7 Best Unsecured Credit Card Funding Options

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Unsecured Credit Cards with Check and Wire Capabilities

As a new business owner, one of the most difficult challenges is obtaining the funding needed to launch or grow your business. Seek Capital has helped thousands of business owners access capital in a manner that is so obvious, yet the business owner simply didn’t understand how powerful it was until the Seek team laid it out for them.

While most business owners are chasing ‘traditional’ funding such as bank loans, bank line of credit, SBA loans, borrowing from friends and family, tapping into their 401k and any other random Google searches, what they didn’t realize was that one of the best, if not the best (In my opinion!) is actually obtaining Unsecured Credit Cards that have Check and Wire Capabilities. Oh, and here is perhaps the best part, the interest rate. Imagine being interest free for the first 12-18 Monthly Billing Cycles (“months”). That’s right, 0% APR for the first 12-18 months.

Seek Matches businesses to both National & Regional Banks that are the best match for them. Now to be clear, Seek Capital is NOT the lender. We are a Matching Platform putting business owners in front of the best banks for them based on their specific business profile. In essence, we are a Data Driven Matching Platform with Hands on Assistance

Now here’s where it gets interesting, how much do you think a new business can be approved for in 0% APR Credit Cards? For Seek Clients, we see the majority of them fund between $20,000 and $120,000 with exceptional credit profiles getting more than that. In fact, we even have a small percentage of clients who get approved for $200,000+ all at 0% APR for the first 12-18 months. The average changes from month- to-month so if we look at the last few years, the average has been in the $55,000- 70,000 range. To get this amount approved for a new client, it will typically be from multiple banks across multiple credit cards.

Advantages of Seek’s Unsecured Credit Cards Program

  1. 0% APR Introductory Rate An introductory rate of 0% APR for the first 12-18 Billing Cycles is pretty hard to beat. After the introductory rate, the interest rate is the standard credit card rates that banks offer, the better the credit profile, the better the rate.

  2. Checks & Wires Many vendors accept credit cards which is great, but if you have a vendor that doesn’t accept credit card as a form of payment, no problem. We assist our Clients to have the ability to write checks & make wires from the credit card account directly to the vendor. To ensure that it is not fraud, an invoice, purchase order or similar is required. For clarity, funds can’t simply be withdrawn from an ATM at the 0% Rate, an invoice is required.

  3. Revolving Credit Facility With the Credit Cards, they have revolving credit lines, meaning you can actually use the funds, pay them back, and use them again and again. In fact, you can do this as many times as you like. This is not a one a done loan, this is true revolving terms which gives you that flexibility. The contrast is a standard business loan which as you make monthly payments, the funds are not available to the business again, it’s a one-time use of funds. This can work if the business makes an initial purchase and then pays it back over time but is not ideal if the business has recurring monthly expenses that they would need ongoing access to a revolving credit facility.

  4. Small Monthly Payment Being a revolving line, you only make payments on the amount that you actually use, not what you are approved for. Meaning, if you're approved for $100,000 & only use $20,000 to start, you're only making payments on that $20,000 & not the $100,000. But you still have the remaining $80,000 available when you need it. Simply put you have access to the full amount, but only pay on what you actually use. In fact, the minimum monthly payment is usually only 1-3%, Let’s say 2% of the outstanding balance. Meaning, for every $10,000 you use, your monthly minimum will only be $200. This is a great way to keep your monthly payments low when the business is just starting to grow. Important to note, there are no pre-payment penalties, this is the power of the revolving line

  5. Multiple Cards Based on the amount of money many business owners are looking for, and based on early-stage cashflow, it is rare to find a single bank out there willing to give you approve funds, at any rate that makes sense. It will most likely be multiple banks to get you what you are looking for. The reality is our funding team would love to be able to match you to one bank and you receive one approval for the entire amount. That would make everyone’s life a lot easier. But that is simply not the usual case for early-stage businesses. Imagine going to a bank and asking for $100k for an early-stage business, they are obviously going to decline that amount but that same bank maybe willing to offer you $20,000 as an example. What we specialize in is being able to acquire the funding for your business from multiple banks, less from each bank so it spreads out the risk for each bank. The simple reality is most Americans who have a credit score of 700+ have on average 4-6 credit cards. That means that some have very few, maybe even just 1, while another person who has 10 or even more. Credit cards are like anything else, there is no one size fits all.

  6. Build Relationships with Banks By working with multiple banks, you are now building direct relationships with those banks. It is not a secret that banks prefer to lend to clients they already have an existing relationship with over an unknown client. As the business grows, so too will the capital needs. With strong relationships in place, the business will open itself up to favorable terms in the future on a range of different funding products such as additional credit cards, equipment financing, vehicle financing, business loans, business lines of credit etc. Most business owners don’t appreciate this significance of bank relationships in the short term but the sure do feel the impact when they are able to leverage the relationships in the coming years.

