Your personal profile is crucial to your fundability. In this episode, Merrill Chandler talks about how focusing on your personal profile, the goose that lays the golden egg, and optimizing it has powerful funding results on your timeline. He shares some amazing insider secrets and describes it one by one. He will show you how to set up the funding entity that circles and focuses around you. You will learn more from Merrill’s million-dollar funding formula and be on your way to making your first or additional millions.
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Velocity Of Credit
Optimizing Your Profile From David Smith, The Guy Who Knows SBSS
In this episode, we’re going to be talking about how focusing on your personal profile, the goose that lays the golden egg, and optimizing it has powerful funding results on the timeline. We’ve got an amazing insider secret, but this one’s a little bit of math. If you’re reading, I want to be able to describe it to you every step of the way. Let’s get started on this. The first thing we want to remember is what David Smith, who is everybody that I met within my original FICO World ‘16.
In 2016, when they referred to the guy who knows SBSS, the Small Business Scoring Service, they always referred us to David Smith. When we had the opportunity to meet with David Smith, he was the one that blew the doors off of my complete understanding of business underwriting. He said, “You have to optimize for business credit.” You have to optimize your personal profile. What that dialed down into was that any percent of all business and entrepreneurial small business loans, credits lines, commercial accounts, etc. are qualified. They’re approved based on your personal credit profile. When you have an optimized personal profile, that’s what gets approved in your business lending models. We’ve gone over a few examples of how they use that and we’re going to be going over some more. They were moving into the business section of things, but the transition of personal to business in these episodes, this is the cutting line. We’re going to talk about how optimizing your personal profile speeds up your funding time tables.
Credit Limit Increases By 30%
First of all, we’re going to make some assumptions as we go through this. The first assumption is that you start optimizing, whether as a client, student, on your own, it doesn’t matter how you start. We’re starting at month zero. We’re going to presume that your credit limit increases by 30%. We have 100% and 200% increases and we have 20% increases. Rarely is it at a 10% increase, but we’re conservative. We’re going to say that every six months, you either reapply or automatic limit increases, you’re going to get at least 30% increase on your credit line, credit card or otherwise. We’re talking business here because, for many of us, we’re interested in these entrepreneurial enterprises. Some of us are buying franchises or we’re considering buying franchises. Some of us are real estate investors, note buyers, etc. It does not matter as you begin to understand and learn how to make a business fundable. You’re going to see the elegance of this.Take the time to invest in your fundability. Take the time to focus on your personal profile. Click To Tweet
The other thing is the initial business line of credit changes based on how long you have been spending optimizing your personal profile. The beginning number, whether you get a 5, 10, 20 or 50, whatever that is, is what increases by 30% every six months. The velocity of credit indicates that the longer we optimize our personal profile, the brand-new account that we get when we finally apply is going to be worth more. The higher it is, the more you could use it and the more you can write a check and do a deal. In this first example, we’re looking at zero months. In zero months, you have a decent credit score and a decent profile. Let’s say you’re going to be approved for an initial business line of credit of $5,000. It’s small, can’t do a lot with it that’s why we encourage you to keep optimizing the personal profile, but every six months, it’s going to up 30%. Month six, instead of $5,000, you’re at $6,500. Month twelve, you’re at $8,450. It continues all the way to month 72. Month 72 is when you cross over the $100,000 mark. All business lines of credit that are unsecured, especially stated income, none of them ever go over $100,000.
As we are learning with the million-dollar funding formula and the things that we’re going to be talking about to establish the right kind of fundable business, $100,000 times two, three or five banks is $200,000, $300,000, $500,000 or more. Ten banks are where we get the million-dollar funding formula. As I said in a previous episode, we use the million-dollar funding formula because FICO’s Small Business Scoring Service software is designed to approve unsecured up to $1 million in business lines of credit. The entire thing is designed to get you to that $1 million, that’s why we use that. It also helps that when we go to events, we have these awesome little million-dollar bills that we hand out as place holders to remind you to keep moving towards your highest possible goal. You need to remember that instead of calling it a hundred if you’ve done this with two or three accounts, 72 months that’s six years you’re sitting on $100,000, $200,000 or $300,000. This depends on how many banks that you’ve vetted, established the business relationships with, and running the million-dollar funding formula through. That’s what happens when you start out at zero. It takes six years to get to that $100,000 or corresponding amount depending on the number of banks you’re established these relationships with.
