If growth plans for your small business require outside funding, one of your first steps is to understand your eligibility. Every financing provider has its own minimum requirements. We’ll examine what PHAZIS Funding requires when applying for financing as an example.
Time in Business
Your business should be established for at least six months. This provides enough business history to evaluate the overall performance of your business. However, some companies specialize in funding start-ups, and others won’t consider you eligible until your business has been open for at least a year.
Business Bank Account
Another basic requirement is that you deposit all funds related to your business directly into a business bank account. Why? Keeping business financial records separate from your personal financial records is just good business sense. But it also allows a lender to easily review your business’ financial health without potentially mixing in personal debits and deposits.
Minimum Monthly Deposits
There is a good chance you can get pre-approved for funding if you deposit a minimum of $10,000 in your business bank account for at least three consecutive months. This number is key to understanding the consistency of your business revenue, which impacts the evaluation of your ability to pay off a loan.
Personal Credit Score
Every lender will review your personal credit prior to approving your business for financing. The higher your credit, the better your chances. But most, including PHAZIS, have a minimum personal credit score of 500. If you can’t meet this threshold, it may be best to wait and apply once your credit has improved. NerdWallet has a good article on the ways to improve your credit quickly.
The final approval process will require a deeper look into your business, but is mostly based on meeting these four basic requirements.