Frustrated with the business loan process after a recent loan decline from a bank?
Request my Guide To Getting Your Business Loan Approved After Your Bank Says No at the end of this blog post.
Access to cash is key to running a business. In the case of a small business, cash may be needed to order materials or equipment for a new order, pay invoices, or make payroll. In many industries, payment from your client can take 2 to 3 months.
In Episode 007 of Financially Empowered with Ralph Russell, we discuss how to position your business loan request for the best odds of approval. There are several non bank lenders who approve loans that banks decline.
One such lender is Maxim Commercial Capital. (www.maxim-cc.com). Maxim is a specialty lender, they consider many loan requests other lenders decline. I have successfully worked with Maxim on a few of my very challenging loan requests. Maxim considers all options in order to get a loan request completed. Maxim does require collateral for loan approval, either in the form of equity in commercial or residential properties, or sizable equity in commercial equipment. Maxim has provided funds to borrowers to pay off tax liens, overdue property taxes, judgments and high cost merchant capital lines.
Non bank lenders will also consider advancing against your account receivables. We will be discussing this in detail in a future episode, but here is a brief primer. Your company has invoices out with credit worthy clients. Typically your terms call for them to pay you in 45 to 60 days, but your company needs the cash flow now. Factoring companies will advance you anywhere from 75% to 85% of your invoice within 24 to 48 hours of submitting the invoice to the factoring company. The initial setup and approval may take one week. The key to factoring advances is the credit quality of your client. The remaining balance due on your invoice after your advance is paid to your company, minus the factor companies fees, (range of 2%-4% per invoice on avg) after the factor company collects the full payment due on the invoice. Factoring, or advances on a company receivables, has been used by many companies over the years.
Purchase order and inventory financing are also available. Additionally, a line of credit may be considered by a local community bank, even if a large bank has declined your request. In many cases, the larger banks may have more stringent loan approval requirements, or higher minimum loan request standards.
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