Navigating the waters of the business funding industry may seem like the Bermuda Triangle at times. Where do you begin?
Who are you?
It always boils down to your personal credit and time in business. As the Owner and Guarantor of any business funding, your personal track record is key. If your credit is bad, take steps to resolve your marks to improve your profile. Time in business determines your options for SBA or bank loans, or tells you that you have few options. Your specific industry or specific need for capital will guide your search.
What do you need?
If you own a restaurant and need equipment, own a construction or trucking company that needs equipment, or have a flow of invoices that you need paid on quickly, seek out a specialty finance provider for equipment financing or invoice factoring. If you are looking for cash or a loan, here are your options and the requirements for each:
1) SBA Loan
- 3 years Tax Returns
- 650+ FICO
- Global Debt Service coverage > 1.25:1
2) Business Bank Loan
- Strong banking relationship
- Most require Collateral & Tax Returns
- 650+ FICO
3) Revolving Line of Credit
- 1 year in Business
- 650+ FICO
- Borrowing experience
4) Business Loan
- 1 year in Business
- 600+ FICO
- Business Revenue > $300,000/year
5) Business Cash Advance
- Business Checking Account Statements
- Any FICO
- Business Revenue > $5,000/month
Where do you start?
The Business Funding Industry has Brokers on the front lines. If you end up putting your name and phone number on a website, you will get called, a lot. The best broker can save you time and money by streamlining the process and targeting your best option in the industry given your specific situation, and the worst broker will mislead you and send your credit application to multiple companies for unnecessary hard inquiries on your credit.
If you prefer the hands-on approach, here is a guide:
-Funding Circle
-Kabbage
-OnDeck
-Paypal LoanBuilder
-Intuit Quickbooks Capital
-AMEX Business Loans
Where do you end up?
You may already have a balance with the above companies, were not approved, or you still need additional funding. Consider Greenhouse Capital for a personal approach to help you decide on your first funding, or your seventh.
