Majority of business owners realize that at some point they do require a bank for their business to expand or continue, operating smoothly. However, as you already might know, applying and getting approval for a business loan can be a daunting task. This is especially so if you go through the entire application process, wait for days even months for approval, and then get declined.
Of course applying for a bank loan for a business is more than just filling the paperwork, although the process is even easier with merchant cash advance lenders. There are other things you should consider if you want to increase your chances of qualifying for the bank loan for business needs.
Read on to understand some of the 4 key questions that you should already have answered before making the application for a bank loan, especially from merchant cash providers:
Will I qualify for the bank loan?
This is a very important question. It’s no use applying for a loan that you will not qualify for. You need to be realistic about your business needs and this will save you time dealing with a cash advance provider. A merchant cash advance lender will base the amount they give you to your business future credit sales.
You can avoid having your bank loan for a business application being rejected by collecting information from the lenders of your choice. Let the cash advance providers answer your questions regarding their particular requirements. You can, for instance, ask for their minimum requirements, cash flow or annual credit sales that you need, to qualify among other things.
Does the business really need the cash? If yes, how much is actually needed?
You need to know the exact amount needed if you want a bank loan for business needs. If unsure of the exact figure, consult your accountants to work out the figure before you approach the merchant cash advance lender.
You should have ready documentation to support your claim to the lender and respond to the other questions such as future plans, business model, and finances if asked. You also need to tell the bank how the loan will be exactly used, although this might not be necessary with merchant cash advance providers.
How much can I borrow based on my collateral?
Banks will always ask you for collateral before giving you a bank loan for a business. You might fall for the common assumption that a bank will give you a business loan equal to the amount that you bought or will buy the business property or equipment put up for collateral. This is not always right, a bank will more often than not lower the value of what you put up for collateral. Merchant cash providers, on the other hand, do not require any collateral from you or your business, but just your credit sales record and projections
Will the money help my business?
Whatever you borrow to finance, always ensure that the bank loan for business matters will be of a great benefit to your business. If borrowing to fund operating expenses, invest the money where it will generate more revenue for the enterprise. Otherwise, you might find yourself in the same position and borrow again within a short period of time.
Merchant cash advance providers are happy investing in a business that has the potential future credit sales capable of covering the business loan.
Overall, know everything you can about your cash lender, your business, and personal financial situation before you apply for a bank loan for a business.