Small Business Loans

How to Obtain Small Business Loans

There is no little secrete here. These are the cold hard facts. The items below are the critical qualifying factors. To get a business loan approval here is what you need to know to determine whether your business loan application can qualify for the best small business loans:

• Time in business for at least one year. Startup loans are very challenging. An online lender will not consider any company with less than six months of revenue. Banks typically will not consider startup business loans since they require at a minimum three years of personal and business tax returns and financial statements
• Minimum monthly revenue of $15,000. Why is at least $180,000 annual income or more the ideal amount? First, no bank will approve your business loan with little to no revenue. Alternative lenders base their approval on multiple factors, including your cash flow. Strong cash flow ensures that you have enough money at the end of the day for loan repayment. Keeping enough cash in your business account is necessary regardless of whether the payment of your business loan is daily, weekly or monthly.
• You must be a U.S. citizen (case by case for work visas) with a U.S. based business. While generally, we like to see you have 51% ownership in the company, this is not a hard and fast rule. Business owners with lower ownership amounts are ok. You must have a business checking account and an active business registered with your secretary of state.
• A personal credit score of 525 or better. Can we accept lower scores? Yes, however, there needs to be other mitigating factors to make up for the scores weakness, such as time in business, revenue, business credit, and industry.

How to get Small Business Loans

What factors increase the chances of a loan approval? What are the highest approval factors?

• No bankruptcies or criminal histories. Make sure the bankruptcy is discharged for over one year as most lenders other than banks will consider your loan application. Most online or alternative lenders also desire at least five monthly deposits preferably from different clients.
• Tax liens are ok as long as they are less than $200K and you have an agreement for repayment.
• NSF’s (non-sufficient funds) are generally less than four a month.
• No-stacking. No bank or typical financial institutions will allow the average business to secure more than one bank loan. For more information on this research “subordination.” Some online lenders will allow for more than one concurrent loan; however, most loan agreements consider stacking to be a violation of their terms and conditions. Lastly, the best loan approvals originate when a company I sin business for three years or more.

Are Small Business Loans Hard to Get?

The following items make it very challenging and even hard to get an approval for your loan.

Business loans available are reduced dramatically when one or more of these items are in your history. Financing your business is almost impossible if you have:

• No credit history. Credit includes both personal credit and business credit. If you are considering applying for a business loan, you should sign up for credit monitoring.
• An average minimum daily balance of less than $1,000. Most businesses that are generating less than $15,000 a month struggle to keep this balance.
• Business loan defaults are a deal killer. Also, a history of taking more than three advances at the same time or stacking. The strategy of taking as many loans as possible, while appealing short term, dramatically reduces your loan options in the future and should be avoided.
• Open bankruptcies or foreclosures.
• Negative ledger balances. Keep on top of your business finances.
• Company revenue is going to a personal checking or savings account. It would help if you kept your business finances separate from your personal finances. You do not want to take a personal loan for the business.

How to Obtain Small Business Loans

There is no little secrete here. These are the cold hard facts. The items below are the critical qualifying factors. To get a business loan approval here is what you need to know to determine whether your business loan application can qualify for the best small business loans:

• Time in business for at least one year. Startup loans are very challenging. An online lender will not consider any company with less than six months of revenue. Banks typically will not consider startup business loans since they require at a minimum three years of personal and business tax returns and financial statements
• Minimum monthly revenue of $15,000. Why is at least $180,000 annual income or more the ideal amount? First, no bank will approve your business loan with little to no revenue. Alternative lenders base their approval on multiple factors, including your cash flow. Strong cash flow ensures that you have enough money at the end of the day for loan repayment. Keeping enough cash in your business account is necessary regardless of whether the payment of your business loan is daily, weekly or monthly.
• You must be a U.S. citizen (case by case for work visas) with a U.S. based business. While generally, we like to see you have 51% ownership in the company, this is not a hard and fast rule. Business owners with lower ownership amounts are ok. You must have a business checking account and an active business registered with your secretary of state.
• A personal credit score of 525 or better. Can we accept lower scores? Yes, however, there needs to be other mitigating factors to make up for the scores weakness, such as time in business, revenue, business credit, and industry.