Read up on tips, how to’s and steps on how to get a small business loan.
Small business loan articles and resources. Information including tips and steps on how to get a small business loan. Find articles on different types of small business loans including asset based loans as well as loans on equipment. Other articles cover mca merchant cash advances and accounts receivables financing. Merchant cash advance information includes getting low rate cash advances and how to get out of a merchant cash advance if they are causing your business a cash flow problem.
Apply for these Max Approval programs with existing positions
Multiple existing positions O.K. No penalty for other loans that are not mca’s.
Business loans NOT count as an existing mca position.
1. Installment loans:
Monthly or weekly installment loans should not count as an existing position when applying for a cash advance.
Example: Monthly payment personal loans, car loans and finance company loans are almost never included in the approval process.
2. Monthly repayment loans
Anything that is repaid monthly is almost always considered a separate type of financing.
Most installment loans are also monthly repayment loans, but not all. These will not be counted against your existing debt on an mca application.
3. Secured loans
Secured loans are not considered in your businesses’ ability to repay a short term unsecured advance. It is a different type of debt and not calculated in the analysis.
Real estate loans, equipment loans, accounts receivable financing are not counted against you. As a result, they will not affect your ability to get an advance, nor affect the amount of the advance.
4. Unsecured Revolving Lines
Unsecured lines such as credit cards and personal lines of credit are not included. You can have multiple credit cards or lines of credit because they don’t affect your ability to get an advance against future receivables.
Different terms between the two are a main reason they are separated because unsecured revolving lines usually remain open for years.
Short term advances are paid off in 3 to 9 months. Underwriting knows that you will continue to have that unsecured debt with a minimal monthly payment that is low compared to the advance.
FAQ: Frequently asked Questions on an existing mca position.
What is an existing mca position?
An existing mca position is business financing that is considered the same type as a cash advance. This is usually any financing with a daily or weekly payment. Some monthly payment options may count as an advance, depending on who the lender is.
What business loans count against me when applying for an mca ?
Any business financing that has a once per business day repayment is almost always considered an existing cash advance position.
Do other monthly payment loans count against me?
Other monthly payment business loans do not count against your mca loan application.
Why does it matter if my business already has cash advances?
New lenders need to know if your business will have the cash flow to pay the new debt. They also consider if you are a habitual cash advance borrower. Lenders probably consider you may take another advance behind theirs.
Short term daily, weekly and sometimes monthly business financing do count as an existing mca position and therefore, your business may not be approved or for lower amounts.
Know the types of loans you already have when applying for cash advances and which one will count against. This will help you understand which type of business loan to apply for and what to expect.
How to keep a lender from taking too much collateral:
Ask about collateral requirements.
Don’t offer all of your assets upfront.
Negotiate the requirements.
Negotiate lien releases during the loan.
1. Ask for all collateral requirements the lender has before you apply
Finding out during the loan process that the lender wants collateral you don’t have or don’t want to offer is too late, and a waste of time. Ask before you apply.
2. Don’t offer all of your Assets up front.
Do not voluntarily give the lender a full asset listing without their request. You may be required to provide a listing of you assets later. First give a general description and total valuation such as on a short form personal financial statement.
This prevents the lender from automatically asking for, then taking all of your assets as security for the transaction. Don’t give the lender something valuable they did not ask for and require upfront. If you do, then there is a good chance you gave away assets to them.
3. Negotiate the assets required
Many lenders will automatically take the most and best collateral you have, even if it may not be required to cover the lender’s money. Banks, Savings and Loans, and the SBA do this commonly. Many will take 5 to 10 times as much collateral as they need just because they said they wanted it.
After you have gotten an approval, push lenders to take only the collateral they need. They may refuse, but you should ask anyway. Calculate the dollar amount of the principal + interest. Figure out how much in assets they need to cover the loan and how much more they are requiring.
If their request far exceeds what they need to protect themselves, then present them with your calculations and valuations. This will be your proof, best case, and put the most pressure on them to lower their requirements.
4. Negotiate a release of lien during pay down.
You pay down the balance during the term of the loan, beginning with the first payment. The loan balance usually goes down much faster than the value of the assets. Sometimes, asset values go up instead of down.
