Author: Will Sanio

Ethical business loans

Not getting straightforward facts when applying for a business loan? Applicants are often told they are approved only to find out they are not.   They are surprised they must pay significant fees at closing they were not told about upfront.   Get money through credible, honest and upfront representatives.

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Call 919-771-4177 for more info.

Contact us and our reputable representatives will work with you as your business advocate, not a salesperson trying to sell you a product.    Get full and thorough facts from representatives with integrity to put you on the path that is best for your company, not best for the lender.

You will be given a fair assessment of your chances for approval, the cost and charges.    The strengths of your profile will be discussed, along with any weakness or obstacles to approval.     You will be receive help with a partner that is looking out for your company.

Ethical business loan programs include:
– Money based on Gross Sales.
– Clear and plain english contracts
– Lines of Credit
– Asset based loans, such as loans against Tractor Trailers, Construction equipment
and Accounts Receivables.
– Financing to obtain equipment
– We specialize in difficult to approve customers due to credit, time in business, low revenues.

Free full consulting session.

Our consultants work much differently and discuss what is in the best interest of your company.   We want to know what your situation is and what you are trying to accomplish.  Basic facts are asked to determine all the realistic options.   By doing this, you will only be talking about products that are the best match.

Then we will discuss their features and benefits.   You can then decide which of the options are best for your business.   You will not be pushed into any product.    With this method, you can get financing in a legitimate and impartial manner.  An authentic, true, reliable and objective assessment will be made.

You will get clear information upfront and what to expect.   We build trust and trustworthiness by acting as your advocate.   Get a transparent business loan.

For other broad loan options and assistance, check with the SBA.

Re-start your company on the right track today.

There is a simple way to get a 10% increase in an approved loan without having to qualify for it.  Just ask for an increase in the approval and ask for an amount that equals a 10% increase. Apply below for loans that offer the easiest bump in the approval amount.

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🇺🇸 Call 919-771-4177 for more info.

Data Secure 15 Second Request Form Here.

How to get an increase in your business loan approval amount

1. Step 1 Tell the lender that you need an amount that equals between 5% to 10% more than what your business was approved for
2. Step 2 Provide any supporting information you may not have provided before that gets you a better business loan offer. This can include tax returns, additional bank statements, financial statements, personal financial statements or other items.
3. Step 3 If approved, review any updated terms and close transaction
4. Step 4 If denied, ask why. Determine if you can satisfy any denial reasons

Apply for funding below.

Many loan programs allow for a 10% increase on a newly approved loan if either the credit representative or the customer simply asks for it.  In many of these cases, credit is not pulled again, there is no additional review and a reason for the increase is not asked for.
Very few consumers are aware of this and do not take advantage of this.  Such an increase is not advertised by lenders because they wish to approve what the customer asked for or the maximum they can qualify the customer for.  They merely do this in the event a customer wants more, 10% is considered small enough to be within the risk parameters of the credit decision.

As an example, a customer applies for $50,000 and is approved.  If the customer indicates they wish for more funding, they typically can get an additional $5,000 simply by asking for an increase.  An automatic 10% increase is the limit, lenders will not stretch to a 20% increase without a further review or more information, possibly financial information being asked for.

For example, if a customer is approved for $50,000 and insists on $75,000, then further financial information may be asked for to consider the request, such as a Personal Financial Statement or Business or Personal returns.   If the applicant can show just a small amount of other sources of income, that may satisfy an increase request.  In some instances, providing the most recent 3 months business checking account statements is enough.

These are some of the ways in which a borrower can increase the amount of an approval.

Banks and similar lenders prefer lending to certain industries, such as Medical, professional and manufacturing.     Does that mean that certain industries are at a disadvantage when applying for a business loan?  Yes.   Apply for programs that will approve loans in industries other lenders will deny.

Complete the Data Secure 15 Second Request Form Here..“>
Or call us at Tel:  1-919-771-4177, or Data Secure 15 Second Request Form Here..“>Question? 

In short, yes.  Service industries, industries that are heavy in service and hospitality do not have some of the advantages that other industries such as Medical and manufacturing have.   Service and hospitality industries generally do not have hard collateral which manufacturing and Medical have much more.   Both medical and manufacturing both have valuable equipment which can be taken as collateral in a loan request.

Another advantage that the Medical, professional and manufacturing sectors have is that on the average, they stay in business longer than service and hospitality industries.  Service industries such as Restaurants have a higher frequency of going out of business.

The past due rate for industries such as Medical is far lower than average in the loan portfolio.    One of the reasons lenders like Medical practices is that their past due ratio and default ratio is among the lowest of any industry.   It is also known in the lending industry that Restaurants go out of business more often than the average business.   This results in a double negative for lenders.   If a certain business sector goes out of business more frequently and they do not have collateral, then the lenders will lose more often lending to these sectors,  and they will lose more money at the time.    In summary, the lenders lose more money more often.

While Restaurant and certain hospitality organizations do have some collateral, Restaurant equipment and hospitality equipment such as beds and furnishings will bring in far less than production equipment and used medical equipment.

Lenders will not discuss these issues, however most traditional lenders do not favor certain service industries such as Restaurant, as well as hospitality industries.

UCC Blanket Liens Definition:

UCC blanket liens are when a lender places a lien on ALL of the assets of a business or a person at the Secretary of State.

Banks and other traditional financial institutions typically place blanket liens on a business loan. What do they cover, what restrictions do they cause companies?

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Apply below now and instead get a business or personal loan without  UCC Blanket liens, including unsecured options!

Several options, both unsecured and partially secured,  are available.   Do not let a lender take everything you have worked for just because your company runs into a short term cash flow problem!

UCC stands for Uniform Commercial Code and are against the specific property of a person or business.    For example, blanket UCC liens are usually against all property, including furniture, fixtures, and equipment.

Details will vary based on the funding company.   Investors making unsecured loans such as an mca cash advance won’t do this, though may still encumber accounts receivables.

Traditional funding sources such as banks will write in specific details, that  may include:

1.  Vehicles or  accounts receivables

2.  Any future purchases during the term of the transaction.

Both of the above conditions can be very significant to any commercial operation and owners should be very cautious.

The business cannot use that collateral  for new funding

Funding companies that encumber a company’s accounts receivables are now the legal owner of those receivables until the balance is paid in full.

