What Criteria Do Lenders Look at for High-Risk Business Loans?
Several factors are considered when determining borrowing eligibility. The following list is meant to serve as a general guide to better understand what lenders consider before approving a loan. Our advisers are available to speak to you about your unique circumstances and business goals.
1. Monthly Revenue
Gross monthly revenue of at least $10,000 tends to be what most lenders look for. The amount of funds you’re allotted will typically correlate with the monthly and annual revenue of your company.
2. Current Debt
Most lenders will want to know your debt-to-income (DTI) ratio. Ideal applicants have low amounts of debt relative to their earnings. Understanding how much outstanding debt you carry will help you get an idea of the loan offers you can expect.
3. Credit History
Generally speaking, having a solid business credit history is advantageous when applying for loans. That being said, your credit report is only one factor among many — it’s not the sole decider for securing funding from business lenders.
4. Length of Time in Business
The longer your company has been around, the better. Lenders prefer businesses that have been operating for a minimum of six months. Exceeding that number increases your approval odds and the chance of securing competitive rates.
5. Profitability
Lenders want your financials to show your business’s ability to consistently turn a profit. You’ll want to be able to show a positive trend with money movement in and out of your business. Being able to do so will put you in a good spot as an applicant.
6. Bank Statements
Plan to have the last three months of bank statements readily available. Your adviser will review the documentation to validate operating cash flow. Having healthy finances will work in your favor.
Popular High-Risk Loan Uses
Whatever your business needs, we’re here to help. Below are the most common ways high-risk borrowers use their loans.
Immediate Needs
Fast funding options provide an infusion of working capital in your bank account, so you can address your most pressing needs. Our process is streamlined and quick, so you get financing without delay.
Slow Periods
If you’re experiencing a dip in sales, meeting your immediate financial obligations might be difficult. We offer high-risk financing options to help bridge short-term cash flow gaps.
Inventory and Supplies
Get the materials you need for your business when you need them. Funds can be allocated toward purchase orders to get both inventory and supplies.
Machinery and Equipment
If you need special equipment or machinery for your business operations, we’ve got you covered. We offer competitive equipment financing with high approval rates.
Rent and Utilities
Free up cash flow to pay for operational expenses, like rent and utilities, by financing. That way, your day-to-day expenses get paid on time and in full.
Refinancing
Restructure your debt, such as credit card debt, based on terms that work for you. We offer low interest rates and flexible loan terms, so you can choose a loan that makes sense for your unique situation.