High risk merchants often have a hard time acquiring business loans. Lenders view merchants in high risk industries as undesirable investments, even if the business owner is an experienced entrepreneur. But it is possible for high risk merchants to find and attain the necessary funds to start and grow their businesses. The following are a 5 steps to getting a business loan.
Develop a Business Plan
Many business owners only know that they could do with some extra cash. Lenders are not likely to disburse funds unless you can tell them exactly where the funds are going and how they will be used over time. This is integral to your business plan. The business plan should include: current and your projected financials, strong business cash flow that can at least pay back the loan and cover business operations. This increases the lender’s confidence in your business and increases your chances at loan approval.
Know How Much You Need
An accurate estimate of the size of the loan is also necessary. Of course, this can only happen if you know exactly where your money is going and how much it will take to improve targeted areas. Whether it is promotion, facilities, expansion, hardware etc., knowing how much the development of these areas will cost will determine how much to ask for. As a high risk business, it will be challenging to attain traditional loans in the first place, having a well-researched budget, supported by positive financial forecasts will give lenders more confidence in your business.
Find a Lender
Find a lender that matches your business needs. There are many types of loans available for new businesses. Commercial bank loans, region specific lenders, local community banks and credit unions, micro and alternative lenders, and social funding sources are all feasible avenues for small business loans.
Gather All Necessary Documents
Research and gather all important financial and legal documents before any loan meetings. Some of these documents include: personal and business income tax returns, personal and business bank statements, balance sheet and income statement, business licenses, article of incorporation, a resume, driver’s license etc.
Collateral is a way for lenders to guarantee they will get their money back if the business fails. This could be equipment, inventory, real estate, inventory, or any other type of asset that can be seized and sold to repay the loan. Collateral drastically increases the odds that you will be able to acquire a loan.
First American Merchant cash advance offers a high risk cash advance to companies that traditional lenders avoid. FAM offers simple and flexible loan programs that will provide your business with the funds necessary to survive within 72 hours. Plus applicants won’t need to supply tax returns or financials. Get the money your business desperately needs. Contact us now to start your application.