There are better ways to leverage encumbered assets for a business loan, which uses only Vehicles, Equipment, or  Real Estate.

FAQ, Frequently asked Questions

What is a UCC lien filing?

It is a legal recorded by a lender with the secretary of state on an individual or business. It is legally binding and any listed assets are held as collateral by the filer of the lien.

What is a ucc blanket lien?

A blanket refers to a lien filed against all the property, furniture, fixtures and equipment that a borrower has. It means the lender has everything the borrower owns as collateral. In the event of a default, they can take court action to repossess and liquidate that property.

Can I get another loan while a lender has a ucc blanket lien on all of my assets?

Only unsecured loans are available to you until the lien is removed. If multiple assets were taken as collateral by the lender, you can request they release some of those assets.  They can do this when most of the loan has been paid down.

How do I remove a UCC filing?

You can delete a ucc filing by paying off the debt or contract for which the UCC was placed. The lender usually files a release of lien automatically after the debt is fully paid. Check with them after the payoff to find out when they will release their ucc. If they have not, tell them to release it immediately and ask for a payoff letter. You can provide the payoff letter to the secretary of state and ask them to remove it.

Other Issues

Avoid liens on future assets.  This happens when the company buys more assets during the loan.   The existing finance company now has blanket rights to anything the company has bought outright.

Violations of UCC liens

There is another legal grey area even with a regular UCC blanket filing.    Regular UCC blanket liens are on all property, furniture, fixtures and equipment.

If the company acquires property which a new lender takes as collateral, then there may be ownership conflict with that collateral.

Also, any new lender may not have a clear legal right to that asset based on the previous Uniform Commercial Code.

Finally, there are significant issues that come with collateral Uniform Commercial Code filings. Businesses should do due diligence or seek legal counsel.

Recently, some regular for profit companies have inquired how they can get free loan grants.    Many Grants are not for profit companies, unless they fall into certain limited specific categories which sometimes change. For excellent alternatives to Grants, click below.

Complete the Data Secure 15 Second Request Form Now..  Click on “Paper Clip” attachment at bottom right and attach the last 3 months bank statements, or just complete Application.
Or, On Cell Phone, just tap either Tel # link, 1-919-771-4177, then Press Dial on your phone.   You can Tap / Click  Contact-Me, complete and we will contact you.

The public often believes that grants are available from the Government and do not have to be paid back.   Grants are given mostly to non profit businesses.  There are some exceptions that change over time.  States may issue grants business in certain industries.  For example, certain technical or scientific industries that government wants help from private industry in.

They sometimes states will issue Grants to certain businesses in the farming sector as States wish to promote the continued health of farming in their States.   There are also instances in which certain minority owned businesses may be provided Grants.   In general, For profit businesses do not receive Grants.   Federal and State governments do not wish to provide money from revenues to businesses that are engaged in for profit endeavors.

Many new businesses that need a start up business loan look for help. They contact companies who advertise they can get grants for private companies.  Many of these advertisements do not say that grants are mostly for non profit businesses.    There are also many companies that advertise books as well as online books that are sold on how to obtain Grants.   These fall into the same category in that these books are being sold on how to get something that in the vast majority of cases, does not exist.

Real Estate Company Loan

For a Real Estate Company Loan, Small Business Loans Depot offers niche used real estate company loan financing based on the Gross Receipts, or Gross Sales of the Business.   By using their sales, Real Estate company loan companies can obtain the highest approval funding amounts.  The funding can be used for any reason.  This includes marketing, advertising, inventory, expansion, additional employees, cash flow, any other reason.

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Features of a Real Estate company loan financing product below.
Difficult and complicated transactions are routinely done.
The application process is fast and easy.
The full process from beginning to end takes five to eight business days.
$7,500 to $150,000 approval amounts done routinely.
There are no application fees or advance payments.
As little as 9 months in business accepted.
Low credit score used.   Credit scores even below 500 can be approved.
No conditions on how the business capital is used.
Collateral is not required as this is an unsecured transaction.
24 to 72 hours processing and approval time.
Real estate companies provide information on their cash flow with their last most recent three months complete business checking account statements.    They also submit a one page application in order to qualify for this real estate company loan financing.  The final approval amount can be as high as 150% of the total monthly deposits over the most recent 3 months.   The customer has 2 to 18 month repayment terms.   6 and 9 months are the most popular repayment terms. Customers decide which approval they want.

Seasonal businesses are not excluded from funding.

Some examples include a recent river rafting companies which are highly seasonal.    For such a business, the most recent 3 or 4 months in the summer are the highest volumes.  Rather than obtaining a lower approval amount or denial, submitting the last 12 months statements for a seasonal business give these businesses the highest chances for approval and the highest approval amounts and longest terms as well.

Funding amounts for this real estate company loan financing range from $7,500 to $175,000.  Approvals can be obtained for up to $135% of the raw dollar amount of deposits.   As an example, if a customer deposits $100,000 in one given month, up to $135,000 approvals can be obtained.

Approvals will be higher if the company keeps strong balances.  If the customer has multiple business checking accounts, submit statements for both accounts.  Doing so will provide the highest approval amounts with the best terms.   This is best for seasonal businesses.

Credit limit increases.   As the customer uses the line, the maximum limit the customer can draw is increased.  Limit increases occur most frequently with existing customers.   Existing customers are the most desired customers.    New customers are not given better terms and handled better than an existing customer.

This line is not reflected on the owner’s credit report.   This real estate company loan financing is not listed on the individuals personal credit file.   business credit is established with the main business credit bureau agencies in the industry, such as Paynet, Experian business credit report, Dun and Bradstreet.

Frequently asked Questions:
How much will the approval be for?   The dollar amount your business will be approved for is most closely tied to both the raw dollar amount of the businesses monthly deposits and the average daily balance.   Higher funding amounts will occur as these amounts are higher.

Will we obtain an approval?
You have an excellent chance of being approved if your business has sales.   Simply having sales means your business has a very good chance of obtaining eh desired approval.   As indicated previously, the higher the sales, the higher the approval amount.

What length of time is required for approval for this Real Estate company loan financing?    In the majority of cases, funding occurs by wire within 2 to 3 days of approval and the customer faxing back in the final documents.
Can this be paid off early?  Early payoff can take place.   Since the approvals tend to be shorter term, from 3 to 18 months, in most cases customers do not pay off early because the transaction is short term already.

