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Declined For Drop in Month To Date Revenues? 7 Ways to Fix Your MTD

Was your business loan declined for a drop in mtd month to date revenue?   Review 7 ways to improve your numbers now and get approved as soon as possible by Applying below!

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1. Understand your Statement.
2. Why were you declined for your MTD? 
3. Total Deposits.
4. Average Daily Balance. 
5. Number of Deposits.
6. Overdrafts or NSF’s.
7. What can I do?

7 Ways to Fix a drop in deposits and get approved ASAP!

1.  What do lenders do with that Statement? 

The statement is used to review your cash flow as of the beginning of the new banking cycle, or your most recent cycle date.  Follow the link here to get a Month To Date (MTD) Statement in a PDF form.

2. Why were you declined for your Month To Date?

The statement used to decline your business will have lower than average deposits and be weaker overall than prior statements.  Lenders ask for recent statements when applying and do not usually ask for interim information.

They only request it approaching the end of the month, or if the most recent statement was weaker than older ones before it.   After the 20th, lenders may ask for the current cycle business account activity statement because a lot may have changed in those last 3 weeks.

Expect a request for the current statement when the last full statement was lower than average.   Lenders are looking for trends in your business revenue, especially negative ones.    Declines are not the end of the line.     Consider the top decline reasons as well as other loan types such as a loan against equipment.

3. Total Deposits in the current month.

Your current monthly totals from business revenue is the most important information mca lenders review in the current statement cycle.

Prorate your revenues to estimate what the full numbers will be for the entire current 30 day cycle.

Example:

Your company had $35,000 in revenues from March 1st through March 12th.    What is the company be expected to do for the full 30 days if they maintain the same revenue pace?

$35,000 X (31/12) =  $90,417.     To breakdown the math in simpler fashion,  31/12 = 2.58333.    Since there are 31 days in March and it is the 12th of the month, the prorated fraction is 30/12.    To express that as a % , 1/2.5833 = .387.  This means that .387% of March has gone by.

Almost the same prorated amount is derived by dividing the $35,000 interim deposits instead of multiplying, as follows:

$35,000 % .387 =$90,439.   The $22 difference is due to rounding.

4. Average Daily Balance.

Why is it important?  When your account’s average daily balance is low, then payments are more likely to bounce.

Average balances below $1,000 and especially below $500 are red flags in credit review and will get your request declined fast.
Work hard to keep a minimum balance of $1,000 and higher because it increases your chances of approval.

Lower average daily balances in the current cycle are very closely looked at in the review process.

5. Number of Deposits.

At least 5 deposits per month are desired for cash advances.  Other types of loans do not have this requirement, but more are better.

More usually means you have a higher number of customers which is considered a lower risk.

6. Overdrafts or NSF’s.

Overdrafts and NSF occurrences hurt the most in the current month.   Many customers say they do not want to keep money in the account.

There is a difference between not keeping excess money in an account and having overdrafts because of it.     Negative balances come from not having enough money and bad money management.

7. What can you do about a drop in month to date sales ?

Try to increase your deposit totals before the end of the cycle.  Deposits made just prior to the end of the statement cycle instead of the first day or two of the next one help current numbers.

Don’t let your balances get too low causing returned payments that show as NSF or overdrafts.

Ask what you need to have for a chance at an offer now and you may be given target numbers.   These will let you know if the numbers are achievable.   If all else fails, consider a micro business loan.

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FAQ’s: 

Can my business be declined for low current month’s sales? 

Your business can be declined for having a drop in revenue even in the current month that is less than a 30 day cycle.

Is there anything I can do to get approved now?

Following the cash flow strategy outlined here gives your business a chance of getting funding now.  There is still be time to correct the numbers in the same statement cycle.

Are there options that do not look at the most current deposits?

There are asset based options with a monthly payment that usually do not look at the most current deposits.    Those merit a close look for businesses that cannot wait for their cash flow to recover.

Conclusion

Declines for a business loan due to a drop in month to date revenues is a real possibility.   Most lenders do not look closely at current 30 days, but some do.

Understanding what the threats to an approval are and the actions to take.   Help your business steer clear of an unexpected turndown due to dropped revenues in the last 1 – 3 weeks.

Keeping a close eye on total and average balances and overdrafts during the current 30 day cycle can make the difference between an approval and a last minute decline.

