Hello, I'm currently going through the process of attempting to open 0% business credit cards to hopefully potentially use as the downpayment to qualify for a hard money loan, to then use that hard money loan to purchase and flip properties. One of the hard money lenders I've spoken to said they require proof of funds and "the funds do not require any seasoning, it can be any account in your name, even multiple accounts, that add up to the necessary available balance."
I'm being advised by the business credit card service that I should be able use a site such as Plastiq or Melio to make a ACH transfer into an escrow account, that would then be used as proof of funds for the hard money lender. Has anyone ever successfully done something like this?
Would I put "Professional Services" as the reason for the transaction when submitting it from Plastiq to that account?
I'm assuming the process would be like: before I apply to the hard money lender, I open a new escrow account that will hold these funds. Then, would it be an issue if they see that the funds and reserves were recently deposited? Can this escrow account be a bank account that I open and then I call the title company and tell them I will be funding the account for a potential downpayment, or do I have to have the title company open the account? Would they ask proof of where the funds will be coming from?
Also, would it be an issue if the funds were from Plastiq? I'm familiar with usually waiting 1-2 billing statements to season the funds in your own personal account but that would require more waiting and strategically getting the cash off the cards throughout weeks/months. I'm wondering if this would be viable to get proof of funds to use for the HML, to buy a property. I have good monthly income and available personal credit to float any monthly payments and even the repairs, its really the downpayment.
I'm currently losing out on many deals due to having to save for another 3-5 years to save 25% DP + closing + reserves. In my area, this is going roughly $80k+. I can do the construction work, I'm an agent, and can very accurately underwrite repairs and ARVs in my area. I'm also exploring a HELOC on my primary residence (2- unit) but would like to leverage as much funding as possible for business start up. (I'm familiar with paying off the HELOC with the business cards to get cash).
If this is not possible, what are some other ways to get the business credit into cash into an account to show proof of funds? I've heard of cashapp, venmo, paypal, Plastiq paired with invoices or using with a payroll service. Which is best?
