A bank statement business loan (revenue based loan) is a loan that is based among other things on the past 3-12 months of bank statements showing that the average monthly deposits, withdrawals/expenses and average balances will support the loan payments.
A bank statement small business loan could be your business's lifeblood and provide it with several financial benefits. When your business is growing, you may need a quick injection of cash to continue its growth. Bank loans are often times too restrictive, not to mention near impossible to get these days. In this situation, a revenue based loan may be the best solution for your business goals. If you use it wisely, a revenue based loan could do wonders for your business. As they say, “cash is king,” and without being capitalized, chances are you will wind up in a growth stalemate. Here are three ways that revenue based loan can save your business.
It helps to grow your business
If your business is under 2 years old and starting to scale, you obviously want to ride the wave. You cannot do this without a dependable source of capital. Bank criteria is typically a minimum of 2 years in business, however a revenue based lender will fund newer businesses. This type of loan will give you a shortcut to cash since it only requires a few months of business bank statements, whereas banks require two years tax returns and countless other documents. This is especially advantageous if you have cash flow issues, or strong cash flow coupled with high expenses. Many times, your bank statements are enough to demonstrate to a revenue based lender that you can repay your loan.
Get cash quickly
You're busy running a business and you don't have to time to chase after loan sources. All you know is that you need cash quickly and even if you could get approved for a bank loan, is it really worth all the trouble? A revenue based loan will provide cash quickly with a very short turnaround time. If you are prepared to apply for a revenue based loan and have the appropriate supporting documents ready to go, you may be able to get funding in a matter of days. Compare that to a bank loan where the shortest turnaround time is 2 weeks, but typically 4-8 weeks. This is one of the main advantages of a revenue based loan. Some businesses actually consider this a lifesaver, and will go this route over a bank loan any day.
You won't have lingering debt
A revenue based loan will not weigh you down with long-term debt. When you obtain this type of loan, you will not be looking at 5 to 10 years to repay a loan for money that you're using today. Think about it, why would you want to headache of paying off a 2015 marketing campaign in 2025? Not to mention, having this type of long-term loan could hurt your chances for getting funding in the future. With the revenue based loan, you will pay it off in roughly 6-12 months, which makes more sense for short-term expenses that you just need to grow your business and boost revenues. One more thing to point out, going the bank route you also have to be aware of is the up-front fees’ such as ones from SBA carriers, referral fees, packaging, guarantee fees, and sometimes closing costs. Also, banks will take first position on your UCC filing, require a personal guarantee and many times insist you put up your home as collateral.
As you see, the preceding three steps show you how a revenue based loan could be advantageous for your business. It helps you grow your business quickly and it does not saddle you down with long-term debt. It gives you the cash that you need quickly, to grow your business your way. What more could a growing business need? The only thing that you have to be conscious of is ensuring that your return on investment will allow you to repay your revenue based loan. Once you have that in mind, the revenue based loan may very well be your best solution for solving your businesses cash flow problems. This could be a lifesaver for your business.
For more information on bank statement small business loans, or other types of revenue based business funding options, call (855) 998-LVRG or click below to get started.