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 qualifiers lenders assess. Our advisors are available to speak to you about your unique circumstances and business goals.
1. Monthly Revenue
A gross monthly revenue of $10,000 and up tends to be the preferred, ‘magic’ number most lenders look for. The amount of funds you’re allotted will typically correlate with the revenue your company brings in.
2. Current debt
Most lenders will want to know your debt-to-income 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, credit is only one factor amongst many. It’s not the sole decider for securing funding.
4. Length of Time in Business
The longer your company has been around, the better. Lenders prefer businesses have been operating for a minimum of 6 months. Exceeding that number increases your approval odds and chance of securing a competitive loan.
5. Profitability
Does your company’s financials indicate that you’re able to consistently churn 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 3 months of bank statements readily available. Your advisor will review the documentation to validate operating cash flow. Having healthy financials 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 that high risk borrowers use their loans:
Immediate Needs:
Fast funding options provide an infusion of working capital, 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 financial obligations might be difficult for the time being. We offer high-risk financing options to help bridge short-term cash flow gaps.
Inventory & Supplies:
Get the materials you need for your business, when you need them. Funds can be allocated towards purchase orders to get both inventory and supplies.
Machinery & 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 & 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 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.