If the lender has multiple pieces of Real Estate, then negotiate before the loan closes. Try to get them to agree in writing to release pieces after the balance has been paid down enough to still cover their loan. A condition may be timely payments of your loan and no other violations of the loan requirements on your part.
Equipment transactions can be handled the same way. Agree ahead of time with the lender that they will release equipment pieces as you continue to pay the loan down. It is not likely the lender will do this if you have not negotiated this ahead of time. If the lender refuses, push them on this point.
Since the balance will go down faster than the value of the collateral, show them that their collateral position should not get better than when the loan was first closed.
FAQ: Keeping a Lender from taking too much Collateral:
What is too much collateral?
When lenders approve a loan and take more collateral than they need to safely cover the loan balance if you default on their loan. Banks routinely take far more collateral than they need to secure a loan.
Can the lender take as much collateral as they want?
Lenders take as much collateral as they want and as you are willing to give them. Do not offer all of your assets in advance and without negotiating to offer less.
How can I keep the lender from taking all my assets for the loan?
Find out program collateral requirements from the lender ahead of time. Negotiate collateral terms right after an approval. This is when you have the most leverage to get any changes you want.
Many lenders often ask for all the collateral you have available.
Most people and businesses believe they do not have any say, influence or choice in this decision. They do. The borrower may not get the lender to lower their collateral requirements much, but they sometimes have success. It depends on the lender, the transaction, and how you negotiate.
Ask for reasonable concessions and justify your request. This may include calculations, valuations and other proof. You will get some of what you want more often than you think.
Call 919-771-4177 for more info.
Consider 7 ways, detailed further below to maximize your borrowing strength.
1. Understand Loan To Value – LTV. 2. How to use the value in your assets. 3. Negotiate. 4. Know the risk of loss. 5. Get the highest % loan against assets. 6. How does credit affect the percentage? 7. How can an asset appraisal help?
Apply below: Business loans to maximize the value on loans you can get!
7 ways to use loan to value to help get the loan you want.
1. Loan to value or LTV. How it works:
Loan to value is the loan amount a lender offers as a percent of the value of any asset they take as collateral.
Your business applies for a loan. The lender wants collateral as security and tells you real estate is required. Because you need a large business loan, you agree and offer residential real estate.
Your home is worth $300,000. The lender has a maximum LTV policy of 75% against real estate.
In this example, the maximum loan amount would be $300,000 X .75%
= $225,000. If your home is free and clear and the lender agrees to a 75% loan to value, then the raw loan amount will be $225,000.
Example # 2
Instead of real estate, you offer equipment or vehicles. The loan to value offered will be much lower. 35% to 60% is the most common range, depending on the lender and only based on the equipment they choose to accept. Lenders rarely are interested in all of the equipment available but may take a blanket lien anyway.
You provided an equipment list with $100,000 in equipment. The maximum Loan to value, LTV is $30% but you are only being offered $15,000. What happened? The lender likely only is interested in $50,000 of the $100,000 in equipment. As a result $50,000 X .30% = $15,000.
2. Use valued assets to boost your offer.
Example # 1:
A business loan applicant qualifies for $25,000 unsecured, but they really need $75,000. The borrower offers their vehicles and construction equipment to try to get more.
The retail value on the equipment is $150,000 and the lender offers a 40% LTV loan to value against that equipment. This equals $60,000 combined with the $25,000 the lender offered unsecured. Combining the two, the lender agrees to offer up to $85,000. By using the 40% loan to value offered against the equipment, the borrower is able to boost the offer by $60,000.
Knowing this, applicants can estimate what lenders will offer in advance for the collateral they have. The borrower can use that information to decide if they should apply for an unsecured line, or secured with assets.
Almost all borrowers think they cannot negotiate and do not have any power when it comes to the loan process. The borrower does not have the upper hand, but they can get a lot by taking the right steps at the right time.
Negotiate during the request. Even if they decline what you are negotiating for, you may still get other improved terms if you had only asked for them.
Ask for higher amounts, longer terms, better rates and early payoff terms. The lenders is not going to give you better terms unless you ask for them.
4. Risk – You can lose your valued assets!
First decide if it is worth it to use your assets to get money?
