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Declined For Drop in Month To Date Revenues? 7 Ways to Fix Your MTD

Was your business loan declined for a drop in month to date revenue?   Review 7 ways to improve your numbers now and get approved as soon as possible by Applying below!

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1. Understand your Statement.
2. Why were you declined for your MTD? 
3. Total Deposits.
4. Average Daily Balance. 
5. Number of Deposits.
6. Overdrafts or NSF’s.
7. What can I do?

7 Ways to Fix a drop in deposits and get approved ASAP!

1.  What do lenders do with that Statement? 

The statement is used to review your cash flow as of the beginning of the new banking cycle, or your most recent cycle date.  Follow the link here to get a Month To Date (MTD) Statement in a PDF form.

2. Why were you declined for your Month To Date?

The statement used to decline your business will have lower than average deposits and be weaker overall than prior statements.  Lenders ask for recent statements when applying and do not usually ask for interim information.

They only request it approaching the end of the month, or if the most recent statement was weaker than older ones before it.   After the 20th, lenders may ask for the current cycle business account activity statement because a lot may have changed in those last 3 weeks.

Expect a request for the current statement when the last full statement was lower than average.   Lenders are looking for trends in your business revenue, especially negative ones.    Declines are not the end of the line.     Consider the top decline reasons as well as other loan types such as a loan against equipment.

3. Total Deposits in the current month.

Your current monthly totals from business revenue is the most important information mca lenders review in the current statement cycle.

Prorate your revenues to estimate what the full numbers will be for the entire current 30 day cycle.

Example:

Your company had $35,000 in revenues from March 1st through March 12th.    What is the company be expected to do for the full 30 days if they maintain the same revenue pace?

$35,000 X (31/12) =  $90,417.     To breakdown the math in simpler fashion,  31/12 = 2.58333.    Since there are 31 days in March and it is the 12th of the month, the prorated fraction is 30/12.    To express that as a % , 1/2.5833 = .387.  This means that .387% of March has gone by.

Almost the same prorated amount is derived by dividing the $35,000 interim deposits instead of multiplying, as follows:

$35,000 % .387 =$90,439.   The $22 difference is due to rounding.

4. Average Daily Balance.

Why is it important?  When your account’s average daily balance is low, then payments are more likely to bounce.

Average balances below $1,000 and especially below $500 are red flags in credit review and will get your request declined fast.
Work hard to keep a minimum balance of $1,000 and higher because it increases your chances of approval.

Lower average daily balances in the current cycle are very closely looked at in the review process.

5. Number of Deposits.

At least 5 deposits per month are desired for cash advances.  Other types of loans do not have this requirement, but more are better.

More usually means you have a higher number of customers which is considered a lower risk.

6. Overdrafts or NSF’s.

Overdrafts and NSF occurrences hurt the most in the current month.   Many customers say they do not want to keep money in the account.

There is a difference between not keeping excess money in an account and having overdrafts because of it.     Negative balances come from not having enough money and bad money management.

7. What can you do about a drop in month to date sales ?

Try to increase your deposit totals before the end of the cycle.  Deposits made just prior to the end of the statement cycle instead of the first day or two of the next one help current numbers.

Don’t let your balances get too low causing returned payments that show as NSF or overdrafts.

Ask what you need to have for a chance at an offer now and you may be given target numbers.   These will let you know if the numbers are achievable.   If all else fails, consider a micro business loan.

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FAQ’s: 

Can my business be declined for low current month’s sales? 

Your business can be declined for having a drop in revenue even in the current month that is less than a 30 day cycle.

Is there anything I can do to get approved now?

Following the cash flow strategy outlined here gives your business a chance of getting funding now.  There is still be time to correct the numbers in the same statement cycle.

Are there options that do not look at the most current deposits?

There are asset based options with a monthly payment that usually do not look at the most current deposits.    Those merit a close look for businesses that cannot wait for their cash flow to recover.

Conclusion

Declines for a business loan due to a drop in month to date revenues is a real possibility.   Most lenders do not look closely at current 30 days, but some do.

Understanding what the threats to an approval are and the actions to take.   Help your business steer clear of an unexpected turndown due to dropped revenues in the last 1 – 3 weeks.

Keeping a close eye on total and average balances and overdrafts during the current 30 day cycle can make the difference between an approval and a last minute decline.