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Key Expectations for Small Business Loans from Alternative Lenders
Small business loans are yardsticks that separate commercial banks from alternative lenders. Unlike banks, a lender like Quick Fi Capital secures funding without needing to have a perfect credit score. We evaluate the current performance indices of your business. These include the history of loan repayment, current debts and the bank statements from the last year. We can calculate the risk level of awarding funds through cash flow analysis, to determine your ability to repay. The following is a review of some of the above expectations that your business needs to fulfill in order to qualify for a loan from an alternative lender.
A cash flow analysis is something you can expect before you can receive small business loans. Usually, an alternative funding agency analyzes the 90-day banking statements of your business. Here at Quick Fi, we typically do a 1 year look back. This is important to evaluate the “stock float”, which is typically your total upcoming revenue against your expected costs. If we find your company expects a manageable loss, there are high chances to complete a loan. This be because we know that the lent sum will cover the cash flow deficit and generate capital to repay the debt.
Another aspect to consider is your past payment history. For instance, if your business has an existing line of credit with other trading partners, it can help demonstrate your business’s ability to make payments on time. If you have not, we lean on past payment history to other types of costs, as well as frequency and method of incoming sales payments. In most cases, even a small firm will still receive an amount that we find will be feasible to repay.
A tax levy is another factor that can favor your business if your need for a small business loan is to cover any gap before the tax season ends. This year, tax season begins on January 29 and completes on April 17. An alternative lending company will consider the realistic expenditure you are likely to incur after filing your tax returns. These could include stock and vehicles as well as staff salaries. In that case, your credit score will not come in the way of receiving the funds. The lender understands that what necessitates the amount is settlement of tax obligations and spending on equipment, staff, materials, etc.
Another consideration for most alternative lenders like Quick Fi is a business’s ability to successfully complete a loan repayment within a specified amount of time. Gauges for assessing this ability can include the total loaned amount and growth expectations. A company where the cash flow analysis finds steady incoming credit card revenue and low debt can get a higher amount while a company with less frequent incoming revenue and more debt could see a lower amount. The advantage for both the creditor and the borrower is that the short-term and well-defined nature of the amount means there is little chance of defaulting.
If your business is in need of funds but cannot find an appropriate bank, then alternative providers like Quick Fi Capital can cover the deficit. We work with the understanding that most small entities do not have enough capital or even sufficient experience to amass a high credit score. We only analyze the current and past statuses of the business to settle on the loan amount and repayment duration. Our expectations are way more flexible than those of commercial banks. Reach out to our professional staff to learn more about how we can help you.