If you must have more money, then you must use your assets. Strong cash flow and credit are the best ways to avoid having to use assets for either a business or personal loan.
The borrower has to decide if the risk they go past due is high and whether they can afford to lose the asset. If the borrower cannot run the business without the asset, they should carefully consider whether they should put it on the line or not.
5. How to get the highest % Loan against the value of assets.
Listed stocks, certificate of deposits and any other liquid asset usually brings the highest loan amount. This can be up to 100% since the balance of the loan goes down, but the value of the asset does not.
Real Estate also brings a high loan amount as a percent of the asset’s market value. Most real estate backed loan offers are in the 65% to 85% of the market value of the asset.
After real estate, percentages drop down a lot. Equipment usually brings between 35% and 50%. Traditional banks rarely makes these types of loans and usually only offer 10% to 15%.
6. How credit affects LTV Loan to value
Credit scores do affect loan to value. The same applicant with a 700 credit score may get a higher loan to value offer than a 575 credit score with the exact same profile.
Lenders will offer more on secured transactions for borrowers with a higher credit score. Lower credit scores are always considered a higher risk and tend to bring a lower loan to value.
An applicant with a 725 bureau score uses their free and clear commercial property to get a business loan. The property is worth $1,000,000. They go to a bank that offers a maximum 75% loan to value against real estate.
This applicant that has a 725 credit score gets a loan offer with a 75% LTV, which equals $750,000.
An applicant with a 600 credit score gets a 60% LTV offer, which equals $600,000. This is common in practice. In this case, an applicant can get $125,000 more or less, depending on their credit score.
7. Valuations: How appraisals fit in
Many asset based loan offers use asset valuation tables and market estimates to arrive at the offer amount.
Provide any asset appraisals you have that are less than 6 months old. Doing so should protect you from getting a low ball offer. Consider ordering an appraisal of your assets when you get an offer you think is too far below market value. Lenders tend to make conservative estimates that help them, not you.
The amount a lender will offer as a percentage of the market value of assets. An asset valued at $100,000 with a 60% loan to value may result in a loan offer of up to $60,000.
How can loan to value help me?
It helps borrowers decide whether to apply for a secured or unsecured loan. It also helps them decide what types and how much collateral to offer to the lender. The biggest benefit is that is brings larger loan offers.
What can I do to get a higher loan to value offer?
Call the lender and ask what types of collateral they will accept and what percentage they will loan against it. Real Estate will bring the highest loan offers and should be provided to get higher offers.
Why is the lender offering a low amount compared to the value of my asset?
It is usually because they only offer a certain percent of the value of the asset. They want to get their money in case of a default and can recover all of it by offering a low amount compared to the market value of your asset.
Negotiating after you have been approved may get you some concessions in terms from the lender. Ask for a higher amount when you know the offer is too low compared to the market value.
Understanding what loan to value is and how to use it can help you get loan approvals for higher amounts and terms more favorable to you!
Call 919-771-4177 for more info. 1. Request a lien release. 2. Lender takes a 2nd lien position 3. Payoff the lien with proceeds.
3 Ways to use an asset with a loan on it as collateral for a new loan.
1. Ask for a release of lien:
Call the existing lien holder and ask them to release the lien. Lenders often take much more collateral than they need because they want to cover any losses on defaults. They sometimes even take all of a business’ assets instead of only they need. They over collateralize the loan. Most borrowers think that is only way it will be and do not object. The lender wins by default just by asking for more than they deserve.
The lender may agree to release a certain piece or more of the collateral they are holding. This works best when they have many pieces of collateral and you have already paid a lot of the loan down with timely payments.
Push the lender hard on loans you have paid down significantly as agreed.
Negotiation Example: 2 years ago, you took out a 4 year business loan for $100,000 and your current balance is $40,000. The lender took 4 pieces of construction equipment worth $25,000 each and all payments have been on time.
Telling the loan company they still have enough collateral and maybe more than when the loan was originally closed.
The loan to value, LTV, may now be lower than when the loan closed. In those cases, you have paid the loan loan down faster than the equipment depreciated during that time.
If they agree, follow up to verify your asset has been released at the Secretary of State, also known as the SOS. Push hard to get a release as you may need the extra collateral, especially for a larger business loan.
