4 ms·

I ran a bootstrapped company with $150k/mo of well-documented, above-board recurring revenue and Chase wouldn't give it a credit limit above $5k. Entrusting my

by fizx 7y ago

I ran a bootstrapped company with $150k/mo of well-documented, above-board recurring revenue and Chase wouldn't give it a credit limit above $5k. Entrusting my finances to another startup like Brex is scary, but damn is the pitch compelling compared to mainstream banks.

adventured 7y ago
What did you ultimately end up doing for a line of credit for the business? That's obviously a very tight threshold of max credit to run a $1.8m sales business on. At the time did you consider trying to get a private line of credit (private as in from an individual)?
- fizx 7y ago
  We ended up leaving a few hundred thousand in the bank and running it off debit.
opportune 7y ago
I think you could easily buy an hq (or any other relatively liquid asset that would also help the business in other ways) outright with that kind of money and use that to collateralize a much larger credit limit
- parsimo2010 7y ago
  GP said $150k in revenue, not profit. If their operating costs are $149k there isn’t much anyone can do without a loan or outside investment.
- insulanus 7y ago
  What's an hq?
  - QuantumGood 7y ago
    Headquarters (real estate)
    - techslave 7y ago
      uh that’s not liquid
      - opportune 7y ago
        Real estate (especially smaller, less customized office space) is usually liquid enough to use as collateral for a loan
repomies68 7y ago
Why is it scary using Brex? In the end they are just providing credit, so the risk is on them.
- toast0 7y ago
  Having your credit disappear overnight will disrupt your business.
  - pmart123 7y ago
    Isn't Brex relying on Mastercard underneath?
- pat87 7y ago
  They continuously track your financial data and sell it to VCs.
petjuh 7y ago
Wouldn't Chase be more interested in net profits and/or collateral?
- H8crilA 7y ago
  Indeed, Tesla or Uber have revenues. But their bonds are still lower rated than Argentinian bonds. Can't expect creditors to like you if you're not showing excess cash flow. Shareholders, on the other side, well. Let's just say that in the 60's or even 80's issuing IPOs was not something a professional investment bank would do. It was considered an undignified exploitation of the naive investor (from "The Intelligent Investor").
smt88 7y ago
It sounds like you had low (or likely negative) cashflow and no liquid assets. That's a very high-risk loan, and it's good that banks are averse to those. It sounds like you were in a perfect position to raise a round without losing your control of the company. If you want a risky loan, you go to investors.
seattle_spring 7y ago
There must be something more to the story. I have several chase business cards that I use solely for points. I use "self employed" and 10k annual revenue from contracting as my business income. I don't have a limit below 15k.
- trentnix 7y ago
  No doubt. I ran a retail business that did 150k MRR and Chase gave us 30k and Amex gave us 100k.

by fizx 7y ago

adventured 7y ago

What did you ultimately end up doing for a line of credit for the business? That's obviously a very tight threshold of max credit to run a $1.8m sales business on. At the time did you consider trying to get a private line of credit (private as in from an individual)?

fizx 7y ago
We ended up leaving a few hundred thousand in the bank and running it off debit.

opportune 7y ago

I think you could easily buy an hq (or any other relatively liquid asset that would also help the business in other ways) outright with that kind of money and use that to collateralize a much larger credit limit

parsimo2010 7y ago
GP said $150k in revenue, not profit. If their operating costs are $149k there isn’t much anyone can do without a loan or outside investment.
insulanus 7y ago
What's an hq?
- QuantumGood 7y ago
  Headquarters (real estate)
  - techslave 7y ago
    uh that’s not liquid
    - opportune 7y ago
      Real estate (especially smaller, less customized office space) is usually liquid enough to use as collateral for a loan

repomies68 7y ago

Why is it scary using Brex? In the end they are just providing credit, so the risk is on them.

toast0 7y ago
Having your credit disappear overnight will disrupt your business.
- pmart123 7y ago
  Isn't Brex relying on Mastercard underneath?
pat87 7y ago
They continuously track your financial data and sell it to VCs.

petjuh 7y ago

Wouldn't Chase be more interested in net profits and/or collateral?

H8crilA 7y ago
Indeed, Tesla or Uber have revenues. But their bonds are still lower rated than Argentinian bonds. Can't expect creditors to like you if you're not showing excess cash flow. Shareholders, on the other side, well. Let's just say that in the 60's or even 80's issuing IPOs was not something a professional investment bank would do. It was considered an undignified exploitation of the naive investor (from "The Intelligent Investor").

smt88 7y ago

It sounds like you had low (or likely negative) cashflow and no liquid assets. That's a very high-risk loan, and it's good that banks are averse to those. It sounds like you were in a perfect position to raise a round without losing your control of the company. If you want a risky loan, you go to investors.

seattle_spring 7y ago

There must be something more to the story. I have several chase business cards that I use solely for points. I use "self employed" and 10k annual revenue from contracting as my business income. I don't have a limit below 15k.

trentnix 7y ago
No doubt. I ran a retail business that did 150k MRR and Chase gave us 30k and Amex gave us 100k.