Its hard to get bank loans for business

Banks have an extremely low approval rating for small business loans, largely because borrowers must possess a perfect credit score and have a lot of money in their bank accounts.

A perfect credit score requires a significant credit history featuring no missed payments, no maxed out credit cards or credit lines, and a low credit utilization rating.

30% of your credit score is made up by your credit utilization rate, or the percentage of your available credit that is being used.If you have a credit limit of $100 and a statement balance of $20, your utilization rate is 20%, a good number. But if your credit limit is $3,000 and you borrow over $2,000 during a particularly chaotic month, you will drive up your utilization rate and shrink your credit score well below 600.

A company’s cash flow determines its ability to make monthly payments while covering regular expenses like rent and payroll. Many businesses, however, tend to pay vendors and suppliers before getting they get paid themselves, giving the impression that more money is coming out than coming in.

Another reason banks reject so many small business loan applicants is a lack of collateral, or something the bank can sell in case the loan is not paid back. New businesses typically do not have any equipment or real estate to offer or might not want to risk losing their personal homes and cars.

The only thing more frustrating than these qualifications it the approval process for a bank loan.

There’s a ton of paperwork involved, and you have to wait several months to find out whether or not you’ve been approved.

Odds are, your business has a much higher chance of being approved by an alternative business lender like the company I founded, United Capital Source.

Collateral is not required, and applicants are not judged mainly by credit score, because poor credit is not an indicator of poor cash flow. Your business must simply have had steady revenue over the past three months in order to be considered for one our many programs. We have issued small business loans to businesses in hundreds of different industries, including businesses that were bound to experience inconsistencies in revenue due to their own unique circumstances

After filling out our one-page application, you only need to prepare a few documentsincluding bank statements, business tax returns, and a profit and loss statement. Approval can be granted in less than 24 hours and funding could reach your bank account in a matter of business days. If you pay off the first business loan without hiccups, you’ll be able to obtain a second, larger funding amount with better rates and terms from UCS much quicker than the first time.