How can I go about using the line over?    Does a new transaction from scratch take place?  You will be viewed as an existing customer with a positive borrowing history.    The line can be used repeatedly only by giving the most updated cash flow information.

Is collateral required?   Collateral is not required for this real estate company loan transaction.    Only the Gross receipts or Gross sales are the main basis for this transaction.

Can we obtain larger limits in future requests?   A  higher line size is usually granted with each re-use.   This provides more options than traditional financing has in the past.  With traditional financing, customers have almost always found it difficult or challenging to obtain limit increases.   Lenders of these programs have always been very conservative with limit increase requests.  However, this does not apply for this financing.  The largest line size possible is provided and the limits are increased as often as possible and by as much as possible.

Example of a real estate company loan financing transaction.  Itemized below is an example of a recent transaction.

A real estate company in Baltimore Maryland required working capital.  They were denied by their local traditional lender.   Issues at hand were that the owner’s credit was not perfect and the financial statements were not what the bank was looking for.

A real estate company submitted a one page application along the most recent 6 months business checking account statements.   Underwriting reviewed for 48 hours and approved a $50,000 real estate company loan.   The company selected a 9 month term.  The original docs were E-Mailed to the customer.  The customer faxed the completed docs back the same day.

The final verbal verification was done with the customer.   Funds are wired 24 hours after the verbal.     The customer was able to immediately use the funds to immediately begin a new project.

For more information on Real Estate loan information and options, visit the SBA

Thank your for visiting our real estate company loan resource page!

Business Sales Loan.

The vast majority of businesses have sales and will pre qualify.  The funds can be used for any purpose, marketing, advertising, inventory, expansion, additional employees, cash flow, any reason.  Did you know you could find a lender that could give your business a loan against it’s sales?

Go to our features and benefits section or call to quickly learn how this program can solve your company’s cash flow needs quickly and effectively.

Complete the Data Secure 15 Second Request Form Here.
Or call us at Tel:  1-919-771-4177

To qualify for this sales loan, or business loan against sales, businesses provide their last 6 months complete business checking account statements.  They then complete the one page application.  A business also has the option of providing the most recent year’s business tax return, for which a higher amount may be obtained.  If the total monthly deposits are high, the final approval may be higher.  The customer can choose from 3 to 18 month repayment terms, though 6 to 12 months are the most frequent approval terms.    The majority of approvals allow the customer to decide which of these options they want.

FAQ’s, Frequently asked Questions:

What is a Sales loan?

Funding amounts for this sales loan as well as business loan against sales range from $5,000 to $250,000.  Up to 125% of the total dollar amount of monthly deposits can be approved.  If the customer deposits $10,000 per month, up to $12,500 can be approved.    Approvals are generally obtained in 1 to 3 business days.

If the company’s beginning and ending balances, especially average daily balance, are high, the final approval amount tends to be higher.  Should the customer have more than one business account, then statements for both accounts should be submitted.  Providing statements for more than one account will get the highest amount approved.  Seasonal businesses should submit the most recent 12 months business checking account statements.

As an example, a snow plowing business is highly seasonal with at least 3 or 4 months in the winter being the highest volumes.  Instead of a lower approval amount or denial, provide the last 12 months statements for the highest chance of approval and highest approval amount.

How can I increase business sales?

Use like a line of Credit.    This Sales loan, or business loan against sales is basically a line of credit that the customer uses at their discretion.  Since the most common loan terms are 3, 4, 6 and 9 months, this sales loan and business loan against sales product is used as a bridge loan in most cases.   If the customer is approved for $100,000, they can use the full $100,000, or they can choose to use $50,000 initially, then another $50,000 in a second take down.  Once the line has been repaid, it can be used again immediately by the business, or left dormant for months, then used again.

Periodic Line Size Increases.   Upon continued usage, the line size is increased over time.  Existing customers are the most preferred.   Better deals are not given to new customers.  A customer that is doing a second or third renewal will always receive a higher line size than an initial customer.     After a few renewals,  the credit line is often 100% or 200% higher than the original approved line.

Line not shown on individual credit report.   This Sales loan, or business loan against sales is not listed on the individual’s personal credit file.   business credit is established with the primary business credit bureau agencies such as Experian business credit report, Dun and Bradstreet and Paynet.

Features of a sales loan or business loan against sales product include:

No advance payment fees or application fees.                                                                          Low credit score is accepted.   Credit scores below 500 can be approved.
No restrictions on how the working capital is used.                                                                    No collateral is required.   This is an unsecured transaction.
Complex and difficult transactions routinely done                                                                 Quick and Easy application process
The entire process take only five to eight business days

What are the credit criteria looked at for this Sales loan, or business loan based on sales?

The average daily balance.

Dollar amount of Monthly deposits. 

Ending bank balances

Business checking account beginning balances.

Gross income Flat or increasing Gross Sales from year to year.

Net income.   It is also expected that Net income figures will be relatively flat or increasing from one year to the next.

Overdrafts. The bank statements are analyzed for the total number of overdrafts and NSF instances. 5 is the maximum.

Contact us today and we will answer all of your questions thoroughly and intelligently.

More than 3 years will help a business loan request.  Less than 2 years in business may result in being declined for time in business.

If a company started out as a sole proprietor then switched to a Corporation, the combined total will be considered.   If a business was unincorporated for 2 years and then switched to a Corporation for 2 years,  the total time is 5 years.

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FAQ’s, Frequently asked Questions:

What is time in business?

The amount of time since the business has been registered.   This is the day the business license was obtained or the day the business was incorporated with the State.

How can I figure the length of time my business has been established?

Look at the date your business license was issued.   If the business is a Corporation, go to the Secretary of State in your State.  Find your business listing.

What is length of time for a business loan?

This is the amount of time that is considered for your business for the loan process.   It is one of the considerations used in approval or denial.   1 or 2 years is usually requested.   Some business  loans can be approved with 3 months in business.

A company can provide old business licenses.  This is especially important because in most states the Secretary of State does not show the history of unincorporated businesses.   The SOS usually only provided information on corporations.   If a sole proprietorship does not keep their old business licenses, they may not be able to prove how long the business has existed.

In the business loan environment, one of the approval factors that is often overlooked is the amount of the request.   The amount of a business loan request is important.