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How to get a Business Loan when an Account is overdrawn

This article covers 3 options on how to get a business loan when an account is overdrawn.

Apply for low balance programs below now that can get you approved if you have a current or a business account with excessive overdrafts.

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FAQ: 

Can I get a business loan with an overdrawn account?

Yes, there are several solutions for approval to get funding fast when your account is overdrawn.

How can we get business funding when our account has been overdrawn?

Occasionally overdrawn accounts are expected and can be funded. You are matched to one of several programs that fits your situation. How much and long it has been overdrawn is reviewed and matched to the best programs.

How much can we get after being overdrawn?

Your sales in the current month and time in business are important in evaluating an offer. Average balances and sales in the last three months are also looked at. Programs consider low or no recent sales due to the virus.

3 Options for an overdrawn business account.

  1. Step 1 You can apply while being overdrawn, however it is best if you can make it positive during the application process. The processing may go quickly and a bank verification may be done before you have a chance to make a deposit it into the positive.
  2. Step 2 Keep funds in the account until closing because the lender may do a DecisionLogic check anytime before closing.
  3. Step 3 Pass bank verification.   The lender will verify your account, including the balance and also the most recent activity in the last few weeks.

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Next steps when your business has already been declined

When your company is  declined for a business loan request  for having a negative balance, it will be difficult to get approved in the next 30 days.   Many funding sources do not want to fund to a business that is now, or was recently overdrawn.

The minimum balance they want to see is at least $500, even with no overdrafts.   Lenders like to see the average daily balance of  $1,000 or more.

The lender may tell you they will re-consider your request once your account has been in the positive for 30 days.   You can do this, but most businesses do not want to wait.   What can you do?

Follow these instructions to find out how to get a business loan when your account is overdrawn

Apply with another lender

This may be your best choice if the account is now in the positive and the lender will not re-consider the request for 30 days.   In this case, choose another lender and apply.     If you are still overdrawn, then wait until you can get to a positive balance.   Lenders will not fund if they verify balances and find out there is a negative balance.

Other business loan options

Asset based loan

Another option is also a loan against equipment, also called a loan on collateral.   This type of funding is between 24 and 48 months with a monthly payment.    Equipment such as construction equipment and also semi-trucks may qualify.  Trucks must be 2009 and newer.

Unsecured Options 

Accounts receivables financing or bank statement loans to get capital.   You may be able to get the capital the business needs this way.

Your main customers are likely factoring for other clients just like you and you are unlikely the 1st one they are factoring.

Contact us@ 919-771-4177 to discuss these approvable loan options, or apply above now.

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Top 6 business loan decline reasons

What are the 6 biggest business loan decline reasons used by lenders?

In this post we will review what loan companies decline for and what you can do about it.

Tips on easy things you can do to prevent many of these declines.   Use the following list to increase your chances of getting approved for a business loan by avoiding the decline reasons listed.

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Don’t let your business get turned down for any of these top 6 business loan decline reasons.

1. Derogatory Personal Credit
Poor, damaged, or delinquent personal credit  of the owner is the main reason for being turned down for a business loan.  Most businesses are less than 35 employees and the personal credit of the owner is usually part of the credit review. If the personal credit score of the owner is low, there are some steps that might be taken to minimize the impact to avoid defaults and the bank calling the loan due and payable in full.

Short term Solutions:
Research different business loan products  before applying. Try to apply for business loan products that have less scrutiny of the owner’s personal credit.  Talk to the lender first and find out how much of an impact personal credit has on their business loan product.
If there are multiple owners of a business and one owner has better credit, the owner with the better credit should be the first applicant.   If the owner with the better credit is over 50% owner, the application may be approved without the other owner.   This may prevent a decline for weak credit.

1. Longer term solutions:

Get a copy of your personal credit report and look for errors.   You can dispute them with the credit bureau and your credit score will go up.  Any derogatory items close to 7 years old may be on the verge of dropping off your report.  If you have limited credit, this may be a time to consider what new accounts you can add to your credit bureau to make it stronger.

2. Derogatory Business Credit

Businesses can have derogatory business credit.   This derogatory business credit may appear on a business credit report.   Examples are State Tax liens, Federal Tax Liens, Suits and Judgements, Past Due Accounts and Collections.