Next, you work on your personal credit profile and you establish higher limits, lower balances, your 24-month lookback period you’re deliberately using, so you trigger higher funding rates. Let’s pretend you work for six months and instead of getting $5,000 at zero months, at six months you get a $10,000 credit limit. If you’re using two, three, four, or five banks, however many you’re implementing the funding formula with, you’re going to be getting a corresponding. Instead of $10,000, at three banks that’s $30,000. Notice what happens, we’re already through month six so the 30% on top of $10,000 would be $13,000. At month eighteen is $16,900, 24 months is $21,970 and all the way up to month 60 is when you get that $100,000. In this case of three accounts, you would have $300,000. You shaved off an entire year for optimizing for only six months. You spent six months optimizing, got a higher limit and you shaved off a full year to get $100,000 for one account, $300,000 for three accounts.
Optimize For A Full Year
Let’s say we’re going to optimize for a full year. No business accounts, no filing for business lines of credit, no commercial loans. You’re talking my word for it that the velocity credit is a thing. You want to make your goose that lays golden eggs as healthy as possible. I’m throwing in all the metaphors. You want to turn on the funding machine. You spend twelve months on your personal profile by optimizing all of the funding metrics, the FICO 40, etc. Let’s say you get a $20,000 business line of credit or three of them if you’re working three banks, or more if you’re working more. We don’t even start until month eighteen and then twenty becomes 26, 33, etc. You shaved off another six months off of your time to get that $100,000, $300,000 in the case of having three business banking relationships. You shaved off another.
The fun one here is that at eighteen months, this is typical. I’m giving you real live numbers. Zero months, $5,000 is typical. You could get a $10,000 depending on the quality of your profile. After six months, you’re going to get $10,000 to $20,000. At twelve months, you’re going to get $20,000 to $40,000. We’re playing conservative. You’ve spent eighteen months on your personal profile. That means, we go all the way out to $52,000 on month 24, $67,600 at month 30, 36 months is $87,800. You’re at a $100,000 in month 42, that’s 3.5 years. Six years at waiting zero months, 3.5 years if you spend eighteen months on your personal profile.
Back earlier, we discussed who we affectionately call Theresa P. Theresa optimized for fourteen months before she even filed an application. If you recall the recording of her testimonial, they asked her for full documentation, pulled her profile, looked at all the metrics, ran it through their software and didn’t finish asking. They gave her a $500,000 business line of credit, unsecured and it was stated income because the docs she was willing to give them, they didn’t ask for. To this date, they haven’t asked for them. She took down $1 million asset using that credit line which is changing everything for her retirement, her goals, etc. Eighteen months in a $40,000 line of credit out of the gate.
If you have two or three banking relationships that you’re implementing the funding formula on, that’s $120,000. Is that a game-changer for buying a franchise, for investing in real estate, buying notes, augmenting your inventory for your Amazon account? How much does $120,000 get you? If you’re deliberate, if you’re a credit eagle, if you’re strategic in every way and you spend the necessary time that we spent all 25 of the previous episodes, all 25 of those were based on the fundamentals of building your fundability on your personal profile. That is what lenders use to measure how you treat other people’s money. There is a mathematical relationship between the time you spent on your personal profile perfecting it and the time you get to that $100,000 per line. In this case, 42 months is $300,000.
I want us to understand the impact of this. I want us to understand what this means when it comes to your fundability. First and foremost, the million-dollar funding formula is designed to implement with any number of business banking relationships. Those business bankers are going to look at your personal profile. Somebody said, “Still 42 months. That’s 3.5 years to get my $100,000, $200,000, or $300,000.” First of all, what are you doing right now without it? You haven’t known the rules of the game, you haven’t known how to play this game much less master it. We don’t want to be greedy.