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The main factors that are most often cited are the time in business, personal and business credit, type of business.   However, one of the biggest factors that is never discussed is the amount of the request.    All other things equal, it is far easier for a company to be approved for a $10K or $25K loan request than for a $100K loan request.    Also, if a loan request is made for $100K, it may be declined for $100K whereas it might have been approved for $25K.

Click Complete
Data Secure 15 Second Request Form Here..  Click on “Paper Clip” attachment at bottom right and attach the last 3 months bank statements, or just complete Application.
Or, On Cell Phone, just tap either Tel # link, 1-919-771-4177, then Press Dial on your phone.   You can Tap / Click  Contact-Me, complete and we will contact you. 

In such a case the applicant could be shorting themselves of funding by applying for too much money.    Many applicants believe that they should apply for as much as possible.  This is incorrect.   Applicants should apply for roughly the lowest amount they feel they need funding for.

If a business is approved for funding but not enough, they can try to get another type of business loan.  The business can look at other loan types to see if another type of funding may work for them, such as accounts receivables financing, or a loan based on the Real Estate owned by the business.   There are other types of loans such as inventory loans, or equipment loans.  If your business was able to receive some funding, but not enough, contact us above and will discuss your options and the types of other loans your business would be most likely to qualify for.

Vendors – Increase your Sales now through free access to our constant flow of  incoming customers.    We bring customers to you for free!

Vendors opportunities include expecting up to $25,000 more in equipment sales immediately, with increased sales of $50,000 to $100,000 per month after just a few months.

Increase your revenues by processing our customers. Applicants need financing to obtain equipment, vehicles, construction equipment and more. Offering monthly lease repayment terms allows the buyer to finance the purchase over a 2 to 4 year term instead of a short term payment they cannot handle.

Complete the Data Secure 15 Second Request Form Here.,
Or Call us at Tel:  1-919-771-4177, OR Send E-Mail
We use your Vendor Expertise!

Small Business Loans Depot offers a one of a kind in the market Vendor Opportunity by bringing customers to you at no cost!  Our customers need equipment or financing, or both.     You provide us assistance in the financing through your channel and expertise with the equipment involved, such as Computer, Electronic, Industrial, Machinery & Medical Equipment.

Other Vendor opportunities include assisting with equipment acquisition, locating equipment and equipment appraisal.

Call us today at Tel: 919-771-4177 to begin the process today!

Vendor Opportunities Resources:

U.S. Department of Commerce – Helps american businesses become more innovative at home and competitive abroad.

U.S. Bureau of Economic Analysis – Provides statistics on consumer spending, corporate profits, travel and tourism and much more.

Bureau of Labor Statistics – Provides companies with up to date information on employment, demand, hiring, productivity and other information that may be useful to companies.

Vendor Opportunities resources:

U.S. Patent and Trademark Office –U.S. office to file patents to protect a companies new or existing proprietary products.

U.S. Trade and Development Agency – Promotes U.S. Exports to Foreign Countries, please review if your company is interested in exporting goods to foreign countries.

Public Radio Planet Money – All issues money related to the public.

Thank your for visiting our Vendor Opportunities resource page!

For a sale-leaseback, Small Business Loans Depot offers a niche sale-leaseback loan based on equity Real Estate.

For this sale leaseback or real estate sale leaseback loan, business owners use equity in their Real Estate. 

• Difficult transactions are routinely completed.
• Application is simple with an expedited funding process.    Only a one page online application is required
• There are no application or upfront fees.
• Your request is completed by an experienced consultant

Callers will call in with varying requests.   Each week, callers will ask for either a
“Real Estate sale leaseback”, “sale leaseback on Real Estate” or a “leaseback”.

Complete the Data Secure 15 Second Request Form Here.
Or call us at Tel:  1-919-771-4177

A significant tax savings may be obtained in this sale-leaseback against Real Estate.

Your business generates revenue by using Real Estate rather than owning it.   This sale-leaseback takes advantage of the untapped equity in Real Estate and uses it instead for cash flow.

The one page application is submitted by completing the online application in the menu bar above, or Faxing to Fax: 919-882-8541, or E-Mailed to info@smallbusinessloansdepot.com.  The general processing time is one to three business days.   Upon approval, time for final funding is approximately one to three days.

Other Options:
Gross Sales Cash-flow-loan –  This financing product can be ideal for many businesses by being based on the Gross Sales and cash flow of the business.  Many businesses  have significant cash flow.  As a result, substantive working capital can be obtained by the business through this product.

This sale-leaseback product is used, in effect as a loan against cash flow.   The business provides the most recent 3 months business checking account statements along with a one page application.    The average daily collected balance, beginning balances, ending balances, and the amount and number of deposits per month are analyzed in order to determine the approved amount.

Repayment terms on this sale-leaseback range up to 72 months.

By providing the last 2 years tax returns,  and if they are strong, the initial line size can be significantly higher and future line increases can also be more.

Sample Asset based Equipment refinance transaction:

More sale-leaseback resources:

Thank you for visiting our sale-leaseback resource page!

Businesses have long looked for financing based on Sales, rather than requiring excellent credit, collateral and financial statements.  A Gross Sales Loan is available now.    Funding ranges from $5,000 to $250,000 with a fast turnaround.   Upon approval, funding can take place within 1 business days.    4 months time in business and a 500 or higher credit score is required.    In some instances, the credit score can be below 500.  What is a Gross Sales Loan?
Features and benefits
Only 3 months in business required and credit scores below 500 accepted are considered.
Complete the Data Secure 15 Second Request Form Here.
Or call us at Tel:  1-919-771-4177

This loan is set up in practice in similar fashion to a line of credit.   Your business decides how much in funds are wired into your business checking account.   The customer is approved for $50,000.   50,000 is then wired into the customer’s account within 1 – 3 business days after approval.    Upon repayment, the customer can renew the line for another round of funding.

Frequently asked questions:
Question:   We have 2 major business checking accounts with significant balances.   Can we combine the two accounts to get a much larger line size?
Answer:  Rather than do 1 large line size for 2 accounts, we can establish 1 line for each account.   This allows your business to accommodate the cash flow needs for each account.  It also prevents the business from overextending it’s available cash flow from 1 account.
Question: Our Sales went down from the previous year to the current year.  Will that hurt our chances?
Answer:  Your business still has an excellent chance of getting an offer.    We will look at the most recent three to six months of gross sales to determine what the approval amount will be.  If your sales in the most recent three to six months went down dramatically from month to month, then the approval amount for the loan based on gross sales may be lower than if the sales had been steady.     Higher sales in the last three months will give you a higher offer.
Question: After we pay it off, do we have to re-apply again from scratch?
Answer:   You only provide updated statements for the last 3 months to renew.   Funds are wired into your business checking account at closing.
Question:  Are financials or collateral required?
Answer:   Collateral and financials are not required to qualify.   Depending upon the amount of the approval and the customer’s requested amount, the customer can choose to provide financial statements in order to qualify for an even higher possible amount.
Question:  What if I don’t use the line?

