Average Daily Balance for a Business Loan

What is average daily balance?

It is also know as the average ledger balance and is the daily average for one month at your bank.

How does it affect me? If it is too low it can affect you in several ways:


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❎ Paying fees on bank accounts
❎ Being declined for personal loans and services
❎ Being declined for business loans or services

If it is not high enough, it may be a reason for a decline with a lender who does not tell you what the requirement is.

We specialize in low cash flow businesses and as a result, will get the best program for your company.  For approvals with low average balances, ✅  Below Now:


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Frequently asked questions FAQ: Average daily balance for a business loan

What is average daily balance?

It is the average of your ending daily balances for a one month cycle in your account. Lenders may decline business loans when it is too low, not believing your company has the daily cash flow to handle a new loan. It is also sometimes called the average ledger or collected balance.

What does the average daily balance have to be?

Lenders look for certain minimum amounts and often want to see at least $1,000. Others want a $1,500 average and as high as $2,500. A higher amount gives lenders more confidence that your business has the cash flow to handle the new debt.

Why does the average daily balance in my business account matter?

Low average balances are a major factor in your request being denied. The higher the average daily balance, the more likely you are to getting approved and for a higher amount.

Keeping high daily balances is challenging for businesses.    Many use almost all of the funds that are in their account immediately after it is deposited.

What is average daily balance and why does it matter?

Why do lenders care about average daily balances?

Lenders, especially short term lenders, also want your business to keep more in your account than what their future payment will be.   The lower it  is, the more worried they are you will not be able to make payments to them.    As a result, they take any new payment into consideration when making the approval or decline decision.   Lenders may also consider what the percent of your loan payments will be as a percentage of total deposits.  This is similar to a debt to income ratio that many lenders use to assess business cash flow and affordability.

Many businesses that are declined for this reason may get declined for having less than $10,000 in deposits per month or also for the account being overdrawn.
Contact us for other options because there are specialty programs for this issue.    We hope this information can assist you and also help you decide what to do next.   Contact us or call us if you have any questions.

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