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Cash flow loan financing adds new product

There is a new cash flow loan financing program to help businesses get financing. Companies provide statements such as their bank statements to show their gross sales.

This program give many companies flexibility they would not normally have.   Many companies do not have financial statements that have a strong net income.  Most companies pay their accountant to take as many deductions as possible so they show the lowest possible net income.    Even more companies have business owners with damaged personal credit and limited or no business credit.

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This program which focuses only on the cash flow as the main requirement for approval, eliminates these decline reasons.   Businesses can get approved with bad personal credit, bad business credit and weak financial statements.   Businesses with several owners will need to have at least 50% ownership apply.

Approval terms are for between 2 to 18 months.   If a business has strong financial statements they can be used to strengthen the request and get a higher approval amount.
This new product lets a business use their sales to get a business line of credit.   The approval process requires little documentation and is fast.   The process normally takes between 4 to 7 business days.

Applicants can call in to discuss the features of this new financing to determine if it is a good fit for them.  A development officer will review the business profile and make a recommendation to the customer.   The customer can first discuss the plan with their Accountant so they can take all tax consequences into account.

 

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Cash Flow – Are reviewing business bank statements critical?

When lenders have requested financial statements as part of a small business loan review process, historically they have requested 1-3 years business and personal Tax Returns, and usually an interim Profit & Loss Statement and Balance Sheet.    They have in the past not always and currently often do not ask for the most recent business bank statements.

However, is reviewing a business’ bank statements critical to the process?

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If the last 6 months business checking account statements are reviewed, they will provide a real time specific indication of the current cash flow of a business, certainly in terms of current balances, beginning balances, ending balances, average balances, # of deposits per month, expenses, and if the company has had any, or significant insufficient funds or overdraft activity.

The tax returns, while very detailed and provide significant financial information that business bank statements do not provide,  are still a snapshot of a company’s financial condition that is at 4-12 months old.    If it is the previous years return, it is at least 16 – 24 Months old.

If the Personal Financial Statement of the owner is requested, a cash on hand figure will be provided, though this too is often months old.  If the additional new debt service being considered is,  as an example, $1,500 per month, then if a company keeps steady average business bank statement balances of $10K – $20K in the past 6 months, will have a stronger likelihood of being able to easily service the new debt.     Conversely, if the company keeps average balances between $1,500 to $5,000, then there may be greater stress on the company to service the new debt.

Unless there are other reasons not to request the statements, such as the customer is a long time repeat customer, or the amount requested is clearly small based on the revenues of the company, requesting the last 3-6 months business bank statements will greatly assist lenders in assessing a businesses real time cash flow.

Thank your for visiting our reviewing business bank statements resource page!

 

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Asset Based Loan

Cash Flow Loans

Cash Flow Loans

Will cash flow loans and their portfolios become as significant and large as traditional loans, including collateral based loans in the future?

It seems so.  Since the recession of three years ago, many business’s credit and the personal credit of the owners was hurt.   Businesses needed working capital but banks were, and are still, balking at making loans to all but the most top shelf companies.

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Loans based on the company”s cash flow, as proven by their bank statements and tax returns will become increasingly prominent in the industry.    Companies which offer such loans will also come into existence in greater numbers and offer more diverse products to satisfy the increasing demand of these loans.

After all, many business owners wonder, if my credit has been hurt in the recent past, but my company’s cash flow is now excellent even if my credit has not caught up, why don’t you do a loan based on my proven cash flow?     The answer, more and more, will be – Yes, we will