Answer:  Nothing happens.  Submit the most recent statements when your business needs funding again.

Sample Gross Sales Loan Transaction:

Magic Muffers in Doraville, Georgia needs $30,000  in working capital.    They did not qualify for other types of loans and another bank declined them for a property loan.

Magic Muffler has $450,000 on sales per year.   They apply for a Gross Sales Loan and complete a one page application.  The company also submits their last 6 months business checking account statements.

The approval for Magic Muffler is for $35,000.    The customer wishes to proceed and gets the loan documents in their E-Mail.    They fax back the completed loan documents.     The paperwork is reviewed and a final verbal verification of the transaction is completed with the customer.

Funds are wired to the customer’s account within 24 hours.

Factoring is a method of raising working capital used by many companies. Some business owners have questions regarding factoring and whether the advantages of factoring outweigh the disadvantages.

The major advantage is factoring provides working capital for businesses that would otherwise have to wait a significant amount of time to receive. Oftentimes, once a business has provided a product or service to another company, they have to wait 30 days or longer to obtain funding.

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If a company has to wait 30 – 60 days to receive payment that is due to them, it inhibits cash flow they otherwise can use to begin work on the next project that will generate revenue. I can also prevent the company from soliciting new contracts, knowing they do not have the working capital to begin or complete the job.

The significance of factoring in this situation can have a major positive effect on a company. If a company completes a job in 1 month and has to wait 1 month to get paid, the total time is 2 months. They have to wait 30 days to start a new job and can only do 6 jobs per year off the use of those funds.

If they complete the job in a month, use factoring, and are paid immediately, they can do 12 similar jobs per month off that revenue. If the company can generate twice the revenue, the additional revenue will often far exceed the cost of the financing, even with a 3% cost of financing.

Some businesses are reluctant contact the customers that pay them and inform them that they are factoring the invoice. In many cases, the company being informed the invoice will be factored already has this arrangement with some of their other customers, is familiar with the practice, and is fine with the request. Additionally, there are further methods that are used to inform the company paying the invoice that it is being factored.

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In a vehicle leaseback transaction, in which an asset is sold for cash and leased back to obtain working capital, vehicles are difficult to use.

Small business loans Depot’s vehicle leaseback program will get you working capital quickly against your commercial vehicles.   Get a business loan against certain vehicles by clicking below.

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Vehicles are difficult to use in a leaseback transaction because the collateral is very mobile.   So the collateral can easily go from one state to another.  The individual or business in possession of the asset can move the asset anytime.  Mobile collateral can make repossession extremely difficult.

A car dealer that is in possession of the vehicle until it sells can get resources on how to get a used car dealer loan.

Vehicles have titles and the title work must be done for the transaction.   This also makes the transaction harder.  The title has to be held as collateral and the lien holder information placed on the actual title.   The information on the title just 100%  consistent with the name on the loan documentation.   The lender may lose their security interest when the title information is wrong.

Preferred Vehicles as collateral in a leaseback

Vehicles are sometimes more difficult to use in a leaseback due to the issues above.  Lenders who accept vehicles as collateral for a loan against tractor-trailers or semi-trailers over want the trucks to be less than  7 years old.   This is especially true when the borrower is a homeowner.     When the borrower is a homeowner, the likelihood that the borrower will permanently move the collateral in an default situation is significantly reduced.

Homeowners are much more likely to remain in their home and not leave the area than renters.   That makes the security interest by the lender stronger. A homeowner is less likely to move around.

For the reasons stated, it is typically more difficult to use vehicles in a leaseback.

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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.

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When it comes to applying for a business loan, businesses will often ask for an amount that is too high.    What amount should a business ask for, and what should they base the amount on?

One of the initial overall factors lenders look at to consider if a business will be able to handle the new debt and if the amount of the request is in line with the size of the company, is gross receipts.

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A business that has $100K in Gross receipts requesting $200K will have almost no chance at being approved for this amount of funding.   A business that Grosses $100K is likely in the “up to $25K” range for funding, unless they have significant unexpected strengths in other areas.  The lender will look at how much money the business grosses as a rough initial guide in determining if the request is in line with the size of the business.

A business that Grosses $500K to $1 Million is in a better position to be requesting $100K, and have a better chance of being approved for a larger amount of funding, even if it is not the full $100K they requested.

Having significant gross receipts will give a company the opportunity to be a candidate for higher funding amounts. However, a company’s net income may be negative, and if this is the case the negative net income may all but eliminate any strengths provided by significant gross income

While net income, debt to income ratios and other factors play a role in how much the company may ultimately be approved for, gross receipts will dictate the broad range of the amount of funding they are a candidate for.

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Among the decline reasons that seem difficult to accept, understand, and even have enough information on to figure out how to handle in the future, “too many accounts recently established”, or similar language, is one reason that leaves declined applicants at a loss.

This is a decline reason often assigned to applicants that have recently opened credit accounts of some type.   The lenders review the number of accounts recently opened, how long ago they were opened, the type of account opened, and possibly the limits.   There are very likely other factors as well they do not disclose.

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The lender believes the applicant has established or opened too many accounts too recently which they are not comfortable with.    They consider this type of activity and behavior by an applicant to be an elevated risk factor, and will often decline an applicant for this.

Whether this is a reason the applicant can accept or not, the bigger hurdle for a declined applicant is they do not know and will not be informed of exactly how many accounts are “too many accounts” , and in what span of time are they “…recently established”.

If the applicant calls the lender and speaks with a representative, they can be sure the representative does not know, will not be told, and will be unable to find out the answers to these very valid questions the declined applicant will have and deserves to know.   After all, if an applicant is told they are declined for certain specifications, aren’t they entitled to know what the parameters of the specifications are?