  7. Increase Approval Odds A common question our team is asked is “can’t I just do this myself?” And the simple answer is; yes but at what cost? Here’s the simple way to understand it. When looking at most of the major banks websites, one will find over 20 different credit cards available. If you go to their website, you wouldn’t know which one is going to give you the best rates, the highest approval amounts and the best odds of approval- We do! That’s what we do, we match business owners to the best cards for their unique profile. Oh, and maybe you aren’t even a match for that particular bank and all 20 of their cards are not a match for that particular business owner. That’s our job, to dramatically increase the odds of approval and reduce the probability of declines. Disclaimer: Does Seek guarantee approval? No. Each bank makes their own independent decisions and at no time can Seek guarantee that any 3 rd party bank will provide an approval. Seek Capital provides best efforts to increase approval probability but does not guarantee approval success.

  8. Credit Card Rewards Credit Cards provide an array of amazing rewards for use. Rewards range from generous signup bonuses, cash back, points, airline miles, hotel points etc. Imagine being rewarded each time the business spends. Business owners have some choice as to how they use the points. They can reinvest the funds back into the business or they can choose to use them in any other way such as gift cards, free travel etc. Why do banks offer generous rewards programs for every dollar you spend? It’s actually quite simple, banks are competing with one another for your business. Banks receive a small percentage of every dollar that is spent on a credit card, that’s usually, but not always, paid for by the business that is accepting the credit card. Their revenue is increased by increasing the amount of dollars spent by their clients, so banks are financially motivated to get more clients spending more money on their credit cards. This is one of the main reasons they offer such generous rewards programs. The rationale being that if they offer an exciting and compelling rewards program, they will attract more clients and will have each client use their cards more. This is a true win-win situation. You as the card holder wins as you receive great rewards and the bank wins because they attracted you as a client.

  9. Get More Than You Need A common misconception of a business owner is to simply ask for exactly what they believe they need as of the time of their application for funding. The challenge is this is that a business is a living, breathing organism that evolves. What the business is today is not necessarily what the business will be in 6, 12 or 18 months from today. Needs change and business owners should be flexible to change with the changing needs of their business. Though not required, we generally recommend early-stage business owners that if they are eligible for additional funding that they should pursue and accept, not reject it. We make this recommendation for 3 main reasons;

  • Unexpected Expenses- Every business has expenses that they did not anticipate. This could be from a positive or a negative perspective. On the positive front, it could be gaining new clients that require the purchase of additional inventory, the hiring of additional staff or additional equipment. On the negative front, it could be that inventory was faulty, lost or stolen. The need to replace a non-performing staff member, legal or insurance expenses or simply expenses that were not anticipated during the planning phase.
  • Growth Opportunities- The best kept secret in business is that as the business grows, it actually increases its cash flow problems, not alleviate them. If the business has more clients, they need more staff, more inventory, more furniture, a larger space and all these things require… more money! If the plan is to grow the business, the last thing any business wants is to have growth inhibited by a lack of capital, or worse still, make the purchases and run out of capital due to growth.
  • Maintain Low Debt-to-Credit Ratio- One of the most important metrics on a credit profile is known as the debt-to-credit ratio. This is the measure of actual debt compared to the available credit. As an example, if you have a credit card with a $10,000 limit (AKA: Available Credit) and the current balance (AKA: Debt) is $4,000 than the debt-to-credit ratio is 40%. If a second credit card is added to the credit profile, with an additional $10,000 limit, the total available credit is $20,000 and the total debt remains at $4,000. The debt-to-credit ratio is now 20% even though the debt level didn’t change from $4,000. If possible, it is strongly recommended to try to keep the debt-to-credit ratio below 70% on the high end and below 20% as an ideal level. If it goes above for the short term, one can expect a short term impact to the personal credit profile but is likely to increase as the debt is paid down.

How Seek Capital Underwriting Works

Seek Capital has helped new business owners obtain over $750 million in Unsecured Credit Cards, all at 0% APR for the first 12-18 months. The level of data that Seek has reviewed over the last decade has helped develop Seek’s Automated Underwriting Platform.

The Seek Underwriting & Approval process is a combination of both automated credit review and hands on concierge underwriter review. We actually speak to our clients! Something that seems to be lost in today’s business world. We take the time to understand them, their business needs and who they are beyond what is just on a credit report.

The combination of the technology and the human underwriting enables us to gain the best understanding of the business and make the most accurate underwriting decisions. We match business owners to the best funding solutions for them based on their unique profile.

Seek Capital 3 Step Underwriting Process

Step 1- Verbal Profile Review: An initial conversation is had with the business owner(s) to gain a top-level understanding of the business, the business owner, their funding needs and an introduction to the Seek offerings.

