The secret is out, working capital advances are no longer a quiet niche in the Alternative Lending landscape or even in the larger financial services industry! While many thousands of small to medium-sized businesses (SMBs) have taken advantage of this fast and efficient lending product, most business owners are still unaware of what it takes to be approved.
From the desk of our Underwriting Manager Aaron (and undisputed Ping-Pong champion of the office!), here are some basic requirements to understand as you consider applying for a working capital advance:
- Revenue Most alternative lenders to SMBs will require $15K/month in gross revenue, and it should be consistent over the past three months.
- Number of Deposits Underwriters like to see a minimum of 4-5 deposits each month, but 10 is ideal. Due to the unsecured nature of these advances, multiple deposits ensure the lender that you have several different sources of revenue.
- Average Daily Bank Balance This is important, and often overlooked! It is vital that a business maintains a minimum positive daily cash flow, i.e. average daily balance. Many of these advances are paid on daily business day, or weekly, schedules. To take on recurring debt payments, the business needs to demonstrate its ability to meet its financial business commitments while maintaining a reserve for unexpected expenses, before considering additional debt liabilities.
- Time in Business This can vary by lender, but in general, 6+ months of operating history will give your business the best shot at receiving an approval.
Before applying for a working capital advance, be sure you can provide at least the past three months of business bank account statements (account must be in the business name). You should have your driver’s license and a voided check for that business bank account available as well, should you be approved and decide to move forward. On some larger deals, a tax return is sometimes necessary. You should expect a response no later than 24 hours from submission, and if approved and you accept the offer, funding can take place in a little as one business day.