Certainly they are, however, they will not be able to find this information out, they will have to alter their behavior based on generalities.   All the declined applicant knows is they need to make sure they don’t apply for, or establish too many accounts too often.    Does that mean 3 accounts, 5 accounts or 10 accounts?    Does it mean in the last 3 months, 4 months, or 5 months?  Declined applicants will be forced to simply refrain from heightened activity as best they can.

This type of decline reason is common to many larger lending institutions and is not an aberration, so there are many applicants that are frequently declined for this reason.     The reason applicants will not be told the specifications is that it is considered proprietary lending guideline criteria by the lender, which they consider company secrets.    While this assertion can be disputed since applicants are directly affected by the criteria, applicants will probably get better results by simply making sound conservative judgements about how often they establish new accounts.

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Recently, a friend  asked if one of the decline reasons they received on a credit card decline was legitimate or not: excessive unsecured limits.

One of the reasons they were declined by the credit card issuer is that the lender believed the applicant had too much unsecured credit available, even though they were using approximately less than 10% of their availability.   Is this a legitimate decline reason?

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From the applicant’s perspective, they have not used the line that is available, so how can this possibly be used as a decline reason?  If they are not using it, that means they do not owe it.   How can they be declined in part for a non-existant debt?   This cannot be a valid decline reason.

However, from the lender’s perspective, it is money that is available at anytime to the applicant.    The applicant can get a cash advance, or may even have checks on hand against the line which they can simply write a check for and deposit into one of their accounts.

If the applicant encounters an event for which a significant sum of money is required, an illness in the family, elderly care, loss of a job,  damage to a home that is not covered, an applicant that had no intention of using the funds, may suddenly do so.   When such an event occurs, the applicant now has a significantly higher monthly debt obligation they are obligated to meet.

This monthly debt obligation may also be used in part to calculate their debt to income ratio, possibly resulting in their upper “limits” ratio to exceed the lender’s threshold, resulting in an additional decline reason.

One issue that is hard to distinguish is the possible incorrect inclusion of a revolving home equity line into the analysis.   Home equity lines are listed as an “R” for revolving credit by the bureaus.   Since a home equity line of credit is secured by the home, it is not unsecured and should not be included as part of an unsecured accounts review.     Often, since a home equity line of credit will have a high limit in comparison to credit cards, if it is included in the analysis, it will severely skew the true picture of the applicant’s unsecured accounts and availability.

Nevertheless, while being decline for “excessive unsecured limits” may not seem valid to an applicant, the lenders reasons for doing so are valid enough for them to legitimately justify their position.

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On personal credit reports,  trade lines are identified by the company reporting the information on the account holder.  As an example, the trade account may say “Sears” and Sears will report what their records show about your repayment history to them.

Imagine if an account were listed and showing slow or derogatory repayment history about you, but the company’s name is not listed. Hard to imagine?   That is precisely what occurs today with very well know business reporting agencies and how they report on businesses.

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One of the purposes of the business credit report is for other businesses, or the business itself, to review the trade and repayment history.    However, if a business reviews it’s own business credit file, reviews the trade section and identifies delinquent or derogatory repayment information, they do not know who the company is that is reporting on them.

For privacy purposes, company names of business credit reporting agencies will not be listed here.

It is even the case when the business credit reporting agency is called and a customer service representative is spoken with,  the representative will indicate they do not know, are unable to tell you, and unable to find out who the company is that is reporting credit on you, in spite the fact that the business credit reporting agency is receiving credit information from them, about your business.

It seems very clear that they do know who the companies are, even if the number of people that have access to that information is small.    Since the business credit reporting agency is receiving information, they will have to know who the company is reporting information concerning your company.

If this issue is encountered by a company reviewing their own business credit from a business credit agency,  it is recommended that a supervisor at the business credit agency is asked for and to make every effort not to relent, until this information is provided. Anything less could be considered a disservice to the business seeking information on their credit.

Cash flow loan programs, based on using business bank statements to assess the cash flow of a business, are available for a businesses. However, are they a fit for most businesses?

This will depend primarily upon the real time cash flow figures in the company’s business checking accounts, the company’s gross and net income, and the profit margin of the business.   The company’s bank account beginning, ending and average balances are important as they will influence the daily and monthly payment a company is able to make.   If a company deposits $25K to $50K into their account on a monthly basis, but their beginning and ending balances are approximately $5K, they will not be able to handle as high of monthly debt service as a company that has the same dollar amount of deposits per month, but higher beginning and ending balances.

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The company’s gross and net income figures are also a strong indicator of the type of financing they may be able to handle.    A company with gross receipts of $250K per year will not be able to handle the same monthly debt service as a company with gross receipts of $1 -$2 million.     The net income figure may also be closely tied to a company with higher or lower bank account daily balances.

The profit margin is also an important % to consider due to the cost of this type of financing is typically significantly higher than other types of financing.    As an example, a liquor store has a low profit margin, and may not be able to handle a higher percentage of financing of a cash flow loan.   The exception to this will be if the liquor store has a fast enough inventory turn around time.  If a cash flow loan is 30% per year and the merchant indicates the loan is too expensive because their profit margin is 20%, inventory turn around time has to be factored into the decision.

If inventory is turned over 1 time per year, then the cost exceeds the profit margin by 10% and the cost of financing is too expensive.

If the merchant turns over all of his inventory on an average of every 3 months, and their profit is 20%, 4 times a year will bring in an 80% return on money, far exceeding the cost of financing.   Other factors which need to be considered include the merchant having to reinvest in inventory, damaged goods, etc., but the top profit margin figure allows the merchant to consider this type of financing.

In different situations, such as a construction company, there is not any inventory turnover, and the business will consider the total profit from the job.

If a construction company has a contract that will pay them $200K upon completion of a job and their cost is $75K, then a cash flow loan based on bank statements may work well for a business in this case, and can be used to purchase raw materials, hire additional job site labor, and operate or purchase machinery if needed.

The decision whether the cost of funds on a cash flow loan is justified must be considered on a case by case basis for each business.

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Large lending institutions have for many years used auto decisioning.    An applicant completes an application and instead of it being manually reviewed, it is reviewed by an automated computer system.    Do these systems correctly review an applicant’s credit file?

Automated systems review many factors when assessing an applicant’s credit file.   One of the factors with regard to unsecured credit is the total amount of unsecured credit lines, and total amount of unsecured credit balances.

