There is nothing unusual about a small business seeking to borrow money. The two biggest questions the owner must face are:
- How much will I be able to borrow?
- How much interest will I pay?
The two questions are interrelated, because they are tied to how a lender evaluates your loan application. Whereas banks look almost exclusively at credit score, a good online lender such as IOU Financial takes a more holistic approach to your business and determines your small business loan rate accordingly.
The Holistic Approach
The three key factors we use to determine interest rates are:
- Credit Rating: Unlike a bank, we use credit ratings as just one component when underwriting a small business loan. The credit rating is a mix of your FICO score and your credit history. Because we look to other factors as well, a low credit rating doesn’t disqualify you from getting a loan at IOU Financial or force you to accept an astronomical interest rate. In fact, our rates are quite affordable and about half of what you’d pay for merchant cash advances. Folks can boost their credit ratings by handling credit responsibly, pay back loans on time, and keep your company’s debt-to-equity ratio reasonable.
- Cash Flow: Lenders set interest rates based on prevailing economic conditions and the risk that the borrower will default on the loan. One way to reduce that risk is to have a positive daily cash flow – that is, you collect more money than you spend on a day-to-day basis. IOU Financial considers this to be as important as credit score. You see, we don’t bill monthly the way banks do. Instead, you repay us daily in fixed, manageable amounts. If you show that you are consistently generating daily positive cash flow, we know that you will be a less risky borrower and can offer you more attractive rates.
- Financial Condition: Finally, we take a look at several indicators of your business’ risk. We want you to own the bulk of the company yourself, or share ownership with your spouse. Long-lived companies are less risky, so we want to see borrowers with businesses that are at least one year old. If you run a retail business (online and/or bricks and mortar), we want to see you generate monthly at least 10 bank deposits. Higher volumes can help with loan access and interest rates. It’s also helpful if you earn an annual revenue of at least $100,000, and that you average at least a $3,000 end-of-day balance in your bank account.
We use advanced computer algorithms to assess all three key factors when determining your loan APR. These quickly tell us whether you qualify for a business loan (85 percent of our applicants do) and how much interest you’ll pay. The nice thing is that we don’t charge fees for applications, processing or early repayments. You are charged simple interest on the amount you still owe, and no more.
We invite you to apply for a loan of up to $150,000 from IOU Financial. You’ll find our service is superfast and you’ll appreciate the low APRs available. Contact us today at (844) 750-8468!
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