Solutions:
Get a copy of your business credit report through Dun & Bradstreet and  before applying for a business loan.    Contact the business credit agencies and dispute incorrect information.   The credit agencies will remove information they cannot verify as correct.

3. Insufficient Cash Flow

The lender believes that the business does not have enough recent cash flow to handle the new debt.   A  Profit and Loss statement showing a negative net income may cause a decline.  Overdrafts and NSF’s happen because of poor or insufficient cash flow.

How to avoid this denial reason:
If your business is declined for a drop in recent revenues including month to date, contact the lender to discuss it. There may be alternative solutions.   Your business might be approved for a lower amount.   This can include a starter line that lenders offer just to get the relationship started.   Lenders sometimes do this with borderline decline instances.   They want to take a small risk hoping that the borrower will develop into a good long term customer.
Weak financial statements.

Financial statements are still required for many types of business loans.  If a companies financial statements are weak and show a low net income, decreasing revenues, or other weaknesses, it can easily cause a decline.
How to avoid this decline reason:

4. Insufficient Collateral

Some loan products are asset based but the collateral must be satisfactory or the business loan will be declined.   This decline reason happens often when a bigger business loan is needed.    Lenders will just not issue many unsecured approvals for higher amounts. Real estate backed loans, accounts receivables financing and equipment loans require acceptable collateral.  Even if the customer has excellent credit and time in business, if the assets do not have enough value or other conditions are not here, they may be declined.

5. Time in Business

The time in business requirement varies from one business loan to another and as much as 2 years or more may be required. Ask the lender if there is a time in business requirement.    If there is, ask if it a hard and fast rule.   For some lenders, if the applicant has other strengths in their profile, it may override the time in business requirement and be approved.   Less than 6 months time in business is difficult to approve.    Brand new businesses with less than 3 months sales have very limited, if any, options.

6.Industry.

Some lenders will decline a business just for being in a certain industry.  Often business still apply because they don’t know the lender won’t loan to their industry.   This is an easy decline to avoid.  Put this in the list of questions to ask a lender before applying.   For example, do you lend to my type of business?   Sometimes lenders have preferred industries that they lend to.

Small Business Loans Depot – Frequently Asked Questions(FAQ)

FAQ Frequently asked Questions on top 6 business loan decline reasons

What are the main reasons businesses get declined for loans?

The top reasons businesses get rejected for loans are bad personal credit, net income or sales are too low, not enough collateral, short time in business, industry type, and unacceptable business tax returns or financial statements.

What can our business do after being declined for a loan?

Ask what the main decline reasons were. If it was for credit, ask for any credit bureau and business credit scores the lender has and the scores the lender wanted. For cash flow, collateral or financial information declines, find out the minimum requirements and when you can re-apply.

What can we do after being denied for low cash flow with strong sales?

The lender calculated that based on their criteria, your business does not have enough cash flow after expenses to safely pay their new debt. If your business is about to payoff any current debt or has recent increasing sales, then let the lender know. They may reverse their decision or approve a lower amount.

Some lenders have industries that the do not considered favored industries.   They may consider your industry as challenged or place it in a more difficult to loan to internal category.   Ask the lender: Is my industry a preferred industry you lend to?

How to correct the business loan decline

Not all of these 6 top business loan decline reasons have to be corrected.   Some cannot be corrected.   The steps that should be taken are on a case by case basis. Every company has different hurdles to being approved for a business loan.

Using some of the tips above and your business can overcome many of these top 6 business loan decline reasons and get critical business capital.

Has your business been declined for a business loan because of derogatory personal credit?
Apply now for fast and easy business loans with bad personal credit.
Has your business been declined for derogatory business credit? Several solutions fast.

 

Has your business been declined for insufficient cash flow? Click here for immediate solutions

In summary, the top 6 business loan decline reasons are:
  1. Derogatory personal credit
  2. Derogatory business credit
  3. Insufficient cash flow
  4. Collateral
  5. Time in Business
  6. Industry

In addition to charge offs,  missed payments are considered derogatory business credit.   The SBA is another resource available to assist small businesses in all industries prepare for business success.   .

Should you worry about all your decline reasons?   What are other steps you can take?  There are other considerations besides these top 6 business loan decline reasons.  For example,  declines for key financial ratios such as debt to income and also declining revenues.

as a result, businesses may get loan terms they don’t want and should consider  Additional action steps in addition to the top 6 business loan decline reasons.