Trade lines listed on an individual’s credit file are generally listed either with an “R” for revolving, or “I” for Installment.

A major glitch has been seen in the past in which revolving home equity lines of credit show up as a “R” on a credit file, but they are not unsecured, they are secured with the homeowner’s home.   Since Real Estate revolving equity lines have very high limits, if, due to their being listed as an “R”, they are added in the summary section of the bureau under “total unsecured balances” and “total unsecured limits”, this will greatly increase the total dollar amount that the applicant will appear to have under unsecured balances and unsecured limits.

As an example, if an applicant has $20K in unsecured account balances, and also has a $200K revolving home equity line of credit, with a $100K balance, the applicant will now, in the credit bureau’s summary section, be listed as having $120K in unsecured balances.

Since most lenders have a maximum limit of the total amount of unsecured balances an applicant can have, a great many customers may very well have been auto-declined for “excessive unsecured balances”, when in fact, their true credit card balances and unsecured account balances this figure is supposed to represent, are much lower, and very arguably,  inaccurately portrayed by the credit bureaus.

Since many applicants have revolving home equity lines of credit with balances, many applicants may be inaccurately detrimentally judged by automated systems.    Applicants with this characteristic should closely review such decline reasons given by a lender.

If they have received this type of decline reason, they should call the lending institution and make every effort to speak with a supervisor at the outset.  It is very doubtful a regular customer service representative they get will understand, have the authority to, or be willing to review this issue.

Upon speaking with a Supervisor, ask for a re-review.    Ask if the Supervisor has the authority to re-review the application.   If so, ask for a formal re-consideration.

Small Business Loan Resources:

SBA – Information by the SBA, Small business administration.   Questions can be asked and answers provided.

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When traditional funding sources such as banks decline an applicant, very often some of the decline reasons seem insignificant, or even illogical.

A very common occurrence is for the top 4 decline reasons to be provided.   Often, the first 1 or 2 reasons, sometimes even 3 out of 4 reasons seem either appropriate, or at least acceptable decline reasons.     A typical first reason may be “delinquent credit history”, or “collection accounts”.     However, the third or fourth reasons are often “too many accounts with balances” or “too many unsecured accounts” or “too many recently established accounts” or very similar language.

They are saying you use too many accounts, you have too many accounts, or you opened too many accounts too recently, in their opinion.     In many of these cases, the credit scores of such files with the more ambiguous declines reason are in the high 700’s or higher.

For credit files in the high 700’s that get declined, there often are no obvious decline reasons,  so what can be considered weak or controversial decline reasons are the only reasons provided.   In such cases, there may still be three or four decline reasons.

The credit bureaus provide the lenders reviewing credit the top reasons why a score is lower than the highest score possible.   The banks then decide how many of those reasons, and which of those reasons to provide for those applicants they want to decline.

Someone with a 775 credit score may receive a decline from a bank due to the bank’s view that their accounts have not been established long enough.   For someone such as this, the 3rd or 4th decline reason may be even more ambiguous, “accounts too new to rate”, or “too many new accounts to rate”.

The lenders may also strategically be protecting themselves in the event a declined applicant disputes a decline reason.   If the bank declines for only 1 reason, the applicant may resolve this reason, come back to the bank, provide evidence the issue has been resolved and in essence, “demand” the loan.   An applicant may also dispute the validity of a decline reason, and therefore also”demand” the loan on the grounds that the decline reason was in error.

To avoid such situations, lenders often issue several decline reasons in order to put themselves in stronger position.   If an applicant resolves or disputes one decline reason, the lender can now simply re-review the file and decide if they want to approve the loan and are not under pressure to now approve the applicant.
The lender can now simply stand on the remaining decline reasons and basically decline the applicant a second time.    For the reasons listed, many lenders decline for several reasons and will continue to do so.

Heard this scenario before?:

You go to the bank, inquire about a loan, and leave feeling like the bank will make you a loan even before you apply, only to take a hard landing and be declined at the end of the process?

Apply where you have the strongest chance of being approved.  Start Below.

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Why does this happen?   Banks do not want to discourage an applicant, even if the customer gives them info upfront that they know will be a decline.

Experienced bankers may tell you upfront that certain loans cannot be done.  Even experienced bankers will usually only do so with obvious decline reasons.

This happens where loan requests are made for loans the bank never does.   Examples are loans against overseas houses, or against vehicles that are too old, for example.

The driving force behind this fear is accusations of misrepresentation, discrimination and eventual litigation.

Banks would rather just have you apply than tell you in advance that the chances are very low they will do the loan, to the point they are willing to take a hit on the processing costs associated with your application.

When going to a traditional bank for a loan, speak with an experienced loan officer and present as many facts surrounding your situation as you can.

Listen closely to their answers, maybe they will tip you off in advance of the likely outcome.  This will save you weeks of time and hours in applications and phone calls and leaving you with nothing to show for it.

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Does character matter when a loan is being reviewed by a lender, or should capacity to repay be the only issue?

Two of the tenants traditional lenders teach their lending staff is capacity to repay, and character, also referred to as willingness to repay.   Capacity is determined by credit, cash flow, length of employment, or time in business for a business, debt to income ratio, financials, possibly bank statements, and the amount of the new debt to be serviced.

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Why is character an issue in lending?   When lenders say character, they more so mean willingness to repay.  There are numerous instances in which the borrower is able to repay but chooses not to for a variety of reasons, including:

– Prioritizing debt accounts.  The debt holder has limited funds and prioritizes what is most important to repay. Some lenders will lose out is this decision making process by borrowers.

– Unwillingness to continue paying on accounts that are joint with someone else, most often a spouse. Often, one of the signers signs more so for the benefit of the other person to obtain rather than for themselves. Over time, due to divorce or a deterioration in the relationship between the parties, the signer who had just signed in order for the other party to obtain financing  is no longer enthusiastic about paying, or outright unwilling.

Partners.   Often partners in a business signer on behalf of each other.   If the business dissolves, or even if the business continues but the relationship deteriorates, one party may discontinue paying on a debt, placing the payment of the debt in jeopardy.

Child Support. In some cases, individuals pay mortgage, rent, car notes and credit cards, even vacations, but not child support. This is considered a character issue.

Lack of ongoing perceived value of the debt. A  good example is vacations.  Someone who has borrowed for a vacation no longer receives any benefit of the vacation after it is over but is now obliged to pay the debt.

