feel you will never have the need for credit? Wayne? $50K line of credit? What interest would they charge for that? If you need the $, contact me...I may be willing to loan for less...depending.

[turbo6bar]

pornery72s brings up a good point. What is the rate on the LOC? If your rate is 75 bp under index, $500 might not be bad, but if it's well above index, then $500 is robbery.

If you're really trying to build a relationship, ask for a fee reduction? I doubt they could do worse than say no.

[Danny_Ocean]

Originally posted by pwd72s
Exactly...But then, why not place yourself in a position where you feel you will never have the need for credit?

I get a call from a competitor who is going out of business. They have a warehouse full of computer network equipment, valued @ $100k+. Asking price? $40k. I don't know about you, but where can the average small business owner put their hands on $40k in a moments notice? Situations like these are exactly what business lines of credit are for.