If you don’t have time for financial forecasting, then a cash flow gap can sneak up on your business.
A traditional business loan can take upwards of 60 days to close. That’s a lot of time to wait if you need the money now. Fortunately, there are ways to speed up the loan approval process.
Before a lender approves you for a loan, they’ll want to see a history of your tax returns, financial statements, and other business documents. Then, they’ll want projections for the future. Included in this will be your business and marketing plans. It helps to have this information ready beforehand.
The process will go a lot smoother if you can hand over the data without needing to dig for it.
The more experience your loan provider has with companies like yours, the faster they will be at their job. So, look for a lender that knows your industry.
The lender will look at your business’s financial history. If they see an influx of expenditure, they might be worried about how the trend could affect your ability to pay back a loan. If the lender is concerned, then they might take more time to look at your company. They may reject you outright.
If you need to spend more, it’s better to wait until after you get the loan to do it.
You know which wheel gets the grease. It’s the squeaky one. Make sure your lender remembers you. You may have to spur them along.
You’ll have various points of contact to choose from: the underwriter, the originator, and the processor. Your best bet is the processor. They should have a general understanding about your loan.
Many assume that if there’s a holdup, it’s the lender’s fault. That’s not always true. The lender might be waiting on you to provide a document. So, stay on top of their requests and make sure you’re not to blame for the process going slowly.
Keeping secrets from your lender is always a bad idea. They are going to find out, and if you weren’t the one to tell them about it, there’s a chance they’ll reject you for it. They might reject you anyway, but if you’re upfront with them from the start, they may at least make a loan decision sooner.
If you think waiting 60 days for a loan is too long, just wait until you need to start all over again with another lender because the first one rejected you. It’s better to work with a few lenders at once. This will increase your odds of being approved for a loan, and it may take less time in the end.
While it’s not always the case, the more time it takes to approve you for a loan, the less the loan might end up costing you. One reason is that if you pass a difficult underwriting test, then the lender knows you are less of a risk. Low-risk loans are often cheaper for everyone involved.
High-risk loans are for businesses that either can’t get funding from a bank or need money in a hurry.
One type of small business funding that’s exceptionally quick is the merchant cash advance. Through this product, the lender may provide funding in as little as one business day.
The main advantages of a cash advance for a company is that you get it sooner. Also, your credit rating and credit history don’t have to be perfect. The disadvantage is that you’ll likely pay more for the money. Plus, the lender will not report your payments to the credit bureaus.
Maybe you shouldn’t be going through a lender at all. Your friends or family might be interested in investing in your company. You could offer them a clear-cut interest incentive, or you could sell them a piece of your company. Losing part of the ownership of your business can be risky, so make sure you do your research first.
A loan provider will go through your business’s paperwork before determining if you qualify for a loan. They’ll look at your financials and decide if your business can afford the loan. If enough lenders say no, then you need to take a step back and ask yourself why. Is your business is failing?
Throwing more money at a failing business is not a good decision. Instead, you might be able to salvage what’s left of the company and move on to something else. But, if you sink too much money into it, then you won’t have anything left over at the end.
We know how stressful it can be to find small business funding fast. We hope these tips can make it a little easier. If you have any questions about the topics we’ve gone over in this post, please feel free to reach out. We’ll try to contact you within one to two business days.