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Is Your Business Lendable?

November 23, 2019

 

 When it comes time to finance your businesses growth, there are a few guidelines to follow in order to get approved. There is a common mistake among new and aspiring entrepreneurs when it comes to raising capital; they believe that if they have a good idea, a lender will give them a loan. Unfortunately we all wish we could borrow millions of dollars on a pinky promise... but that is just not the case. This article will cover the requirements (the 3 C's) and loan programs you may have available as a business owner.

 

The 3 C's

 

The approval of a business loan is based upon the 3C's; Credit, Cash-Flow, and/or Collateral.

 

 

Credit 

 

 The vast majority of start-ups and small businesses are funded through loans and credit lines which are based on personal credit. Since many businesses do not qualify for traditional means of financing such as an SBA loan or a revenue based loan. To qualify to a credit based loan for your business the minimum requirements are a 680 Fico credit score for most loans.

 

Loan Programs:

 

-Corporate Credit Cards

-Personal Lines of Credit

-Personal Term Loans

 

Cash-Flow

 

Approval for a cash-flow loan is based on the amount of revenue and deposits your business generates on any given month. Revenue based loans can be in the form of a line of credit or term loan. For existing businesses, a cash-flow loan is very common way to finance as it much easier to qualify for.

Most businesses should have 6+ months in business with a minimum revenue of ten-thousand dollar per month. This type of financing is good for entrepreneurs with less than perfect credit and who need funding quickly.

 

Loan Programs: 

 

-Term Loan

-Line of Credit

-Merchant Cash Advance

 

Collateral

 

Collateral based financing offers loan programs in the form of a line of credit or a term loan. Most loans are secured through real estate or business assets such as equipment. Financing secured by collateral is attractive to the lender because of the added security of the loan in case of the borrower defaulting, borrowers can take advantage of long repayment terms and low interest rates.

 

Loan Programs:

 

-Term Loans up to 30 Years

-Lines of Credit

-Merchant Cash Advance

-Equipment Financing 

 

 

 

 

 

 

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