Step 2- Credit Review: Seek conducts a prequalification credit review, more commonly known as a “soft credit pull”. We do this this with all 3 credit bureaus; Experian, Equifax and Transunion. The credit data is automatically analyzed by our underwriting system to provide a preliminary response. This is all done while the business owner is on the phone, no waiting days or weeks for a response.

Step 3- Business Review: If the credit profile meets the criteria, our team will have a deep diver conversation with the business owner(s) to gain a deeper understanding beyond what is in the data. We find that a simple conversation enables us to understand if the business is a good fit for the Seek Program. As much as we’d love to help every business, that is simply not realistic. We receive over ten thousand business owners inquiring for funding each month but our funding team only has the capacity to work with a small percentage of those.

How Long Does Underwriting Take

The Seek Capital 3 Step Underwriting Process is all conducted with the business owner in one continuous phone call. We respect the time of the business owner and for this reason, we get them answers as quickly as possible.

For a Decline, it could be as quick as 10 minutes or as long as 45 minutes, it depends on where in the process the declining information comes to light.

For a Pre-Approval, we let our clients know that they will have that response usually within 35-60 minutes and could be a little longer if there are a lot of questions and answers back and forth.

Impact on Business Owner Credit Scores

Credit scores and reports are a snapshot at a given moment and continually change based on changes in your financial behavior. To understand the impact of changes, it’s important to first understand what makes up a credit score. The best place is to go to the source, the myfico website. The 5 main components of a credit score are:

  1. New Credit: 10% of score a. Inquiries for credit last for 2 years on the report but the FICO score only factors them in for the first 12 months. Inquiries are the smallest element of the credit score and organically age out within the above time periods.

  2. Amount Owed: 30% of score a. This is the combination of how much total is owed as well as the debt-to credit ratio. High debt to credit ratio may indicate that the user is overextended, and this can have a material short term impact on the credit score. As this debt is paid off, the score can increase quickly. As additional debt is taken on, the score can decrease quickly.

  3. Length of Credit History: 15% of score a. The older your average and the older your ‘oldest’ accounts are, the more stable the credit score. Older accounts indicate that the user has successfully managed debt for a longer time period.

  4. Credit Mix: 10% of score a. Having a variety of credit lines and creditors shows diversity. This could be mortgage, auto loan, credit card, personal loan etc. Showing you can receive & manage credit from different lenders and in different forms shows you are capable of managing them. On the contrary, if you only had one type of credit form one creditor, e.g. multiple auto loans from the same bank this lacks the diversity of lending and is less desirable.

  5. Payment History: 35% of score a. The largest factor of all is payment history. Research shows that your previous payment history is the best predictor of your future payment behavior. Strongly recommended to never miss a payment.

Funding with Seek and the Impact on Credit Scores

There is no one size fits all to this question so let’s look at the elements;

  1. New Credit- Applying for any new funding will have the lender do a hard credit inquiry and the Seek program is no different. Seek is NOT a lender and performs a soft credit pull which does NOT leave an inquiry. However, the banks that Seek matches its Clients to will do an inquiry. Part of Seek’s Matching is to help the business owner reduce the number of inquiries be Matching to lenders who may not do the hard credit pull based on the client’s particular profile.
  2. Amount Owed: Once approved, the credit profile now has increased available credit which would increase the credit score, but most business owners obtain credit to use it, not just to look at it. By utilizing their credit facilities, they are increasing their short term debt levels which will have a negative impact on their credit profile. As the pay off the debt on their credit scores, their credit will increase
  3. Length of Credit: Depending on the depth of the existing credit profile will dictate the impact of adding several new credit cards to a credit profile. A thin credit profile with not many older accounts will experience a larger short term impact than that of a robust credit profile with many other credit facilities. Fast forward 1, 2 and then 3+ years and these once ‘new’ accounts now become the ‘aged’ accounts and can become the anchor of the credit profiles age and depth
  4. Credit Mix: Much the same as ‘Length of Credit’, the impact on credit mix is based on what the existing profile currently shows. If it is a thin profile that only has credit cards and no other financing such as auto loan, mortgage etc then the impact will likely be larger than a credit profile that has a robust number of different credit facilities.
  5. Payment History: As long as payments are made on time, the Payment History component of the credit score is not materially impacted. We recommend all our clients set up auto pay so they never miss a payment by accident.

The net impact is by adding multiple new credit cards and utilizing the credit facilities, it is reasonable to expect a short-term decrease in credit score. As the accounts are managed correctly, payments made on time, the inquiries age out and the age of the accounts become ‘seasoned’, debt ultimately repaid, it is reasonable to expect the credit score to increase over the next few years. So short term down, medium term up!

Seek Capital is not a credit advisor and all information is provided as per what is provided by www.myfico.com and expected impacts based on past user behaviour.