Here’s what I would propose. What if you read my book and finish watching all zillion thousands of these episodes? What if you went to the bootcamp? What if you become a coach? Whatever way in which you want to relate with me and this technology. What if, worst-case scenario, you did everything you needed to do and what if you picked up $200,000 every year? Let’s say it took you twelve months to get that $100,000. Remember, $40,000 in 18 months, we’re sitting at a $120,000. What if every year you picked up another $200,000 because of all this continue to age? Two banks added every single year to the $200,000. Would it be okay if you had a $1,000,000 over the next five years? You know how fast a year goes by. Could you add successfully only $200,000 every year until you hit your million in 5 years? Would that be a game-changer for you? Would that make a difference in how you’re growing your business, how you’re capitalizing your growth? Would it help you add more franchises or open up more stores? Would it allow you to do more deals? Could you take down more properties? If we’re not greedy and you’ve slow-boated this thing, would it be okay if over the next five years you receive new $200,000 every year?
I’ve had clients come to me over and over. They come in the beginning and they’re like, “I want my million dollars. I can slay the whole world with a million dollars and lines of credit.” I’m like, “Here’s how you do it. Here’s a million-dollar funding formula. Everything you guys are going to learn about how to do it. What are the principles behind the million-dollar funding formula and what needs to be done?” Invariably, I have less than twenty individuals who have hit the million-dollar mark. “Those must be disappointing results.” Brad may have shared this story in one of our previous episodes. A gentleman came to us, his name was Noah. He was hell-bent on the million-dollar funding formula. He said, “I’m all in.” Eight months was all he needed to get his personal profile in order. The first day, he goes out and on the same day got approved for $250,000 one from each of two different banks that he had built a relationship with. He followed the process to Nth degree, got $100,000. We never heard from him again. We sent emails, follow-ups, this and that, but he sent us a testimonial. His $100,000 was enough to leverage him to be able to pick up the properties for his fix and flips to do what he needed to do. He didn’t need more money. To this day, after we got the testimonial, haven’t heard a thing from him. Happy client, we haven’t heard a thing.The initial business line of credit changes based on how long you have been spending optimizing your personal profile. Click To Tweet
Over and over, people say, “I want that million-dollar.” They hit $200,000 or $300,000 and they’re like, “Thank you, this was awesome. I’m out.” For some people who are using hard money, picking up a $100,000 home and they need $30,000 to have their skin in the game. Of course, you’re paying points and higher interest. If you have $100,000, you’re able to do three deals at a time using hard money. If you have $200,000 or $300,000, how many deals can you take down? How many franchises can you open at a time? How many branches? How many dry cleaners? How many gyms? We had one client who opened up more and more gyms. The money to establish the new place and fund the purchase of his weights and inventory fell under the $300,000 he had on his credit lines before he could start cashflowing.
I challenge you, go for the million, take my number over twenty. Many clients don’t need the money they think they need when they have it in their hot little hand and those automatic limit increases continue to grow and you’re taking down the properties that you want to take. You’re growing, you’re expanding your dry cleaners, you’re buying notes, and you’re buying new franchises. We have home investors, We Buy Ugly Houses, the caveman. We love that whole crew there. We’re their fundability team, the entire franchise outfit. People buy these franchises and kill it in real estate. They have the money to do so.
Whatever your goal, if you’re in the personal realm and you’re reading this so that you have the best credit possible so that you have the opportunity, keep binging these episodes. I’m going to show you how to set up a funding entity that’s a legitimate business that’s focused and circled around you, not something that you’re not doing yet. You can be a W-2 for the next twenty years, but I can show you how to set up a funding entity that will be able to fund any enterprise, any experiment, any business opportunity that you want to do in the future. In the next ten episodes, I’m going to show you how to establish this, focused around you and not the deals that you’re doing, not your podiatrist or business that you’re opening up additional clinics. I’m going to show you how to take this profile that we’ve been working so hard to learn the rules to the game. I’m going to show you how to create a funding entity that is being masterful. You can then invest in anything you wish over time.
Take the time to invest in your fundability. Take the time to focus on your personal profile to make that golden goose healthy, to grease all the gears of your funding machine. When you do it, you will optimize your personal profile. You’ll have more funding and faster funding. Your business dreams, your entrepreneurial dreams can come true when you spend the time and the energy on optimizing your personal profile. This is Merrill Chandler with Are You F***able? and you have a spectacular day.