Many business owners find themselves in situations where they need immediate capital – whether to jump on a profitable opportunity or to expand their existing business – and the typical route to get funding is either through an SBA loan or large national bank. Yet, the processing timeframe for these loans can be painfully long, taking anywhere from several months to a year, and some business owners cannot qualify due to personal hardships or lower than perfect credit scores.
The good news however, is that there are still options available to get the capital you need. One of the best options is a private business loan. The great thing about private business loans is that you can usually qualify without perfect credit, and you can receive the funds you need for your businesses in as little as 5 business days (in some cases even faster!). What is even better is private business loans are typically much more specialized and catered towards the borrowers specific needs.
The financing involved with a private business loan can be extremely creative. Below is a list of approaches that can be considered, even if you show little to no income on your business / tax returns.
- Loan based off the businesses current averaged monthly / gross annual revenue
- Loan based off merchant accounts average monthly transactions if you process credit cards.
- Loan based off equity from current Real Estate you own.
- Loan can be based off any combination of equity business assets / business revenue streams
How to Prepare:
When you find a private lender that offers business loans always make sure you are prepared to apply. Private lenders receive many loan requests each day and will typically pass over the loan request from potential borrowers who appear unprepared or not serious about seeking a loan. Make sure to know your businesses last 3 years of revenue, and always have a simple 1-2 page executive summary available. Your executive summary should always include the following.
- The amount of funds you are requesting.
- A brief summary of your day to day operations.
- How long you have owned your business.
- The state your business is in.
- The industry your business is in.
- The gross revenue of your business generated for the current year and the past 2 years.
- Your Average Tri-Merge Fico or Credit score.
- Schedule of Real Estate (If you have Investor real estate assets with substantial equity).
The more brief / factual / finance detailed your executive summary is, the faster you will get a response. Do not fill your executive summary with fluff content, lenders only want to see the financial facts initially to determine interest.
Please keep in mind that a private business loan is not for everyone, and you should always do your own research on the particular private lender you are considering. Do not be discouraged if you are turned down as all private lenders offer different programs and have different lending criteria.
About the Author:
Matthew Joint is the Senior Businesses Development Manager of Joint Venture Capital, LLC and JVCmoney.com a Commercial Real Estate Private lending finance company that helps borrowers find funding for a myriad of commercial real estate, business, and development loans. Find out more about Joint Venture Capital at jvcmoney.com/about-jvc/