Categories
Articles

Getting a Business loan: Discuss Amounts with Lender

When applying for a business loan, there are many actions the applicant can take to increase their chance of being approved. One way is to discuss the requested amount with the lender at the beginning of the process.

Funding sources often ask the borrower for “the amount of the request”.  Borrowers sometimes get declined by asking for too much.

Apply Secure DocuSign Now

 Call 919-771-4177 for more info.

DocuSign 30 Second Application here.

Get a business loan and discuss amounts with lender

Time in Business – The longer the time in business, the higher the requested amount can be for.   If the time in business is less than 2 years, amounts over $25,000 or $50,000 become difficult and are the maximum that should be considered in most cases.

Business Revenues – The amount of revenues a business generates is a big factor in determining the amount the business should apply for.   For example, a business that has $150,000 in revenues has virtually no chance of being approved for a $250,000 loan request with the vast majority of lenders.   $25,000 to $50,000 maximum would be in line with what a lender would consider for a company with annual revenues of $150,000.

Personal Credit – For most businesses, the owner(s) of the business must sign at closing on the loan and their credit will be reviewed.   Often, the stronger the personal credit is, the higher an approval will be for.

Business Credit – Business credit is often looked at.  If you know that the business has good business credit, a higher amount can be applied for.  Business credit files can be accessed at business credit reporting agencies such as Dun & Bradstreet, Experian Business credit and Paynet.

Financial Statements –  For many business loan requests,  the lender will ask for financial statements.   This is often called financials, or full financials.   It almost always includes the last 2 years complete business tax returns.  It may also include 2 years personal tax returns, a current personal financial statement, an interim year profit and loss statement with balance sheet and the last 3 months business checking account statements.   Lenders will look at the returns to determine Gross Revenues and Net Income.  If these statements are strong, a higher amount can be requested by the applicant.

In summary, when applying for a business loan, consider the factors above in determining how much to apply for.   Applying for the right amount will often assist your business in securing an approval for the amount it needs.

Categories
Asset Based Loan

Asset based loan for higher amounts: Which are the best choice?

When businesses request funding for higher dollar amounts, they typically consider either an asset based loan or unsecured loan.   Which one is more likely to get the businesses a higher funding amount?  Which financing products should the business apply for?   Choose an asset based loan for higher amounts.

Apply – Call Tel: 919-771-4177
What is considered a higher loan amount for a business loan request?  Requests over $50,000 are considered larger amounts.   When a request is over approximately $100,000, financials are often required.

For requests over $50,000 to $100,000 and more, it will be easier to qualify through asset based loan programs rather than unsecured programs.

A Business needs to have gross sales over $1,000,000  to be seriously considered for a $100,000 unsecured loan.    They should consider an asset based loan if their sales are less.

There are several asset based loans that businesses can consider.   In general, the most common types are those in which the lender will take a blanket lien on the business.   Traditional banks take a blanket lien most often.   The blanket lien means a lien on all furniture, fixtures and equipment.

Another type of asset based loan is when the company puts up equipment assets.    More asset based financing types include accounts receivables financing, and offering stocks, money market accounts, or  certificates of deposit.

As a result, when a business is requesting over $50,000, they should generally consider asset based loans.