Are you a Small Business with big plans? If so, chances are you are considering how to finance your next phase of development. The taking of a loan marks an important event in the life of a company. Sometimes it is necessary to survive a temporary setback, but hopefully it means you have a plan to launch a new phase of growth in your development. Either way, the decision to seek financing represents a pivotal moment for your business.
Unfortunately, many banks have stopped lending to Small Businesses during this time. And the well-intended government loan programs for Small Businesses have turned out to be an unreliable. Thankfully, commercial lenders are stepping up to fill the void. So, whether you apply during a pandemic or afterwards, you’ll find it much easier and faster to apply for funding through PHAZIS.
If you have you exhausted your opportunities for a government loan and are trying to decide between a bank or a commercial lender, here are 4 things to consider to help you navigate the options:
1: Have a clear purpose for your financing
Firstly, banks are notoriously nosy about your plans for spending your loan proceeds. They will require a well-documented purpose. When you apply to a bank, you need to lay out how the loan will allow your business to survive and grow. Additionally, the bank may want to collect multiple years’ worth of tax returns and audited financial statements. Fulfilling a bank’s demands for comprehensive information is expensive and arduous. Contrast this to a commercial lender, where you are trusted to spend the loan proceeds in your company’s best interests. After all, you know more about your business than does anyone else. And, we don’t make you submit reams of documentation. While PHAZIS Funding will ask about the purpose of the loan, it’s mainly to help our Business Growth Advisors to tailor a solution that works best for you.
2: Decide how hard you’re willing to submit an application
Part of a bank’s underwriting is to review all of your company books and records. You’ll need balance sheets, income statements past and current, tax returns and other relevant documents. Also, ban procedures may devolve into a virtual audit of your expenditures and business strategies. As far as a bank’s loan committee is concerned, all topics are fair game. And any one answer can open up various other avenues of time-consuming interrogation. Naturally, a bank will analyze your financial rations to see how you rank against your competition. On the other hand, PHAZIS looks only at your time in business (at least six months), your personal credit score (above 500), and your monthly revenues (above $10,000). Meeting these requirements puts you on the fast track to financing.
3: Understand your debt service capacity
Naturally, any lender wants to know it will be able to collect on its loans. However, the difference between banks and commercial lenders is how much reassurance they need. Banks will drill in on how you manage cash and adhere to your budgets. They may issue you a recourse loan requiring you to pledge collateral in the form of business and/or personal property and other assets. A popular approach is to measure your average bank balance and the number of deposits your business makes each month. Refreshingly, PHAZIS takes a different approach toward lending. For example, one of our loan products, Flexible Funding, conditions the loan amount and repayment terms upon your outstanding receivables or future credit card sales. You don’t sell off your receivables. Therefore, you avoid high factoring fees.
4: Explore all your financing options
Sometimes, a simple term loan is not your best option. While a bank might be constrained in the types of financing it can offer, PHAZIS gives you wider variety of choices beyond term loans:
- Our Flexible Funding program offers financing of up to $5 million based on your future cash inflows rather than your deposit history.
- PHAZIS’s Line of Credit of up to $500,000 allows you to pay interest only for the amount of capital you need when you need it, in monthly or weekly payment periods.
- Explore all the options and choose a financing structure that works for your business.
If qualifying for a bank is taking too long and costing you too much, explore your options with PHAZIS Funding. You might qualify to get a traditional Fixed Term Loan, accessible Line of Credit or Flex Funding cash. We invite you to apply for funding online in under 3 minutes or contact us for a free, no-obligation consultation with one of our Business Growth Advisors. We could be funding your plans within 1-2 business days, letting you get back to the important task of growing your business!