2. New lender takes a second position.
They can take a 2nd position lien on the collateral.
This works best with real estate that has a lot of equity in it. The new loan provider can be the 2nd lien holder against the Real Estate.
Example: A first position lender has a lien on commercial real estate. The property is worth $500,000 and the current balance is $100,000. The new lender makes a loan for $50,000 and then takes a 2nd lien on the property behind the 1st lien holder. 2nd and even 3rd positions are usually limited to real estate or cash flow financing.
3. New loan proceeds are used to payoff the loan
The existing loan balance on the asset is paid off. This happens most often when the balance on the loan is very low. As part of closing, the 1st lien is paid off and that amount is debited from the proceeds of the new loan.
For Example: Your business is closing a loan for $50,000 using equipment as collateral. There is a first lien holder on the equipment and that loan has a payoff balance of $10,000. At closing, the new lender sends a check for the payoff amount to the first lien holder and takes a 1st position on the collateral.
FAQ on getting a business loan using assets with a lien .
Can I use equipment with a loan on it as collateral?
Lenders may take a 2nd position on the collateral. In most cases, they will not make a loan if there is a lien on the asset and it is not paid off.
Do I have to payoff the loan first?
You will have to payoff the loan in many cases. Some real estate and cash flow loans may not require a payoff of the 1st lien holder. This will vary by lender depending on their guidelines.
Can a lender payoff the loan on my collateral?
Lenders can payoff the loan on your collateral. The process is faster when the lender pays off the loan because they will verify and also handle the payoff.
Can I get a loan before I have the title in hand?
Ask the lender if they are willing to close the loan and request payoff and title from the lender holding the title as part of closing. You will have to have the title in hand if they are not willing to do that.
Getting a business loan using assets with a lien is possible.
Find out the lender’s requirements early in the process. If allowed, there may be extra steps that can take a few days. Start right away and you can close a few days sooner.
Between a release of lien, a 2nd position, or payoff, there are several creative ways you may be able to use collateral that has a loan on it right now to get a new loan.
If not, find out if other lenders have different criteria that will allow you to use encumbered collateral. Checking into these options often lets borrowers get loans they never would have gotten otherwise.
Apply above to: Pay IRS business taxes for the October 15th, 2020 extension.
Multiple Programs to get approved through. Flexible criteria. Fast funding and closing.
Need the money to pay the IRS October 15th deadline? Get your business tax extension loan now!
Several relatively unknown programs available. Due to this year’s July 15th, 2020 regular filing date, the extension period is reduced from 6 to only 3 months. The October 15th, 2020 deadline has not been extended.
Businesses that have construction equipment or over the road tractor trailers can use their equipment to pay tax extensions.
You can get between 40% and 60% of the retail value of the equipment, depending on the year, make, model & condition.
Example: Your business owns a 2010 John Deer Front End Loader with a retail value of $60,000. Based on a 40% Loan to Value, the offer would be $24,000. The percentage will depend on the condition of the asset, maintenance records and the results of a site inspection.
A 60% valuation would give an offer of $36,000. These ranges may vary from lender to lender. The difference is that most lenders will not make this type of loan at all and it is also considered a specialty business loan.
Traditional banks will rarely make this type of loan. When they do, they typically only offer approximately 10% – 20% of the value of the equipment and require real estate as part of the loan.
Therefore, if your business has to have money to pay the IRS extension amount and gets any offer close to that range, it should be strongly considered.
2. Funding against business property.
When the IRS amount your business has to pay is high, then you may need to use business real estate.
The real estate will need to have at least 50% equity in order to have a chance to get the amount you need. A 50% equity requirement seems like a high number. Most lenders do not loan against 100% of the value of real estate and 65% to 85% is the maximum.
It is hard to qualify to get a loan to value higher than 70% or 75% of the appraised value.
3. Funding based on the cash flow of your business.
Another option is to fund against the cash flow of your business. This may be the best option for businesses that are asset poor.
For Example: Your business has limited assets but strong annual revenues. You need $25,000 to pay by October 15th, and business annual sales are $300,000.
Based on getting approximately 50% of monthly sales, $25,000 X .50 = $12,500. An average offer will be approximately $13K. Offers in this example could range from $10K to $30K depending upon other factors.
