Lendinero's blog on Growing Your Business
Gil Zapata has worked in the financial services industry since 1996 and has worked over 1000 financial transactions. Obtaining a business loan from a bank is much more difficult than obtaining a small business loan from an alternative lenders. In this article I will mention what businesses can do to obtain a good rate and term in the world of alternative financing. Today, alternative lenders are competing for the same clients. Can Capital, Swift Capital, Rapid Advance and On Deck capital are competing every day and they are developing innovative products with longer terms and lower rates. Rapid Advance has a loan with an overall interest rate as low as 14%. This is a very good rate for a business in the world of alternative financing. If you want to obtain that rate you will have to present the following:
a) Less than 2 days of non-sufficient fund activity
b) More than 10 deposits per month
c) Deposit more than $20,000 per month
d) No negative close out balances
e) A credit score of about 640
This may sound easier said than done, you would be surprised the amount of businesses that don’t qualify for a low interest rate because one of the above factors is not in place. You may have 20 deposits, a positive close out balance, and 8 non-sufficient funds and this alone will cause a denial.
My suggestion is that every single week you should have a weekly ledger, budget, and conduct a bank reconciliation. If you have to reduce expenses or increase payment terms on expenses I would do it. Keep in mind there are things that report on your credit report and things that don’t. Your office lease payment will not report on your personal credit report. If you have to delay your office lease payment by 5 to 10 days it will not affect your personal credit. Those 5 to 10 extra days may improve your cash flow. If you have a sales staff instead of paying commissions weekly pay them bi-weekly. This can also improve your cash flow. There are a number of payments which you can extend to avoid poor cash flow on your bank statement and financial statements. These simple strategies will allow you to have improved cash flow and increase your probabilities of obtaining a better interest rate.
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