Is it hard for traders to get loans/credit?

[oldtime]

Quote from marketsurfer:

Wrong. Tax returns are no longer accepted as income proof for the self employed.

well, then what the heck more do they want? My bar tab and how much I spent on women in Mexico?

All I have to show is 1040's, and my expenses are so low I just file as "Unemployed"

It's been a long time since I went to the bank and asked for a loan.

If my 1040's are not good enough anymore, what more do they want?

 

[marketsurfer]

Quote from oldtime:

well, then what the heck more do they want? My bar tab and how much I spent on women in Mexico?

All I have to show is 1040's, and my expenses are so low I just file as "Unemployed"

It's been a long time since I went to the bank and asked for a loan.

If my 1040's are not good enough anymore, what more do they want?

My experience and that of business people I know is banks are simply not lending to the self employed any longer regardless of income without substantial excess collateral.

 

[oldtime]

Quote from marketsurfer:

My experience and that of business people I know is banks are simply not lending to the self employed any longer regardless of income without substantial excess collateral.

well, you may be right, when I tried to rent my $500 a month apartment and told them I was a trader, they told me, no deal unless I could pay the first three months in advance. They were kind of shocked when I said, "That's cool."

If I told them I worked at Long John Silvers it would have been no questions asked.

 

[dealmaker]

Quote from marketsurfer:

Wrong. Tax returns are no longer accepted as income proof for the self employed.

How about K1 for proptraders?
I somehow find it difficult to believe banks won't to lend to people with solid income and credit history just because they are self employed.

 

[comintel]

Incorporate and pay yourself a salary every year.

Then you are just another W-2 employee.

 

[marketsurfer]

Quote from dealmaker:

How about K1 for proptraders?
I somehow find it difficult to believe banks won't to lend to people with solid income and credit history just because they are self employed.

I'm not sure about partnership income via K1's.

I would venture to say it depends on the partnership-- say if it was from a large and reputable law firm would have more of a chance than from joe & joe painters. Then again I don't know for sure and am just speculating regarding K1 income.

Banks don't ever want to get burned again like in 2007--- hence all the new lending criteria.

Surf

 

[marketsurfer]

Quote from comintel:

Incorporate and pay yourself a salary every year.

Then you are just another W-2 employee.

Yep. But make sure you have someone to answer the phone when they call to "confirm" among other verifications.

 

[oldtime]

Quote from comintel:

Incorporate and pay yourself a salary every year.

Then you are just another W-2 employee.

you sure you want to pay all those taxes? Maybe in the future if they change things, but in the past, it has always been better just to pay cap gains, especially at the 60/40 split if you trade futures

How much do you want to give up just to get a loan which you could probably get anyway if you know the banker?

 

[rallymode]

My experience is that you can get a loan through Chase's private client group even if all your income is cap gains. Tax returns do suffice with some verifications ie canceled checks, regular bank deposits, etc.

 

[tiddlywinks]

I'm in the midst of moving to Vegas. Will be relocated before Xmas.

Apartments REQUIRE pay stubs OR bank statements showing monthly INCOME OR DEPOSITS between 2½ and 3½ times the monthly rent. For me this was no problem as 1) I trade through an entity. 2) I pay myself... I dump 24K into my PERSONAL bank account every 4 months. In my case, no additional deposits or fees needed. But I was ready to pay 3 months + deposits in advance. I even looked up a couple of "cosign" companies just in case. Actually, based on my 30000 ft view research of a few cosign companies, these don't look bad for the poor credit/cash strapped. They only want like rent x lease x 10% up front.

Also, the wife got a new(used) Lexus ES 350 in July. 28K... through my credit union (I intentionally avoid doing business with "banks") 14K financed at 9.25 for 18 months. What a deal, huh!?! That's with a multi-year relationship.

On a quirky, funny note... being the Xmas season, I "applied" for Bill Me Later for a $400 online purchase. I was declined!! The reason was I do not have other open credit lines. That's right! I use cash or debit card!! I'd like to fall off the financial grid altogether but it's just not practical.

My final 2 cents on the subject are...
1) Operate your trading through an entity. Bite the bullet and pay the SE tax etc!

2) Pay yourself, consistently! Had a bad month? Tuf shit. Pay yourself!! Depending on your entity you might even require documentation to NOT pay yourself or to pay yourself reduced amounts. The rubber meets the road on this point... either you are professional trader or you are a hobbyist.

Happy Holidays.