Can I get a loan to pay business taxes by October 15th ?
There are several programs your business can choose from to pay
October 15th, 2020 business taxes. Consider programs based on your company assets or cash flow.
What if we can’t pay the full amount of the extension?
Refer to your Accountant. Typically, accountants recommend filing the return, paying as much as you can and communicating with the IRS on a payment plan.
What can we do if we don’t qualify for enough to pay for the October 15th extension?
You may qualify for more than 1 type of loan. A 2nd type of loan may allow your business to get the extra amount needed to pay the IRS extension balance.
If you need a business tax extension loan to pay October 15th, 2020 quarterly taxes quickly, look at alternative solutions.
Getting a business loan approval when the use of funds is to pay business taxes is harder to get than for other reasons. Look at less well known options mentioned above, including based on assets and cash flow.
Leverage the strengths of your business to get as many options as you can. The business loans you qualify for may not be the ones you prefer. Be open to alternatives and your business has the best chance to get money to pay the IRS or State tax extension balance!
Lowering MCA Payments. Is it a good idea, or not? Why would you not lower your cash advance payments if it will help your cash flow?
There are significant advantages, and disadvantages to lowering your daily cash advance payments. Disadvantages can include large extra fees, difficulty getting future business loans and being declared in default.
Apply below:For business loans to help your business get funding without the problems after lowering payments. Payoff options also!
The lender has agreed to lowering mca payments for you. …….But should you do it?
Pros to Lowing MCA Payments:
1. Immediate Cash Flow Relief:
Lowered payments will give your business the immediate relief it needs from daily advance payments. How much it helps will depend on how many advances you have, how much the payments are lowered, and for how long. Switching to fluctuating payments based on sales is another solution.
2. Saving Your Business
If you have stacked daily advance payments, first find out from all the advance companies if they will lower the payments, for how much and how long. It may turn out that the savings are not enough.
Calculating this ahead of time will help you figure out if you should go forward or not. Some advance companies may lower the payments and others will refuse. The amount they will lower and for how long is different from one company to another, but the savings can be significant.
Acme inc has 2 daily cash advance payments. Each payment is $200 per day. $200 per business day times 21 business days per month = $4,200. Two advances means $4,200 times 2 = $8,400.
Each cash advance company agrees to lower the payments in half, to $100 per day for 21 days. $100 per business day times 21 = $2,100 per month. 2 advances = $2,100 times 2 = $4,200.
The total savings is $8,400 – $4,200 = $4,200 per month. This is significant and your business may need to go this route if it makes the difference between staying in business or going out of business.
3. Avoiding Default
Lowering payments may prevent an outright default. It will depend on what your contract says and discussions with each lender. Many official defaults can be avoided by negotiating with the lenders and having a clear agreement that they will not designate and list your account as a default.
Cons of lowering daily payments:
1. A Derogatory Listing with Business Lenders
Lowering cash advance payments will be considered a negative to funding companies. Your account will be flagged. Other lenders will see that your payments were lowered and may decline future requests.
2. It can still be a Default.
Lowering cash advance payments almost always is a default per the original contract you signed.
It is very important to negotiate a non default into your agreement when you lower payments. Your account may be tagged and put into a database that still lists your business as a default account. You may not even know this happened in spite coming to an agreement with the lender.
3. Additional fees and other charges.
Lowering payments still means that your business did not meet the terms of the original agreement. The advance company did not get payments they originally required.
They may impose a large additional fee as part of the agreement to lower payments. This fee is often added to the end of the contract. Your payments are temporarily lowered but the number of payments is extended.
This may still be better than missing payments and having an outright default, but factor this possibility into your decision. The fees can often be significant, so ask about them when negotiating.
4. Trouble getting money later.
Lowering cash advance payments will be considered a negative to other funding companies. Your account will be flagged. Other lenders will see that your payments were lowered and may decline any request.
This is basically a delinquency on your record and will make future borrowing harder. Your business will be declined more often. This derogatory on your record may last for years. As a result, your business may have additional problems getting financing.
Call the merchant cash advance company and ask for your payments to be lowered. You must provide a verifiable and critical business reason. So make the request before you start missing payments.
Does it hurt me to lower payments?
