When businesses request funding for higher dollar amounts, they typically will consider an asset based loan or unsecured loan. Which financing type is more likely to get the businesses a higher funding amount, and which financing products should a business apply for?
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What is considered a higher loan amount for a business loan request? In general, amounts up to $50,000 are considered low enough that they will be evaluated “App only”, which means that a decision will be rendered based just on the application information. When a request is over approximately $50,000, financials will be required. Any amount over $100,000 will be considered a larger request.
For requests over $50,000 to $100,000 and more, it will be easier to qualify through asset based loan programs rather than unsecured programs. Lenders generally will consider a business with similar credit guidelines up to those amounts, especially up to $25,000. Above those figures, businesses will need to have Gross Receipts over $1,000,000 or so in order to be seriously considered for a $100,000 unsecured loan. If their sales are lower, or significantly lower, they should consider only asset based loans.
There are multiple asset based loans that businesses can consider. In general, the most common types are those in which the lender will take a blanket lien on the business. This occurs most frequently when the lender is a traditional lender. The blanket lien means a lien on all furniture, fixtures and equipment. Another type of asset based loan is when the company puts up equipment assets. A further asset based financing type is when the business puts up liquid assets, such as listed Stock, Money Market accounts, or even Certificates of Deposit.
Whatever financing is chosen, if a business is requesting over $50,000 to $100,000 or more, they should generally consider asset based loans, as the approval rates for unsecured loans in this dollar range and above is significantly lower.