There are a great deal of myths surrounding small business loans. Among the most prominent are that applying for a loan and paying it back are literally the most difficult things a human being could ever do. This myth has been perpetuated for so long and by so many people that it makes business owners forget just how hard it was to start a successful business. It’s honestly silly to imagine someone who runs a business in a competitive environment being intimidated by the steps required for seeking a small business loan.
Then again, such business owners have probably never heard of alternative business financing. It’s 2017, and borrowers no longer have to worry about an absurdly tedious application process, being rejected by the bank you’ve worked with your whole life, or risking bankruptcy with generic, non-negotiable terms. Companies like United Capital Source are dedicated to making the act of paying off debt as easy as possible since, as a successful business owner, you already have enough to deal with on a day-to-day basis.
We eliminate the unnecessary headaches associated with traditional funding programs so you can focus on the borrower’s most important responsibilities, or those that should, by definition, require brainpower.
Figuring Out How Much To Ask For
You know how much your desired investment costs and you know how much it costs to run your business. What you aren’t sure of is how much money you’ll be able to periodically pay back on top of regular expenses like bills, payroll, rent, etc. Figuring this out begins with plugging some numbers into one simple mathematical formula.
Your debt service coverage ratio (DSCR) will tell you how much cash you have on-hand to make monthly payments. To determine your DSCR, divide your monthly or yearly cash flow by the amount you would pay back every month or in a given year. Cash flow refers to how much money goes in and out of your business throughout this time period. Borrowers looking to take out short-term loans should incorporate monthly numbers whereas borrowers looking to borrow approximately or over $100,000 should incorporate annual cash flow and payments.
If your DSCR is higher than 1, you will most likely have no trouble paying off this much debt in a year while covering regular expenses.
As you can see, the math isn’t hard at all; you just might have to try out more than a few hypothetical payment amounts to see which numbers would work best for you. Keep in mind that United Capital Source offers numerous business funding programs that do not involve fixed, monthly payments or strict due dates, like Merchant Cash Advance or a Business Line of Credit. But it is still important to know your DSCR since it will give you a much clearer picture of how expensive of an investment your business can take on given its current financial standing.
Supporting Your Business Plan
In the world of business financing, you cannot claim that an investment is lucrative or necessary without hard evidence to back it up. Whether you want to expand your team, secure additional property, or launch a marketing campaign you must have proof that this investment will directly allow your business to increase or stabilize revenue. How long will it take for the investment to produce results? How have your competitors benefited from similar endeavors? You might also want to include statistics about your industry suggesting that your business will be left behind or face a severe competitive disadvantage if you aren’t able to level the playing field with additional funding.
Showing your desired lender that you know your business and industry inside out will prove you are a responsible business owner who can be trusted to carry out an investment and pay off debt. Like the previous step, performing research isn’t complicated at all but it could be hard to find time to do it so gather this information well before you speak to a potential lender.
Keeping Money In The Bank
Clients of United Capital Source are not judged by their credit scores or ability to provide collateral. They are judged by the performance of their businesses, or how much revenue they are taking in over the past few months. United Capital Source even offers bad credit business loans for borrowers in this exact situation. Many small businesses, however, fail to keep adequate cash in the bank, even if they are successful. Newer businesses have a habit of tabling bookkeeping and never getting around to it because their daily responsibilities occupy all of their time. Others might be forced to pay vendors or suppliers before they get paid for their product or service. Arrangements of this nature, like having to pay your suppliers within fifteen days even though your customers can wait up to 30 days to pay you, are sometimes difficult to avoid.
Then there’s the tendency to spend more than is necessary on regular expenses like bills. If your business bank account isn’t as strong as it should be, consider making an effort to save money on electricity or switching service providers to lower your phone bill.
You might be wondering why we haven’t mentioned the application process, obtaining optimal terms, or making payments. It’s because if you choose to work with UCS, you’ll quickly discover that our application does not require mountains of paperwork or months of waiting just to hear you’ve been rejected. UCS small business loans can be approved in as little as 24-48 hours, and terms can be customized based on the unique circumstances of your industry. Our financing experts have years of experience working with dozens of industries and know which business funding programs are best suited for your business and the investment you have in mind.
Why trust UCS? As our clients can attest, our funding programs are designed to provide financial stability and growth long after you have finished paying off your debt. UCS is more invested in your business’s long-term success than just being paid back. This is a partnership that will change your business’s future and put you in a position to take on the giants of your industry!