How to qualify for short term business funding
Most companies are able to qualify for a short term business loan. This is why this financing option tends to be desirable. Small Business Funders look at business owners’ personal credit scores to determine how qualified they are. Typically, they approve merchants with an average credit score Small Business Funding, based on their past and future revenue.
Small Business Funders also tend to look at a business’s cash flow projections. Small businesses that are able to demonstrate consistent monthly revenue are more likely to receive approval over a business that has inconsistent months of revenue. For instance, a business that steadily brings in $7,000 or more on a monthly basis is considered stable as compared to a business that fluctuates between bringing in $5,000-$7,000 each month. The purpose of looking into cash flow is to ensure that the business won’t be relying on cash flow financing through the short term loan for more than 30 days.
At the same time, Small Business Funders normally like to check a business’s bank statement to see how many times their balance has gone negative. For example, Small Business Funders will consider qualifying a small business that has had a negative balance four times over the span of three months over a business that has had a negative balance five or more times over the same span of time. If a business can’t keep a positive balance in their business account, it likely shows that the applicant will have trouble making payments on time.
Characteristically, borrowers don’t have to jump through hoops to get qualified for short term business loans. Once you submit all of the necessary documents, the approval process is fairly quick. However, short term business loans could potentially cost you more than you think.