The credit industry is still financing business if you know where to look. Here’s everything you need to know about getting your company a cash infusion.
A surging economy is bringing mixed news to small companies financing business with fast cash advances.
Approval percentage for merchant cash advances hit a record high of 27.2% in March 2019, according to Biz2Credit Small Business Lending Index.
This means over $10 billion in assets flowed to small business owners, in a single month, up one-tenth a percent from February.
There’s a reasonable match between small businesses seeking capital and investor confidence in borrowers. This all bodes well for the strength and stability of the US economy as a whole.
But unfortunately, this also means over two-thirds of applicants interested in financing business are unable to secure the cash they need.
There is however a positive trend for borrowers with less than ideal credit who have been denied merchant cash advances in the past. A growing but stable economy means lower rates for everyone and more investors willing to take risks – thanks to the Fed.
The Federal Reserve is now again encouraging cash flow, backing off incremental rate hikes, and even tantalizing Wall Street with prospects of a cut.
The cost of cash will remain reasonable as long as the Fed keeps its word on target rates between 2.25% and 2.5%, according to Forbes.
Cheap money means smaller financial institutions are able to fill the gap, financing businesses that larger banks deem too risky.
But surprisingly, the primary reason businesses fail to secure financing is not about interest rates or credit scores at all.
For the over 70% of firms who can not initially secure merchant cash advances from big banks, Forbes reports the main pitfall is literally clerical.
If a bank has already rejected your request for capital, smaller institutions are open to financing business at reasonable rates, but that means having your proverbial ducks in a row.
Borrowers with bad credit are rarely ineligible for cash infusions, it’s more a matter of clearly outlining the case a business deserves funding and then submitting the appropriate documents. According to Forbes, always include the following:
- Personal tax returns
- Business tax returns
- Balance sheet
- P&L report
- Personal bank statements
- Business bank statements
- Reporting of personal investment
- lease or building mortgage
- incorporation documents
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Experts also recommend a professional business plan including realistic projections. A clear road map on future performance will help smaller investors decide they want to finance your business with the billions in capital now available in US markets each month.