business bank statement loan
Definition of Business Bank Statement loan:
Your business can get a business bank statement loan based on the Gross Sales of the Business. Since almost all businesses have sales, almost all businesses pre qualify. The funds can be used for any reason, marketing, advertising, inventory, expansion, additional employees, cash flow, new product lines, or taxes.
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For this business bank statement loan product, businesses provide their last 3 months business checking account statements and a simple one page application. If the Gross sales figure is significant, the approved amount will often be higher. Repayment terms for this product are 2 to 18 months.
What is a business bank statement loan?
How can my business get a loan using bank statements?
Features and Benefits:
– Only 4 to 5 Deposits per month are needed in most cases.
– No Site inspection for most clients.
– Renewals often possible once balance is 40% to 50% paid off.
What is needed for Approval?
– Most recent 3 months complete business checking account statements
– Signed and dated within last 30 days application.
What is needed for closing?
– Completed closing docs.
– Copy of driver’s license
– Copy of voided check. Specifically, this is a copy of a voided business check.
– Other requirements may apply.
Funding amounts of up to $500,000 can be obtained through this business bank statement loan. Up to 125% of the total dollar amount of monthly deposits can be approved. For example, if the customer deposits $50,000 per month, a maximum of $62,500 can be approved. Approval time is 24 to 72 hours. In most cases, businesses are approved for 25% up to 100% of their total average deposits of the last 3 months. As an example, if a business deposits and average of $40,000 per month, they will most often be approved between $15,000 to $40,000.
Approvals can be higher with a higher average daily business checking balance. If the customer has more than one business account, then both account statement can be provided. 2 lines may be approved. If your business is seasonal, then the last 12 months account statements can be provided. This will strengthen the request.
For example, a construction business is often a seasonal business with at least 2 or 3 months in the winter being low volume months. Rather than receiving a lower approval amount due to this, simply provide the last 12 months, which will include the higher volume months.
Required to qualify or pre-qualify.
– Signed and dated application from 50% of ownership.
– Last 3 months complete business bank statements from main business operating
– For amounts over $150,000: The most recent 6 months business bank statements
and first page of the most recent business tax return.
Required for Loan Contracts:
– Valid and clear driver’s license.
– Voided business check for approved account.
– Valid E-Mail address for owners.
– Federal Tax ID number, or TIN.
– Other requirements may apply on a case by case basis.
Other business bank statement loan customer benefits:
– Renewal options may start at 40% pay down of balance.
– No standard site inspection in most cases.
– Tax Liens < $100,000 may be accepted.
– Bankruptcies > 1 Year O.K.
– Only 50% ownership required in many cases.
A Dental practice in Lakeland Florida needed some expansion capital. Due to the recent time in business and some past credit issues, the company wished to use their strong Gross Sales.
The company provided their most recent 3 months business checking account statements. A one page application was submitted. Within 24 hours, they were approved for a $40,000 business bank statement loan. They chose a repayment term and original documents were E-Mailed. The customer returned the completed documents.
A simple verbal verification was completed with the customer. Following the verbal, the funds were wired directly into the customers account within 24 hours. The customer had access to the funds and was able to pay a contractor to begin expansion and remodeling of a section of their practice immediately.
Features of this business bank statement loan product include:
Low credit score acceptable. Credit scores even below 500 accepted.
No application fees or advance payment fees.
Unsecured transaction. No collateral is required.
There are no restrictions on how the funds are used.
Fast and Easy application process.
The entire process takes approximately 5 business days.
Difficult transactions handled routinely.
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What are common decline reasons that you may be able to approve?
– 5 or more overdrafts or NSF’s per month.
– Less than $7,500 per month in revenues.
– Less than 2 Months in business
What are the primary factors that are looked at for this business bank statement loan?
Average daily balance. The average daily balance is considered. Lines begin with an average daily balance starting at $3,000. The higher the average daily balance, the higher the approved amount will tend to be.
Number and dollar amount of Monthly deposits. A minimum average of 5 deposits per month are requested. The higher the dollar amount of the average monthly deposit, the higher the approved amount. Approvals are up to 125% of the average monthly deposits.
Beginning bank balances. The balance at the beginning of the month is reviewed for each of the six months. The amount of the beginning balance is not critical. Many businesses have some of their largest monthly expenses at the end of the month. These include monthly business office rental payments, business mortgage payments and other payments. After payments such as these, the beginning balance at the first of the month may be lower.
Ending bank balances – The balance at the end of the month is also reviewed. For reasons similar to the reasons above for reviewing the beginning bank balances, the ending balance is assessed. Many businesses have large expenses at the end of the month, including many automatic debit payments.
Insufficient funds and overdrafts. The statements are reviewed for the total number of overdrafts and insufficient funds per month. A company can have some insufficient funds and overdraft events per month. The statements are reviewed to make sure that the numbers are not excessive per month.A customer wishes to obtain a higher business bank statement loan approval amount. What can they do? Provide strong Financials. What are strong financials?
Gross income. Gross income figures should be increasing from any one year to the next. This includes Profit and Loss statements. If the Gross income figure decreases from one year to the next, this is considered a negative and will hurt the request.
Net income. The Net income figures should be flat or increasing from year to year. Net income figures should be $25,000 or higher. Lenders will question the ability to repay if net income figures are too low.
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The SBA offers assistance with business plans and putting together financial statements.