How to Get a Business LoansOn February 13, 2020 by Raul Dinwiddie
Hey, it’s Ty Crandall with Credit Suite in this video, I’m going to show you exactly what it takes to get approved for a business or credit line for your business. By the end of this video, you’re going to know exactly how to get approved, even if your bank has said no in the past. As a matter of fact, you’re probably even going to learn why your bank said no in the past. So when it comes to getting business loans, there’s three main criteria that lenders are looking at to determine if you should be approved. I call this the three C’s approval formula and it really comes down to this. The first C is Credit, they’re going to look at your quality of your personal credit. If you have good personal credit or a guarantor like a family member, friend or potential investor that has good credit. That opens up an unlocks a lot of different funding options for you. How many inquiries you have, your utilization, as well as your FICO score, will all determine if you can get this kind of credit-based financing. Now, the second C is Cash flow, if your business has consistent cash flow and if you’ve been around and open for six months or more and that cash flows five thousand a month or higher than that opens up and unlocks all kinds of funding options that are for available for you based on your actual cash flow of your business. Now, what lenders are looking for is that you manage your cash flow responsibly. They want to make sure that you don’t have a bunch of overdrafts every month, that you have positive ending bank balances at the end of each month. They want to make sure that you have plenty of money left over month to month to be able to pay the bill on the actual loan or credit line. They’re going to give you. So responsible Bank account management is a must when it comes to cash flow financing. Now the third C is Collateral and there’s all kinds of assets that you can use to qualify for very low- interest rate credit line or credit lines or loans that are collateral-based. So collateral-based financing looks at all kinds of things like maybe you’re an insurance agency and you have a book of business. Maybe you want to buy or already have commercial vehicles or commercial real estate you can use as collateral 401k, stocks, IRA, bonds. Equipment can be used as collateral, inventory can be used as collateral. And these type of things like equipment inventory, you can be able to get specified financing to buy them or you can borrow against them if you own those assets free and clear. So the question becomes what assets do you own? For example, you can get financing using your purchase orders as collateral or using your account receivables where you’re allowing your customers to pay you on terms and then use those account receivables as collateral to be able to get financing. Now, the great thing about asset-based financing is you don’t need to have good credit to get approved, you don’t need to have cash flow either. All you need is the asset applied as collateral. And the other good news is you can typically get interest rates of 5 percent or low that are lower. Now when it comes to cash flow based financing, you don’t need to have good credit, you don’t need collateral to get approved. And that’s very fast financing, as a matter of fact, with cash flow based financing, if cash flow is your strength, you’re able to typically get approved and get funding in 72 hours or less. And back to the very first C, we talked about credit-based financing. If you have good credit, you don’t need cash flow. You don’t need collateral to get approved. That means even as a high-risk industry or even as a startup, you’re still able to get up to one hundred and fifty thousand dollars in credit lines. The three C’s formula is easy Cash flow, Credit, Collateral. If you have one, it unlocks those funding options for you. In the more of the C’s you have, the better kind of financing you can get. So for example, if you have consistent cash flow and good credit, then you can get longer-term, term loans. You can get lines of credit as well if you have all three C’s cash flow credit and and collateral, that’s what unlocks SBA loans. So the key to getting financing for your business is cash flow, credit and collateral. The more of those you have, the more money you can get for your business. But what happens if you have none of the C’s? That’s when business credit becomes crucial. Business credit helps you become more fundable, the nice thing about building business credit is that you’re able to get very high limit credit cards along the way. You’re able to get 10 thousand, 20, 30, 40, even 50 thousand dollar individual limit credit cards at places that you do business with all the time. From Sam’s Club and Costco to Amazon and Walmart to Staples, Office Depot, Home Depot, Lowe’s, almost every major retailer offers this kind of corporate credit. You can get it without a personal guarantee. You can get it without a personal credit check. You can get it with no collateral check, no cash flow check. So you can get it even when you don’t have one of the other C’s that makes you lendable. So there you go. That’s a formula to get a loan for your business is either cash flow, credit or collateral. If you have none of those, then you want to build business credit instead to get high limit accounts and to make yourself more fundable if you do have cash flow, credit or collateral. You still want to build your business credit because you’re business credit one of over a hundred and twenty-five fundability factors that will determine how much money you can get for your business and the rates and terms that you’ll pay. So to learn more about getting approved for credit, for your business, financing for your business and building your fundability. Visit us online at creditsuite.com.