Your account may be listed as having lowered payments in databases that can be seen by other lenders. It can hurt future requests for business funding depending on the lender and type of financing.
Does lowering payments mean I defaulted?
It depends on the lender, as well as the original contract and your negotiations with them. Read the contract first before contacting the lender. Make sure they do not declare a default, otherwise your account may still be declared that way without you even being aware of it.
Lowering mca payments should only be done as one of the later stage options you choose to improve your cash flow. There are negative consequences that can be significant.
Once you choose this option, it needs to be handled in a systematic way. Decide which advances you need payments lowered on and make a plan to show the lender. Explain why you need payments lowered, how much and for how long.
Prove to the lender that you will be able to resume regular payments and then keep making those regular payments.
If you have multiple advances, it is critical to take them all into consideration. Address them all at one time, rather than a scattered approach and your cash flow should be sustainable for the long term!
Call 919-771-4177 for more info. Apply above now for business funding with missed mca payments!
How to get a business loan with missed MCA payments:
Steps and tips on how to get a business loan after missing mca payments.
Tools needed: internet connection, computer, phone. Supplies needed: Time available
1. Evaluate your missed payments.
The number of payments missed is important. Missing 1, 2 or 3 payments is considered minor and should not prevent your from being approved for more funding.
Missing more than 3 daily advance payments may trigger denials with other lenders. Consecutive missed payments make the prospects harder. Bringing your payments current is the best first step to get new funding.
Communicate with the lender during the process. Regardless of the outcome, it almost always causes the lender not to take more adverse action against you when behind. It will also make new funding much easier.
2. Match funding options
Tip: Begin a search for other funding options. Start the search broadly with other programs that your business may qualify for. Decide which programs are the best fit for your business.
Look at the qualifying requirements for other programs. Eliminate those programs that your business likely could not qualify for. Prioritize and choose programs you can get approved for instead of programs you prefer.
Apply for the best matching program that allows for recent missed payments on other financing. Talk to a representative before applying when possible.
Tip: Give them information on your overall profile and discuss your chances. If it is still a good fit, then apply.
4. Close approval
Review terms and conditions of any approval offer. Close the transaction if your business can handle the payments and the funding will assist in generating future revenue.
5. Make a plan after denial.
If the request remains a denial, then make a plan. Understand the decline reasons. There may still be a chance to reverse the decision and get an approval. Try this first. Consider applying with other lenders when you cannot get approved.
Apply with other lenders. If that still does not work, do not stop the process.
Begin working on correcting the reasons that were used for denial during the first funding request. Whether it is credit, financials, or cash flow, try to improve this month over month until your profile meets the requirements of the previous lenders.
FAQ: How to get a business loan with missed mca payments:
Can I get a business loan with missed mca payments?
Yes, you can get a business loan with missed mca payments. Review the decline reasons with the lender to see if the decline can be reversed. You can apply with other lenders that work with recent missed payments. Finally, you can work on correcting the denial reasons to get funding.
Can I get another cash advance after missing payments?
It is possible to get another advance. Approval depends in part on how many payments you missed, when you missed them and if they are still past due. Getting the payments current is the most important step. Staying in frequent communication with the lender will help your chances as well.
Do missed cash advance payments show on my credit?
Missed cash advance payments do not show up on personal credit if you have not defaulted. Default accounts may show up on personal or business credit. Check your contract. It may provide information on how and when the lender reports delinquencies.
Being declined for missed mca payments is something that can be overcome. Your business does not have to wait several months to get funding.
With an action plan of trying to reverse the decline decision into an approval, applying with other lenders and correcting decline reasons over time, your business should be able to get comparable funding quickly.
Call 919-771-4177 for more info.1. Only 1 Month’s bank statement required.
2. New Businesses.
3. Fast offer and closing.
Apply above: Small business loans with expert assistance to help your business get funding with only 1 months time in business and 1 month’s bank statement. Get funding today!
New Business: Loan program
New businesses can get approved with just the most recent month’s statement and the fast 15 second application. Renew the loan and increase the approval amount as your sales increase.
This program is excellent for
Businesses that expect to have big swings in revenue due to the covid-19 pandemic after they open.
Businesses that want to establish a partner relationship with a lender.
With this program, the most recent 3 months bank statements are not required.
