Are you wondering if you should get a business loan from your bank? A lot of people are, so you’re not alone. Read on to find out if the bank loan is the best option for you, or if you should choose a different path.
When looking for working capital for your business, you should think about the following questions.
1. How fast do you need the funds?
Typically with a business loan from a bank, it can take anywhere from 30 days to several months depending on if the bank is financing the loan themselves or if you will be applying for a SBA loan. SBA loan process is significantly longer and a lot more paperwork is required. First Capital Business Finance can have the funds in your account as soon as 5 business days. We have our own in-house underwriters which makes the process of qualifying your loan application faster than most of our competitors. Our company offers a wide variety of loan programs, from Business Cash Advance to Purchase Order Financing we can do it all.
2. How is your personal credit?
Using a local bank again as an example, they require a minimum credit score of 650 for their small business loans. Our business loans only require a credit score of 480, your company historical gross income is mostly what we consider when qualifying for our loans. I don’t believe there is any bank that will lend you money if you have sub 600 credit scores.
3. How much income documentation can you provide?
Most banks will ask anywhere from 2 to 3 years tax returns, both business and personal. But depending on the loan amount you’re applying for, it could be another form of income documentation. Because in some cases for lower loan amounts they will accept 3 to 6 months bank statements. Our company requires you to provide us with 6 months bank statements, and if you also process credit cards we will also need 4 months merchant processing statements. Our process couldn’t be any simpler!
4. How much are you looking to borrow?
Both with banks and our company, we will consider issuing a loan based on 10% of your annual gross revenue. But when using a bank they will also require you and/or your company to have 4x in liquid assets. So that means if you were asking for $100,000 loan amount, the bank would require you to have $400,000 in liquid assets. However with First Capital, we have no such requirement.
5. How long do you want your loan term to be?
If you’re company is looking for a term longer than 18 months you will want to see your local bank. Banks have terms anywhere from 3 to 20 years. Our working capital loans are strictly short term, the loan terms we offer range anywhere from 3 to 18 months. This is great, because once you’ve paid down 70% of your loan; you will be eligible for a renewal if you need to borrower again.
So after going through the series of questions, you will be to make a decision on what type of loan your company is in need of. Please keep in mind, not all banks have the same guidelines but this should give a general idea of what’s out there and what they might require. If you have some spare time I would suggest visiting a few banks to see what their requirements are, they might be easier or more difficult than what was mentioned in this last post. Happy hunting!
Should You Get A Business Loan From Your Bank? | First Capital Business Finance