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3 Things Lenders Look Into When Underwriting Your Bridging Loans for Business

Do you want to increase your chance of success and save time in applying for bridging loans for business? Learn the 3 main things lenders look into when considering your application.

Here are three main issues that banks and other traditional lenders look into when you file your loan application and what you can do to qualify.

  • Credit report

Lenders are most likely to decline your application for bridging loans for business if the principles of the stakeholders of the company have business credit histories that reflect low credit score. The lender also reviews the business credit history and the utilization rate. So, if your available debt is at least 70%, the lenders may increase your credit limit.

  • Ability to repay the loan

The lender evaluates your ability to repay your financial obligations by requesting documents that prove your income or earnings. They compare your earnings history with the amount of your loan request. They may also require additional financial documents depending on the size of the loan. For example, if your loan is over $100,00 banks may request your tax returns in the past 3 years, the personal financial statements of the principles in your company; or those holding more than 20% interest in your business, and your  most recent balance sheet.

  • Availability of Collateral

Lenders often approve applications with collateral because they can go after your property when your business faces a glitch. While it should be the last repayment recourse, collateral strengthens your loan application because it shows your ability to manage your financial obligations when things go bad.

So, you may have to pledge your inventory, real estate, equipment or any valuable asset in exchange for the loan. Although they possess your collateral, you actually still get to “own” them until they are seized because you failed to repay your loan.

Lenders don’t just give away bridging loans for business to all entrepreneurs. They prefer borrowers with a clear understanding of the loan they are applying for, and the reasons why they need it. You must also be prepared to explain to them in detail how you can generate the cashflow to pay them back.

Banks require financial documents and a sound business plan. So if you want to increase your chances of getting approved, it is advisable to prepare your tax returns and financial statements to prove your income and your capacity to repay your loan. The business plan must also be detailed enough to show them how you plan to turn your business around.

What if you’re not qualified for bridging loans from traditional lenders?

ALC Commercial has created a loan process to help meet your small-business needs and goals. It’s alright if your credit score is low and you don’t have financial documents that are usually required by other lenders. ALC Commercial has its own way of assessing your trustworthiness and creditworthiness. Get the right amount of money to start your business, cover low profits, increase your inventory and shoot up your operating funds.

Contact ALC Commercial team today and get the funding you need which is way better than the bridging loans for business other lenders may offer.

For more information on business loans, commercial finance, debt consolidation, bad credit business loans and low-doc business loans talk to our experienced and understanding loan specialists to see how our business loans can support your business goals.

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