Typical Existing Programs
Almost all current programs require the most recent three months bank statements and a month to date statement.
Why? Underwriting wants to see how the company’s cash flow has been over the most recent months. They take the average of those 3 months and issue an approval based on the average.
Example: A business provides statements for the last 90 days and has the following total deposits during that time.
The average per month is calculated as follows:
$35,000 % 3 = $11,666 per month. In this example, the lender can make an offer knowing that the business brings in an average of $11,666 month.
Lenders cannot calculate an average with only the numbers for the last 30 days. If the business deposited $10,000 in July, then the lender will make an offer based just on that 30 day total.
An offer may be slightly lower, but the business has the opportunity to get a higher renewal offer quickly. As sales increase, the business can get a much higher renewal offer.
FAQ on business loans with only 1 months bank statement.
Can we get a loan with just 1 month’s bank statement?
Yes. You only need to provide the first month’s statement as a brand new business. Businesses that had a strong month since the 1st of the current month can provide a month to date statement to get a higher offer.
What if our first month had low sales?
You may still be able to get a starter offer. As your sales grow, you will be offered higher amounts quickly. This is a relationship product that your business can use like a Line of Credit.
Can we get approved with only a few weeks in business?
You only need 4 weeks or more in business. If the business began the previous month, then provide information since the beginning of the new month. This can be a MTD Month to Date statement.
New businesses have limited or no funding options. This new program allows them to get capital after only 1 month.
Even better, a relationship is established with the lender. The borrower can get more working capital sooner and for larger amounts as the relationship is developed.
Call 919-771-4177 for more info. 1. Give fully accurate information. 2. Don’t withhold critical information. 3. Do not volunteer information. 4. Do not answer if you are unsure.
Apply above: For business loans with expert guidance to help your business get past ANY issues and get funding today!
The lender is making the borrower closing call to you.
4 Top ways to insure the merchant loan closing call is successful and the loan funds.
1. Give fully accurate information:
When the lender calls, always accurately answer every question.
Even for minor information, always give completely accurate answers. This also includes clarifying things.
The business address on the application is a mailing address rather than the physical address. The lender confirms the business address with you. Let the lender know the address listed on the application is not the physical address for the business. Give them the physical address if they ask for one.
Another example is if the lender asks if you are the owner. If there are more owners, let the lender know about each one.
Other examples can include giving updated information on the company such as product lines, website information and a full explanation of what the company does.
2. Don’t withhold critical information
If you have important information that the lender does not know, tell them or give them an update during the live merchant loan closing call.
Any information not provided to the lender before closing can backfire and cause major problems later. Even if one of these reasons means your business loan does not close, it is better to work through the issues now.
Example # 1:
A company buyout. You are in negotiations to sell the company and have not told the lender. This is critical information they would definitely want to know and likely would not approve the request if they knew.
Example # 2:
You are 1 of 2 owners of the business guaranteeing the loan. You plan on buying out the other owner after closing. It would be advisable to tell the lender what your plans are. The lender approved the funding based on the current owners of the business. If the lender knew one of the guarantors will be bought out shortly after closing, they may not approve the request.
Example # 3:
The IRS or state is filing a tax lien against you personally, or your business.
If you have back taxes and the IRS or State is about to file a lien against you or your business, it is risky not to tell the lender about this.
The loan contract may say the lender needs to be made aware of any impending liens that may be filed against you. Not disclosing this type of information could be considered a violation of the loan loan contract.
Example # 4:
Outstanding liens on assets. The lender does a search of existing liens and may not find your listed assets as encumbered. The lender must be told about any liens they did not find in their search.
Sometimes previous lenders may have put a blanket lien on assets and those assets are not itemized at the Secretary of State. Such liens are sometimes called a lien on all assets, including furniture, fixtures and equipment. This type of lien may not list a specific asset, but still includes that asset. Tell the lender which specific pieces of equipment are encumbered.
3. Do not volunteer information
In general, do not give information that you are not being asked about.
Giving the lender information they did not ask for only has the potential of stopping the closing. You may be telling them something they did not know about and will not like. Even if it is minor, it may be enough to cause the loan status to be put on hold and then declined.
