Cash Flow Based Lending
Does your business have steady cash flow?
Have you been unsuccessful obtaining a business loan from your bank because of low personal credit scores?
There’s nothing more frustrating for a business owner that has a business with consistent cash flow but can’t get financing because of personal credit issues.
If this describes your situation then you’ve come to the right place. The good news is cash flow based lending is ideally suited for the unbankable business owner.
The loan itself is based on the cash flow of the business rather than the personal credit ratings of the owner and will not exceed 10% of the company’s annual gross sales.
So if your business has a total of $250k in annual gross sales then the loan amount you can obtain via cash flow based lending cannot exceed $25k.
The loan amounts in this type of program ranges from a minimum of $5k to $1.5 million per business. As far as the loan term goes it can be as little as 4 months to as long as 24 months depending on the financing product the business applies for.
Now to compare what it takes to qualify for a business loan let’s compare the two.
To qualify for a bank business loan they review personal credit reports, FICO® Scores, business and personal tax returns, financials, business credit reports, etc.
With cash flow based lending there are minimum requirements which include:
- Minimum FICO® Score of 550
- Annual gross sales must be greater than $100k
- Minimum of 5 deposits per month in business checking
As you can see cash flow based lending has much more flexible requirements compared to your standard bank loan. With this type of loan, gross sales and deposits take a front and center role while FICO® Scores take more of a back seat.
There are also unique differences in repayment terms when you compare both types of loans. A standard bank loan has a single lump sum monthly payment due each and every month.
With cash flow based lending; also known as revenue based financing, payments are made in small increments via ACH from the company’s checking account on a daily basis except on Saturdays and Sundays.
Some of the most popular businesses that utilize cash flow based lending find it to be a fast, easy and convenient solution for getting the funding they need.
Unfortunately there are certain industry restrictions that prohibit certain types of businesses from obtaining this type of funding.
Ready to apply for cash flow based lending? Submit your information below and a funding specialist will contact you within 24 hours. Plus receive my FREE Business Credit Building seminar audio ($597 value) =>
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About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.
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