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Asset Based Loan

Business checking account reference – why is it important?

On financing requests, the business checking account reference  is often requested.  Many business owners do not wish to provide it for privacy reasons.    Is it needed and is it helpful?

If the business checking account reference is requested, it is often a normal request and often not even checked.    In the past, it was standard procedure to contact the bank, verify the opening date, current balance, average balance, insufficient funds and overdraft history.

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More recently, the bank reference is not always checked, and the lender will decide if they want to do a bank account verification.   Even though the reference is still asked for in most cases, there are several reasons why the applicant should want to provide the reference and not feel it is a privacy issue.

Business Checking Account – other considerations

The applicant is approaching someone else and asking for something  – Many borrowers feel whether they should provide a business checking account reference is up to them.   They also often give an opinion if it should be relevant or not in the analysis.    Since the borrower is approaching another party and asking for something, it is really the right of that party to decide what to ask for from the applicant.

The bank information may be a strength for the applicant – Providing the bank info will not always be a weakness.   Provide the reference if your business has a strong business checking account reference information.   It will help their chances of being approved.  It may also help them be approved for a higher amount and better terms.

The bank information may be a weakness for the applicant – If the applicant’s business checking account reference is weak, it can hurt them and they should not voluntarily provide it if it is not requested.   Weak bank statements may include low beginning, ending and average balances.    It can also include NSF – insufficient funds and overdraft history.    If an account has any of these, it may hurt the applicant.

Privacy Concerns

Privacy Concerns – Privacy concerns are sometimes a significant issue.   This is understandable.   If the applicant has such concerns and their account statements are strong, they should consider resolving these concerns through other means.

The applicant should talk to the representatives further if they need to get a higher comfort level.    Research the company at the better business bureau and with the state to see if there is any negative information on the company.     If not, and the company has been verified, providing the checking account reference information should be acceptable.

Thank your for visiting our Business Checking Account resource page!