How to Get a $1,000,000 Credit Line With NO Capital
The other day I was visiting home and decided to go out with my friends to a local cigar bar. There we met up with one of my buddies acquaintances. One of the guys there was a bright guy who knows his stuff. As a budding entrepreneur I admire people who run their own business especially when they start it from scratch.
Well a few whiskeys later he told me the easiest way to get $1,000,000 credit line with NO Capital and No Risk.
The process is very simple. You get a business name registered in your local town (this also works with your own name). I recommend starting a business because later down the line you can always create an LLC and to limit your liabilities down the road.
Go to your local bank that offers business loans. Ask for a simple $200 dollars. Most banks will be willing to take on that risk even if you do not have much credit history. Make sure to write a nice thank you letter and show your gratitude for putting trust in you.
Now here is the secret : DO NOT SPEND THE MONEY
Simply keep it until the end of the month and pay it back. When you pay it back ask for $400 dollars. Why wouldn’t the bank give you $400 when you just paid back the $200. Take your $400 dollars and make sure DO NOT SPEND THE MONEY.
Again come back and pay back your loan and ask for $800. The bank won’t care how you are paying your money back, all they care is that you pay your money back on time. If they do ask you, just say your building a business from scratch. DO NOT SPEND THE MONEY.
By now you should understand how this works. Simply keep doubling your loan DO NOT SPEND THE MONEY, pay it back, and rinse and repeat until you reach the credit line you desire.
Here is a table to help you out.
Month 1 -$200
Month 2 - $400
Month 3 - $800
Month 4 - $1,600
Month 5 - $3,200
Month 6 - $6,400
Month 7 - $ 12,800
Month 8 - $25,600
Month 9 - $51,200
Month 10 - $102,400
Month 11 - $204,800
Month 12 - $409,600
Month 13 - $819,200
Month 14 - $1,638,400
Nice theory, but I don’t believe that this will actually work in practice. Repaying the total amount each month will give the bank confidence to lend you a larger amount - up to a point. Once the amount gets reasonably large, they’re going to start asking for more info - business plan, audited finaancials etc. Otherwise, you could just keep doubling the amount until you borrow 1 billion dollars and skip the country…
Do another post about this when you’ve actuallt used the theory to borrow one million
@ Enoughwealth
I just submitted my business name and registration so I will be trying this shortly. The whole point is even once you get over 100k your business plan will have a lot more options. Financing a startup is hard enough. I feel like this is a shortcut to avoid VCs and all the headaches.
The other problem with this theory is that once the loan amount gets quite large, you’re going to have to start using some of the loan principal to pay the interest that falls due. This is the classic start of a “ponzi scheme”, and is a type of fraud.
It’s highly likely that at some stage you’d have to lie to the lender - pretending that the loan was being used to finance an ongoing business and that the repayments were coming out of cash flow. This is just a tiny step away from “liar loans”, where you go to several difference lenders and apply for a loan from each, but fail to inform them of the other loan applications (which would adversely affect your loan application).
The final problem comes when you eventually have borrowed “enough” to actually start a business. You’ll be putting a large amount of borrowed funds at risk, with no experience building up the business, no equity, and no ability to borrow more funds if you suffer a cash-flow problem during start-up. If you were able to borrow $1m (or even $100K) using this technique and using the funds to start a business, you’re likely to end up going out of business and owing a huge sum to the lender, without any way to repay the debt. This seems like a great way to end up bankrupt.
I tend to agree with Enough Weath. You’ve said in the beginning that they are going to lend you the $200 without really asking since they are willing to take the risk. Once you pay it back, you’re getting a whole new loan. So, now if you’re going to the counter asking for 1 million, it’s going to be a very big risk and it will defintely take a lot more paperwork questions, etc.
Trust me, I’ve seen it all, I worked at a bank for years helping people with business loans.
You guys are probably right, but I will be trying this shortly. It is meant to be a shortcut to getting financing for a business without having to jump through a million loopholes.
I will let you know how it goes in a years time. My goal is to raise 100k to start a search engine of sorts that I think will take a bit out of Google, Yellow Pages, and Super Pages.
My friend requested $20K from Washington Mutual, with no documents. Just proof of registration.
I took this story as a type of proverb, not as a real advice. Something like this probably it would be a way of making money in the 50-s. This example just shows you that everything is possible. Today you just need to find where to wisely use this 200$.
very unlikely…this whole idea of them doubling your credit line is not gonna happen…
it sounds good to hear but in in reality lacks practical implication.
unrealistic!