For a variety of reasons, many detailed above, character, or willingness to repay is a significant consideration by lenders.

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Cash Flow, the first form of repayment, is the number one way borrowers have the ability to repay.

The first form of repayment is cash flow.

Traditional sources such as banks have long looked at capacity to repay, followed by willingness to repay.

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What is looked at in order to assess cash flow?   In most cases, financials.  That means the last 2 years tax return, plus an interim Profit and Loss statement and Balance Sheet.

However, the financials only give an accountant created, dated picture.    The most current business checking account statements should be included in the review.

Keeping foremost in mind that cash flow will almost always be what allows repayment, business owners should review the most recent cash flow numbers before approaching a lender.

If the numbers are not attractive, the applicant should re-consider waiting.

Apply when the numbers in their checking account go up, or until their accountant reviews their interim Profit and Loss statement.

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Broker Funding Source

Use an ISO broker funding source that gets you the highest approval rates and the most diversity of programs.   Increase your income by providing several forms of ethical business loans to your customer’s.   Watch video on page about Loan Broker honesty: no lies.

Advantages of these broker funding sources include asset refinance:

✅ More businesses will prequalify for this product than any other product because more businesses have equipment than any other asset.

✅ Machinery, Construction Equipment, Tractor Trailers and Farm Equipment.

✅ More businesses qualify for $5K to $25K than for larger amounts such as $250,000
Fund difficult to fund restricted industries, such as used car dealers, attorneys and others.

START NOW

Call 919-771-4177 for more info.

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FAQ, frequently asked questions about broker funding sources

What does a commercial loan broker do?

The mission of a commercial loan broker is to contact business owners and find out what problems they are trying to solve. The broker then matches the products that will give the business what it wants.

Why should I offer these programs to my business customers?

We offer unmatched integrity and 35 years experience with the widest range of business funding programs that are available. We do not circumvent brokers or put customers in bad deals. We help you offer business loans that will help your customer the most. Each customer’s strengths and weaknesses are different and match best to certain programs.

How do I become an independent loan broker?

Establish a customer base that creates a steady source of business loan leads and renewals. We help you develop the sales skills and products and how to talk to your customer about them. Contact us to get started and get a business license with the Secretary of State.

Clawbacks or no Clawbacks

A Clawback happens if the customer defaults soon after the financing transaction is funded.  The funder asks the broker to return the commission.   This normally happens if the customer has defaulted within 30 Calendar days of closing or between 21, 22 or 23 payment days.    Our asset based as well as some of our revenue based MCA Merchant Cash Advance transaction do not have a clawback or are much more limited in the possibility of a Clawback.    Contact us to ask about this.

Most businesses have either revenue or Equipment.   With these multiple flexible programs, you will be able to get a very high percentage of your customers approved and funded.

This product can be very effective as an additional loan product.  Offer along with your main loan products that you already offer.  As an example, you are a broker that offers merchant cash advances and accounts receivables financing.   Your client wants $200,000 and you have secured $125,000 maximum in funding through your 2 core funding products but the customer still really needs another $75,000.  Your client is a Manufacturing company and they have Accounts Receivables.    By factoring their receivables, you obtain the extra $75,000 that they need.

Meet all of your customer’s loan needs

We have other broker funding source options, including loans against Retirement accounts and Against Commercial Real Estate.   By offering many products as a broker, you will be able to offer your customer every product they may qualify for.    Some customers may not get the funding they need through just one or two programs.   By being able to tap into other programs like unsecured and commercial real estate backed loans, some customers can get the full funding they need instead of falling short of their goals.

Use a broker funding source. Get the highest approval rates and the most diversity of programs. Multiple programs to get clients all the funding they need.

Submit to us for immediate access to their best-in-class funding programs.  This includes low rates, longer terms, weekly payments and fast online checkout funding.

Just submit a completed and signed app and the most recent three months’s business bank statements.    We can send you a quick 30 second online application for your customer’s to complete!

• 6 month and up to 24 month offers.
• Daily and weekly payments.
• Same day approvals and funding opportunities
• Online closing with corp office assistance to help push through any last minute closing hurdles and issues.
• Buy rates as low as  1.10
• $5,000 to $250,000
• $200k + in annual revenue, $3k avg bank balance, 3 or less neg days per month, and 1 yr in business needed
• Offers start with a 600 FICO
• 1st position lines.   Customer must net at least 50% of funds after payoff if another funder is being payed out.
• Build business credit for your client.
• Renewals at 50% are available.

Thank your for visiting our broker funding source page.  Because the success of your business is our goal.

If your customer needs help improving other areas of their business, they can contact SCORE the  is the nation’s largest network of volunteer, expert business mentors.

We are a leading funding source for all Small Businesses looking for the best alternatives to Banks.

Author Biography: Will Sanio, Owner of SCF Funding, dba SmallBusinessLoansDepot.com, has a Bachelor of Science Degree in Business Administration with a concentration in Finance from the University of Tennessee, Knoxville.

Over 20 Years experience including 10 Years with Wells Fargo, formerly Wachovia Bank headquartered in Winston-Salem, North Carolina, and First Atlanta Bank in Atlanta, GA. Specializing in Traditional and Alternative lending.

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Is credit important on a leaseback?   Yes,  credit is important for a leaseback.    The vast majority of funding programs are concerned with the ability and the willingness of the borrow to repay.

Many times, potential borrowers ask, there’s enough collateral there, why do you need to look at my credit?     On a leaseback, the collateral may even be Real Estate, or valuable Industrial or construction equipment.    If the borrower defaults, what does it matter.

It  is not the lenders desire for the borrower to default.   In fact, it is typically the last thing they want.    If the borrower defaults, now the lender has to reposes the equipment.   Then they have to hire an outside vendor to liquidate the collateral.   By the time this is all done, the lender has often taken a substantial loss.   The lender would much rather the borrow simply repay the monthly payment. The lender earns their interest, the transaction is fully paid and the lender moves on.

These are the reasons why credit is looked at.   If the collateral is valuable, weak credit may not be a make or break issue for the lender.     With valuable collateral, the lender’s primary interest in looking at the credit is to make sure the potential borrower does not have current past due credit.

As a result,  it is clear that credit is important on a leaseback.   However the transaction may be approved and closed even if the credit is not good.   The Equity in the Asset may override the need for good credit.   These decisions are at the discretion of the Lender.

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