Things to know before applying for short-term financing
By: Rachel Covington
Accel Capital strives to get your business the funding it needs in order to continue to grow. Our team thoroughly examines each business profile to provide specific funding solutions for each business. Most business owners are confused on what actually qualifies them for short-term financing. Here at Accel, we want to help you prep your business for the best offer. Whether it’s for cash flow, payroll or marketing, we are here to provide a business plan to raise your business to the top and make it easier on all business owners. How do you prep your business? Here are a couple of qualifying factors that our underwriting team takes into consideration with each file.
Accel Capital is a revenue based lender meaning we work each file specifically based on the revenue you generate, on average. Our minimum requirements are that you average at least 10K a month. Upon requesting a free quote, we ask for 4-6 months of business bank statements to see your business’s revenue. Most businesses, retail and restaurants, for example, process credit cards. In that case, we require credit card processing statements, as well. Whether you at the minimum requirements or exceed them, the goal is to keep your revenue as consistent as possible so you receive exactly what you need. Our goal is to never offer more than your business can handle.
AVERAGE DAILY BALANCE
Maintaining consistent revenue is key but how much you have left over at the end of the day is also a key factor. Based on your average revenue, the average daily balance must coincide. Meaning, if you are depositing 100K a month and are only left with a couple hundred, it raises a red flag to underwriters when trying to finance your company. Try and balance out your deposits and expenses so they work in your favor.
TIME IN BUSINESS
Businesses that have been around for a year or less are considered new. Although we do not work with startups due to the high-risk factor, our minimum requirement is that you have been in business for at least 6 months. Small actions can help your business thrive for years and years to come. For new companies, we suggest focusing on marketing and building credibility for the business. Why should people work with you over other companies offering the same services? Pump up your business and let people know who you are!
NUMBER OF DEPOSITS
Why should this matter? If you are depositing over 100K a month, who cares how many deposits you have, right? Wrong. Whether you deposit 100K or 10K, the number of deposits matter. Since we are revenue based, we need to see strong revenue. Transfers, unfortunately, do not count as revenue. Even if your statements show you have the volume, banks need to see you making a healthy number of deposits throughout the month. Think of it this way; we need to see constant cash flow or else it looks like you are only making money 2-3 times a month.
Yes, personal credit does play a role in qualifying your business. Fortunately, we understand how personal credit can change for several reasons so having a lower or poor credit score will not kill your chances of receiving short-term financing. However, aim to grow and keep your credit score high so you always qualify for the best financing.
Some of our clients have active balances with other lending companies. Although that will not ruin your chances of receiving more funding, it will indeed be considered when offering funding for your business. A general rule of thumb is that we cannot break gross revenue. Meaning, the sum of your balances + the offer presented by us cannot exceed the average of your business revenue.
Everyone runs into issues every now and then that cause the business to experience a negative balance in their bank account. We often see this issue with our construction, contracting and trucking clients since they usually work project to project and must wait on customers to pay invoices. If this is the case, we suggest budgeting your funds accordingly to avoid multiple NSFs. Although it isn’t ideal, having a couple of negatives will not prohibit you from receiving short-term funding.
Owe the government money for taxes? Liens on you or the business? Surprisingly, this also will not kill your chances at receiving short-term funding. All we ask is that you be set up on a payment plan to show that you are working towards paying your debt.
So, these are a couple of the main factors we take into consideration at Accel Capital. We know not every business is going to be picture perfect and that’s understandable. Our main objective is to help your business start generating more revenue naturally. If you do not perfect each of these qualifications, do not fret. We have a team of experts standing by to focus on your specific business needs and help you accel your business to the next level. Call today to get started!