Applying for working capital from a lender? Here's what you need to know
In this post, we’ll include the documents and other preparations you’ll need to make during the small business loan application process. Many of the best small business lenders will require these various components, so make sure you’re prepared!
1. Bank statements – In order to provide your small business with funding, a working capital lender will need to review some of your recent bank statements. When applying for a merchant cash advance, the lender will want to see frequent and small ticket transactions in your credit card statements. These qualifications will ensure that you’re able to handle the process of remitting your advance.
2. Your credit score – Most likely, the working capital lender you’re applying to will take your credit score into consideration when reviewing your application. Having a low credit score won’t necessarily hinder you from receiving working capital, but it might affect the amount of money you receive. Although the lender will probably run your credit at some point during the funding process, it is good to be aware of your credit score
3. Existing loans or other outstanding debt – Be upfront if you have already taken out a loan with a different lender. Most lenders will be weary of stacking loans, as this can be detrimental to them, the original lender and your small business. In addition, having other debt may affect how much money you qualify for, so be forthcoming about this as well.
4. How you plan to use the working capital – Depending on your needs, your business may be a good fit for a prepayment discount. If you’ll be using your working capital short-term, and the lender has prepayment options, this may be a good fit. On the other side, if you know that you’ll be using the money over a long period of time for something like an expansion project, a prepayment discount wouldn’t be beneficial.
If you’re applying for capital from one of the best small business lenders, it is likely that you’ll be asked to provide these documents when applying for additional working capital. Receiving financing from a working capital lender is a responsible way to attain funds for your business, so make sure you’re organized throughout the application process!