What Do Commercial Lenders Look for Other than Personal FICO?

 

Bad credit doesn’t have to stop you from getting a business loan. Some lenders look at a variety of factors, not just personal FICO. The more informed and thus prepared you are, the better your chances of finding funding. Below are a few key elements that lenders, like First Union Lending, consider when determining whether or not to underwrite a business loan:

1. Annual Revenue

How much is your company bringing in? This is hugely important when it comes to qualifying for a loan. If you have high revenue, lenders are going to take your request more seriously. If your credit is less than ideal, sizeable annual income is certainly going to help offset some of the impacts of that FICO score.

 

2. Are You Profitable

With bad credit especially, being able to show that your business is profitable can go a long way with lenders. You don’t, of course, have to be profitable to get a small business loan, but it helps if you can show a good track record and positive forecasts.

 

3. Debt Obligation

If you already have a business loan in repayment, it may be more difficult to procure a new one. Lenders want to know how much debt you currently carry before processing any loan request. With a loan out there already, that would put any new lender in the second position—and this is not something that most financial institutions want to deal with. However, First Union Lending will consider the second position. Especially if you have the financials and revenue to back up your loan application.

 

4. Cash Flow

The question is, will you be able to make your loan payments? To do this, you need to be able to show positive cash flow. In other words, does your company have enough on hand to cover this extra cost that you will accrue? Many lenders will generally ask for 3-6 months bank statements as well as additional documentation to verify cash flow.

 

5. History

While this seems an all-encompassing term, lenders are going to want to flesh out some of the details that might otherwise be on your credit report. For instance, are there any bankruptcies or foreclosures? What led to these? Are there any other red flags? This is why even if you do have bad credit, it is so critical to understand your credit report and have any relevant documentation to support it.

At First Union, we specialize in finding loans to suit a variety of situations. Even if you have bad credit or some other potential red flags, we can work with you to come up with a plan for financing. Don’t hesitate to contact us at 863-825-5626 today!

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