4 steps to better approvals
When applying for financing, there are several factors at play. Virtually every detail about your business is considered in a holistic manner. Out of all these many elements that are taken into account, there are top 4 factors to better approvals you should keep in mind when being considered for funding.
1. Years in Business
From an investment standpoint, the longer your business has been active, the greater the probability that it will remain so because it has proven to withstand changing conditions. So if your business has been around for a good number of years, your chances of getting approval are much higher.
2. Transaction History
Having a clean history of staying in the positive in your business bank statements is a great sign of a healthy business. It gives the impression of a business that is able to pay their bills and not venturing in the red. Zero negative days and no non-sufficient funds on your bank statement portray as favorable as it indicates you would likely be able to meet the repayment schedule.
3. Industry Type
Some industries are seen as riskier than others when it comes to providing financing. This can be due to seasonal impacts, fads, profit margins, and overall statistics of success and failure of that particular business type. Some of the following industries may prove more challenging to get approved due to their various restrictions: Adult Entertainment, bail bonds, cannabis growers, talent agencies, investment firms, and call centers. This does not mean that they cannot acquire funding, but only that the pool of willing investors shrinks which results in fewer options.
4. Average Daily Balance
As cash flow is seen as the lifeblood of a business, investors like to see a healthy amount of funds in the business bank account at any given time. A higher average daily balance indicates that a business is bringing in more than it spends on a daily basis. This is a terrific indicator showing a growing business. An average daily balance of $500 or less will significantly decrease your chance of a good approval for financing for your business.