The Fundera Advisor Program turned 6 months old this summer. Within those 6 months, I’ve had hundreds of conversations that have given me a completely different perspective of how accounting professionals are thinking about helping their clients find funding.
I could go into detail about all these lessons, but I want to focus on one common theme in all, I kid you not, all these conversations. The biggest FAQ I get is:
“What are the chances of my client, {insert name}, securing a loan?”
They then go on to tell me a bit about the client, and I am able to (hopefully) give them a better idea of their client’s chances.
Accounting professionals seem to love this, as they don’t want to waste their client’s time. They want to be able to recommend clients apply for a loan, knowing they have a decent shot of finding funding.
I’ll preface all of this by saying, the only guaranteed way to know if your client can secure a loan is to have them apply. This is not a black and white industry. If your client needs capital, they’re always better off applying just to see what happens.
That being said, as I know how nice it is to have some idea of your client’s “fundability,” I’m providing a product-by-product breakdown of the minimums your client will need to even be considered.
Before we get started, I want to clarify what I mean by the term “second position.” Many lenders do not want to lend to a borrower that currently has debt. Most likely, the first lender has put a lien on the borrower’s business. So, if this lender were to also make a loan to this borrower, their lien would be in second position to the first lender’s. In short, if this borrower were to go bankrupt, the lender in first position’s debt would get resolved before the second lender could ever start getting paid back. It’s a riskier position. However, for some lenders it isn’t an issue, and if the borrower has almost paid off that current debt, it may not be an issue for any lender.
Now, let’s do this! Here are the absolute minimum requirements your client will need to be considered for the following loan products:
1. SBA Loans
Been in business 2+ years
Annual revenue of $50,000+
Credit score of 640+
Must be 3+ years out from a bankruptcy
Second position not allowed
Been in business 1+ years
Annual revenue of $150,000+ (one lender will consider $25,000+)
Credit score of 600+
Must be 2+ years out from a bankruptcy
Second position allowed in some cases
Been in business 6+ months
Annual revenue of $65,000+
Credit score of 500+
Must be 1+ years out from a bankruptcy
Second position allowed in some cases
4. Equipment Financing
Been in business 1+ years
Annual revenue of $75,000+
Credit score of 600+
Must be 2+ years out from bankruptcy
Second position allowed in some cases
Been in business 1+ years
Annual revenue of $200,000+
Credit score of 600+
Profitability required
Must be 2+ years out from bankruptcy
Some lenders will require the borrower to have outstanding accounts receivable
Second position allowed in some cases
6. Invoice Financing
Been in business 6+ months
Annual revenue of $50,000+
Credit score of 500+
Must have outstanding AR
Second position allowed
7. Merchant Cash Advance
Been in business 5 months+
Annual revenue of $75,000+
Credit score of 400+
Must be 1+ years out from bankruptcy
Must have 4,500+ in credit card transactions
Second position allowed in some cases
8. Small Business Startup Loan
Credit score of 700+
Must be 3+ years out from bankruptcy
Second position not allowed
If you’d like to share the above information with your client, you can have them download it as an eBook here.