In a world where traditional banks have cut back on their small business lending, small businesses have had to scramble, sometimes unsuccessfully, to raise working capital. To the shock of many small businesses, getting a small business loan from a traditional bank hasn’t been as easy as it may have been in the past. When this happens, the search for an alternative source of borrowing is on. This is where non-traditional lenders step up.
Many small businesses seeking more working capital are unaware that there are other borrowing options out there. Well, there are. Actually, there are many different options for borrowing the working capital they need. These non-traditional lenders do not conform to the same underwriting guidelines as a regular bank.
One example is a lender that will not consider the small business owner’s personal FICO score as a major factor in its underwriting process. This type of lender will focus more on the health of your small business. To do this, they look at your small business’s cash flow using your business bank statements. They also consider your annual revenue.
Here is how to position yourself to get a non-traditional loan based on your cash flow. We will discuss the minimum criteria and then the average criteria. First, the minimum criteria:
- FICO = 500 or better.
- Annual revenue = $100k or more.
- Minimum monthly business bank balance = $1k/month for the last three months.
This type of loan may get you up to $35k in working capital.
Here is the criterion for an average loan that may get you up to $100k in working capital:
- FICO = 620 or better.
- Annual revenue = $150k or more.
- Minimum monthly business bank balance = $3k/month for the last three months.
These are just ballpark figures to position you to get a non-traditional, business cash flow oriented working capital loan. If you meet, at the least, these requirements, though, you are well positioned to get some decent working capital funding.
For more information on small business loans, go to www.spcapitalfinancing.com or Google Specialized Capital Funding.