On the hunt for a small business loan? If you want fast financing without the hassle, read on to get all the details that will get you through the process.
When it comes time to shop equipment financing options you’ll need to provide a few key documents to help decision-makers asses your needs and viable credit line. As your Broker, Kapital Venture has collected over 25 years of experience in the Finance industry and we want to share some knowledge to best prepare you for what’s ahead.
In this article, you will find a quick rundown on everything you need to know about providing bank statements, or “Banks” as we often call them, so you can be fully prepared to receive the best approve terms available.
Bank statements are an important part of the underwriting process since it helps us evaluate cash flow. Most underwriters will require the last 3 months for an average loan below 150,000.00
6mths for anything usually over 151,000, in addition to your tax returns. The larger the amount the more financials they want to see.
Here are 5 key things we look for in bank statements:
- Sufficient deposits: The Underwriters (depending on the program you qualify for) requiring a 10K + in deposits monthly. And, some programs require a minimum of 3x the monthly lease /loan payment as an ending balance. For example, if your payment is $2700 you’re ending bank balance should be $8,100.00 for the past 3 months.
- The Underwriters will look for NSF’s: If it truly was a one-time event, then let us know what caused the NSF so we can explain it to the Underwriter. NSF’s happen.
- Merchant cash advances: The underwriter’s looks for healthy bank statements, MCA’s indicate weak cash flow and are usually declined.
- The Underwriter looks for other financial payments you may be making and will cross-reference that information with your credit report and application.
- The Underwriter also looks at your average deposit to make sure a sufficient margin to accommodate natural cash fluctuation during the month and the ability to make the payment without putting you in a bind.
TIP: Preparation is Key If you are a new business:
- Review your credit in advanced.
- Build your deposit & minimize expense for 3mths prior to buying an asset.
- Keep your deposit in your checking account for at least 3 MThs to show large balances.
- A business bank is better than a personal checking account.
Preparing for a small business loan or any type of equipment financing for your business can take time. Having the right tools and know-how is just half the battle. Think you need a little extra help pulling all the right documents together? We are happy to offer personalized help that will prepare your file for approval status! Speak with our Finance Specialist today by contacting our office at 737-717-3100 or apply for a loan today, click here to get started.