As you probably know, banks proudly advertise that they offer working capital loans. In fact, walk into any branch and you’ll find posters, brochures and other happy things that focus on “supporting businesses” and “offering a helping hand”.
However, when you go behind the marketing hype and finally learn about bank working capital loan requirements, the story changes – and it’s not full of support and helping hands! Rather, it’s full of staggeringly, unrealistic requirements; all of which are designed to help banks AVOID approving working capital loans to any applicant who they perceive as risky or unprofitable.
Specifically, here are the requirements you’ll be expected to meet if you apply for a working capital loan from your (not-so-friendly) neighborhood bank:
Extremely good credit.
Have a few dents on your business or personal credit score? Expect banks to hit the alarm bell – especially if you’re a small or mid-sized business. Then you essentially don’t stand a chance. They might not even give you a calendar!
2+ Years of Credit History
In the real world, businesses launch each day and it only takes a few months for a business to start putting down roots and needing more working capital. But in the “bank world”, businesses are risky, scary startups for at least the first two years of existence; though in some cases longer. As such, if you don’t have at least two candles on your business’s birthday cake, banks aren’t even going to give your application a second glance.
All bank working capital loans are secured by collateral – and there is no way around this (even if you’re next-door-neighbors with the bank manager and his kid is on the soccer team that you coach).
What’s more, banks have a funny way of evaluating collateral that works like this: take the fair, realistic market value of any asset (e.g. property, vehicle, equipment, etc.), and reduce it by anywhere from 25-50 percent. That’s what banks will say it’s worth. Not happy with their insanely low evaluation? Too bad. Banks don’t care.
Working Capital Loan Requirements that MAKE SENSE!
At Mulligan Funding, we have working capital loan requirements, too — except ours MAKE SENSE. That’s why we don’t demand perfect or even good credit, we only need to see 2-3 months of cash flow numbers, and we don’t require collateral of any kind.
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!