What Documents Do I Need to Get a Fast Business Financing?

Updated on:
June 8, 2023

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Applying will not affect your credit score

The trucking industry has been an integral part of the American economy, transporting goods and products from one place to another. However, the pandemic took a toll on the industry, followed by supply chain issues, leading to a struggling freight market and squeezing out owner-operators. In this post, we’ll provide a market update and explore whether the trucking industry will be better in 2023. Additionally, for those looking to get into the trucking industry, we will share insights on how first-time owner-operators can secure financing.

Streamlining the Application Process

When seeking business financing, navigating the application process can be time-consuming and complicated. However, there are several strategies you can employ to streamline the experience and improve your chances of securing funding quickly.

Utilize Online Funders and Digital Applications

Online funders have become increasingly popular among small business owners in recent years thanks to their faster application processes and competitive rates. By utilizing digital applications, you can submit your required documents electronically, saving time and making the process more convenient than visiting a traditional financial institution.

Many online funders also offer prequalification features, which allow customers to input basic information and receive an initial assessment of their eligibility without impacting their credit score. This can be a helpful step in identifying suitable funding before submitting a full application.

Research and Compare Funders

Before applying for Business financing, take the time to research various financial institutions, credit unions, and online funders, as well as various types of financing options like small business loan and lines of credit. Be sure to read FAQs and understand how each one varies and pay particular attention to interest rates and whether the product you are applying for features simple interest or compound interest . Looking at the annual percentage rate (APR) is a helpful indicator of the total cost of borrowing when it comes to loans, as it includes both the interest rate and any additional fees.

Another option would be an MCA which usually features a much faster application process. MCAs use factor rates (and thus don’t charge interest) which can provide a greater level of certainty when considering your cost of capital. You can learn more on that by clicking here.

Generally speaking, comparing rates, fees, and eligibility requirements can help you identify the best options for your business. Reading customer reviews and testimonials can also provide valuable insight into the experiences of other small businesses and help you choose a reputable funder.

Maintain a Strong Business Credit Profile

Your credit history and credit score play a significant role in determining your eligibility for business loans while merchant cash advances look at past and expected future revenue.

To create excellent credit, ensure you make timely payments to creditors, maintain a low credit utilization ratio, and monitor your credit report for any inaccuracies. You could consider debt consolidation or refinancing to further improve your score.

Separate Business and Personal Finances

Establishing a clear separation between your business and personal finances is essential for streamlining the application process. Open a dedicated business bank account and use a business credit card for company expenses to create a clear financial history for your business.

Essential Documents

Whether you are applying for a business loan, a line of credit or a non-loan product like an MCA, it is likely that you will need a mix of, or all of these documents to assess your creditworthiness and your company’s financial health. Having these documents readily available can expedite the application process.

  1. Personal Credit Report: Banks are likely to review your personal credit report to evaluate your creditworthiness and repayment history. A strong personal credit score can improve your chances of securing a business loan but isn’t typically vital for an MCA.

  2. Business Credit Report: Similar to your personal credit report, the business credit reports from the three major credit bureaus provide insight into your business’s financial history and creditworthiness.

  3. Proof of Identity: You’ll need to prove who you are. That means a driver’s license, proof of address, a social security number, and any other necessary contact information.

  4. Financial Statements: You will usually need to provide up-to-date financial statements, including balance sheets, income statements, and cash flow statements. These documents to understand your business’s financial health.

  5. Tax Returns: When applying for a small business loan, you will typically need both personal and business tax returns for the past two to three years to verify your income and assess your business’s profitability. With a non-loan product like an MCA, you may not need to provide tax returns at all.

  6. Bank Statements: Providing recent bank statements for both your personal and business checking accounts helps verify your financial stability and cash flow management. Any savings accounts can also show cash flow.

  7. Accounts Receivable and Payable: A list of your business’s accounts receivable and payable provides insight into your cash flow and outstanding debts.

  8. Collateral Documentation: If you’re applying for a secured loan, you’ll need to provide documentation for the collateral you’re offering, such as real estate, equipment, or inventory. This documentation may include property deeds, titles, or valuation reports. Remember, not all types of financing requires collateral. With a non-loan product like an MCA, this is generally not required.

  9. Legal Documents: Funders may require various legal documents related to your business, such as articles of incorporation, LLC operating agreements, franchise agreements, or commercial leases. These documents help verify your business’s legal structure and operations.

  10. Proof of Business Ownership: To confirm your ownership of the business, you may need to provide documents such as stock certificates, partnership agreements, or other legal documents indicating your ownership stake.

  11. Business License and Permits: Financiers may require copies of your current business license and any relevant permits to ensure your business operates legally and complies with local, state, and federal regulations.

Read Customer Reviews and Testimonials

Customer reviews and testimonials can provide valuable insight into the experiences of other businesses with a particular funder. They can reveal information about the customer service, the ease of the application process, and the overall satisfaction of previous customers. A good place to start is looking at a third party site with unbiased reviews like Trustpilot.

When reviewing customer testimonials, pay attention to recurring themes and patterns, as these can indicate common issues or strengths. Remember that while negative reviews can be informative, it’s essential to consider the overall context and weigh both positive and negative feedback.

Additional Factors To Consider

In addition to the factors mentioned above, there are other aspects to consider when choosing a funder:

  • Different funders may offer various types of loans, such as short-term loans, lines of credit, or secured and unsecured loans, or you can go with an alternative finance company who specializes in non-loan products like a merchant cash advance. Consider the type of financing that best suits your business needs and financial situation.

  • Ensure the funder offers the amount you require for your business needs. Some funders may have maximum or minimum limits that could impact your ability to secure the necessary funds.

  • Review the repayment or repurchase terms offered by the funder, including the repayment or repurchase period, daily or monthly payments, and any early repurchase discounts. Choose a funder with terms that align with your business’s cash flow and financial capabilities.

  • If you require quick cash for unexpected expenses or time-sensitive projects, select a company that can provide funding within your desired timeframe. Many MCA providers offer fast funding options within a business day or two of approval. Though they are not loans, a merchant cash advance could be the fastest option to consider.

Final Thoughts

Understanding the documents required can help you confidently navigate the application process. By providing financial statements, bank statements, tax returns, a business plan, and license and registration information, you demonstrate your company’s financial health. Build good credit, decide how quickly you need cash, and prepare your documents to make the process as simple as possible.

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