Business Loans Based on Bank Statements
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There comes a time for people when they encounter business financial problems and they would have to need a lump sum of amount in order to get over it. Looking for other people that can grant that huge amount would be impossible, given the fact that a lot of us have been affected by the recent recession. Fortunately, there are banks and finance firms out there that are more than willing to grant business loans at the expense of a certain price of course. As long as the person is able to comply with the requirements that the bank or finance firm needs, then there would be no problem at all in filing for a business loan. Let us take a closer look at the requirements needed for business loans and the most prominent one that comes on top of the list is the applicant’s bank statement. Why is your bank statement relevant to your business loan application? Will it affect your chances of being granted a business loan? These are the most common questions raised when a person gets curious about business loans based on bank statements. Let us briefly explain the relevance of bank statements in business loans and how it could improve or drag down the chances of you being granted that request.
Finance companies and banks do not require any collateral when it comes to business loans. However, they need to have a guarantee on their part that the customer or debtor is capable of paying the amount that they are going to lend. This is where the bank statements play the part. The creditors are able to assess the financial status of a person based on his or her banking statement alone. They can monitor the cash flow of the business that the customer operates and even be aware of their financial tendencies. Most of the time the requirement is the recent 6 month banking statement of the applicant. The span of 6 months would be enough for the bank to assess and make an analysis of the applicant’s financial capabilities. The amount that they are going to lend including the mode of payment will also be included in the assessment as well.
Aside from the banking statement, there are other requirements needed in applying for a business loan based on bank statements. The credit score of the applicant will also be considered and it must sit at 500 or below to qualify for this type of loan. Credit scores also known as credit reports is a numerical value calculated by credit bureaus that represents the credit reputation of a certain individual. The formula in calculating for it is confidential and each credit bureau has a unique formula but it can be noted that the scores are always close. There would be no chances of huge disparities when it comes to credit scores if the bank or finance firm purchases credit reports from different credit bureaus. Another requirement is the longevity of the applicant’s business if he or she has any. This piece of information is crucial for the lender because it determines the stability of the business and as well as the consistency of the money going inside the applicant’s bank account. These 2 requirements are what finance companies and banks usually ask for aside from the banking statement. As long as you got these requirements covered then a business loan would be easily up for grabs. Just keep in mind that requirements vary depending on the lender or bank that you are applying a loan for.
The Advantages of a Business Loan Based on Bank Statements
The best advantage of a business loan based on bank statement is the fact that it is much easier for approval. If you have experienced applying for other types of loans such as a salary loan or a housing loan then you’d get to compare that the application process is much easier with bank statement business loans. Aside from the easy application process and requirements, it only takes 5 up to 7 business days for banks and finance firms to grant business loans. Applicants would not have to wait for a long time for their money unlike other loans who have much more complicated processes. The business loan based on bank statements should be the first option for people these days when it comes to financial needs to support businesses or just for their own financial stability. Just keep in mind that you should be responsible enough to pay for your responsibilities once the bank or finance company starts chasing your tail for debt collection. Business loans can become bad news if you aren’t responsible enough to take care of your payment duties. Make sure you are aware of what you are getting into if you are thinking about applying for a business loan or any loans for that matter.