4. Do not answer if you are unsure.
Many times we want to get tasks over with. This causes us to sometimes answer questions when we are not completely sure about our answer. Don’t do this! If you are not sure, tell the lender you will check and call them back.
A merchant loan call is when a lender is about to close and fund a loan. One of the closing requirements is they call the borrower just before funding to confirm their identity and the loan request.
What do I say on a loan closing call?
Always give correct information. Do not withhold anything critical. Also do not volunteer any information or answer questions when you are unsure.
What if I fail a borrower closing call?
Call the lender to find out if the problem is something that can be corrected in the short term to still fund the loan. If not, get a full understanding of why the call was not satisfactory.
If you cannot get the decision reversed, apply with other lenders and eliminate the issues on your next approval before the closing phase.
Loan closing calls for business loan are a quick, but important part of the loan closing process.
Do not take the call when you are in the middle of another task. Try to find out when the lender will call and what the questions will be about.
Mostly, just answer the questions accurately and thoroughly. If there is a misunderstanding or the lender does not know something important, correct and update them.
The lenders want to close the loan. They are looking for every reasonable way to close rather than decline. If there are still issues, then discuss them with the lender. They will give you the best plan to get past any hurdles and fund the loan.
This should result in a quick closing process and funding!
Have at least 2 to 3 times the new loan payment in your account.
No negative days, NSF’s or Overdrafts in the last week and less than 5 in any of the last 3 months.
Recent average balances should be strong.
No new loans taken out in the current month.
1. 3 Times the Loan Payment.
Your account must have a positive balance. An overdrawn will result in an immediate decline.
At the time of the check, have at least 2 to 3 times the amount of the new loan payment in your account. If you do not, you may be declined. Do not move forward with the check if your balance does not reflect at least twice the new payment.
If the new payment is $400, then you should try to have $800 to $1,200 in the account to help insure you will pass a Decisionlogic check. If you have less, it puts the closing at a higher risk and your recent activity will then be very closely reviewed in the decision process.
2. No Negative Days.
Your account should not have ended the day negative in the last week. On statements, negative days usually appear towards the end of the statement.
Negative days in the last week will not automatically result in your approval being reversed and declined. One overdrawn day for a small amount and NSF will often be overlooked. If you had more than one overdrawn day, the risk of a reversal of the approval increases. You definitely want less than 5 total negative days in any of the last 3 months bank statements to close the loan.
3. Strong Average Balances
The current month’s average daily balances should be strong. The amount depends a lot on your overall business sales and any new debt. For smaller businesses getting a loan less than $25,000, the average daily balance could be as low as $1,000 and still be approved. Pay close attention to this if your business has had recent low sales.
Businesses with higher annual revenues must have higher average balances in their checking account.
Lenders look at this number to help them decide if the business will have the cash flow to handle expenses and all required payments. Strong average balances will help you successfully pass a decisionlogic check.
4. No New Loans
Your business should not have taken out any new loans during the last 30 days. The lender will know if you took out any loans through the end of the previous month, but not the current month.
Did you take out a new loan in the current month? Approvals will be re-evaluated when new loans are taken out in the current month.
FAQ: How to pass a DecisionLogic Check:
What is a Decisionlogic check?
The lender securely reviews the current and most recent cash flow in your business checking account. They use that information as part of their final closing items to decide if the loan will close and fund.
What can I do after failing DecisionLogic?
Talk to the lender. Try to find out as much as you can about why you did not pass the account verification review. Also ask if you can wait a few days and try DecisionLogic again. Some declines are based on low balances that day and very recent NSF’s.
Significant deposits in the next few days along with a clean account can change a decline back into an approval.
How do I pass a DecisionLogic check?
Discuss with the lender in advance what will be required for you to pass. They may not tell you but find out as much information as you can. If you are not given the criteria, tell them what your current and recent balances are and ask if that will be good enough to pass and close the loan.
If any lender wants to do an account verification such as Decisionlogic, ask beforehand what they are looking for and also what will be required for your request to be completed and funded.
If you fail DecisionLogic, ask if you can try it again after you make substantial deposits or overcome the obstacles that caused the verification to fail. These 2 main ways should allow you to overcome the verification hurdle and get funding!
What other ways have helped you pass a bank verification check?