Since the financial crash of 2008, banks have become a great deal more conservative. Whilst they still provide the vast bulk of small business finance, they’ve significantly tightened their lending criteria, meaning that in a large number of cases the computer emphatically says no. Even when they are prepared to accommodate borrowers’ requests, they generally require sight of a broad range of documents, making the application process complex and time-consuming – whereas entrepreneurs would rather spend their time building their business.
Enter Cashsolv. As an alternative lender, we apply quite different criteria when considering applications, and will often say yes when a bank won’t. What’s more, there are seven sets of documentation and information we don’t require, saving you time as well as reducing the risk of a refusal.
1 Personal credit score
You may be wondering why an application for business credit would involve your personal credit score in the first place. However, banks will often demand this information and decline a loan if they don’t like what they find – even if your company is going from strength to strength. Their thinking is that if you have a record of responsible borrowing as an individual, then you are likely to display similar conduct as a business owner. Credit scores range from 300 to 850, and in general you would need to score at least 600 (and preferably above 700) to get a good deal from a bank.
2 Personal tax returns
As with your personal credit score, a bank may be very interested to examine your tax returns as an individual. With small businesses, banks tend to scrutinise their owners’ personal finances in depth because there is a limited commercial track record on which to base a judgment. Assembling three years’ personal tax returns can be quite time-consuming, distracting you from the more important task of keeping your business moving forward. Further, there’s always a possibility that the bank will see something it dislikes, meaning a refusal even though your business is performing very well.
3 Business plan
Compiling a detailed, fully costed business plan isn’t an easy undertaking. Not compiling a detailed, fully costed business plan virtually guarantees a refusal when applying for a bank loan. Your bank will want a clear understanding of what you propose to do with the money you borrow and how it will pay dividends in the future – as well as clear and considered projections of future sales, profits, cash flow, income and so on. They will always want to know what makes your company stand out, where you see it growing and how you believe it can carve a unique niche for itself in the marketplace. We’ll simply try to gauge your ability to repay your borrowing or assess the quality of any assets you can offer as collateral.
4 Business tax returns
Banks use three years’ business tax returns to verify two things – whether the revenues you’ve claimed are genuine and whether you’re up to date with your taxes. We’ll be happy to take your word for your income and we’ll focus on your ability to repay the loan, allowing you to concentrate on moving the company forward instead of compiling paperwork.
5 Accounts Receivable Aging
Your first question may be: what is an accounts receivable aging? Not nearly as complicated as it sounds, this is simply a spreadsheet that breaks down your outstanding invoices into age brackets (for example, Current, 31-60 Days, 61-90 Days and 91+ Days). By monitoring and tracking this information over time, you can understand how efficient (or inefficient) your company is at collecting payments. There’s a good chance that you compile this information anyway, but if you don’t then it’s one more time-consuming task you will need to undertake in order to stand any serious chance of obtaining a bank loan.
6 Entity type
The legal status and taxation of your business will partly depend on its structure – whether you’re a sole trader, partnership, limited liability company or public limited company. This information can also give lenders insight into how you think and work, how financially astute you are, and how ambitious you are for your business to succeed. At Cashsolv, we’re more interested in how you are likely to behave as a borrower, so we won’t need to interrogate your business structure in such depth.
7 Work history/CV
Not every lender is going to insist on studying your CV, but banks do sometimes request this. But what are they looking for? Well, they may want to see how deeply you understand your industry, whether you have previous experience of running a company, or whether you have any specialist qualifications that could give you the edge in a crowded marketplace. With us, keeping your CV up to date simply isn’t a necessity.
As you can see, Cashsolv offers far greater flexibility when assessing applications, plus a process that is much more streamlined and a great deal less onerous. But that’s only half the story: what exactly can we do for you that a bank can’t? Here’s an overview of three of our most popular small business solutions.
Emergency loans
Even the most carefully controlled business can hit the occasional cash flow crisis. In fact, these pitfalls most commonly occur for companies that are profitable and growing. That might sound counterintuitive, but when you enter into a phase of rapid expansion you will need to invest in new people, equipment and of course raw materials before you get paid. If your new customers are slow in paying, you can find yourself unable to meet your financial commitments and facing liquidation even though your prospects are excellent. Cashsolv can keep you out of trouble with an emergency loan.
Whether you need to borrow as little as £20,000 or as much as £250,000 to meet pressing financial commitments, we can have the money inside your account within 24 hours. We can promise no delays and a simple, streamlined application process. In short, there’s no better way to absorb a sudden financial shock.
Asset-based finance
For longer-term borrowing for strategic purposes – such as investing in new premises, plant or people or funding a major marketing campaign – we recommend asset-based finance. As its name suggests, asset-based finance enables you to borrow against the value of your plant, premises or equipment, with repayment being made over a number of years.
One big difference is that with asset-based finance, we use a panel of lenders. This has two advantages: it enables us to negotiate the best possible interest rate for you and it means we should be able to offer you a loan even if one or more of our lenders is cautious to lend within your business sector. Furthermore, since the loan is secured on an asset, we won’t need to see reams of paperwork to prove your creditworthiness – you can eliminate the seven requirements listed above, for a start.
Invoice factoring and discounting
If you’ve never considered invoice factoring and discounting, it’s time you did: these innovative solutions can tame a troublesome cash flow forever. How does it work? Simple. As soon as you issue an invoice, we lend you up to 85% of its value, with repayment being made when your customers pay you.
So what’s the difference between the two solutions? With invoice factoring, we take control of your debtor ledger and assign experienced credit control professionals to negotiate with your customers to secure early payment, thus minimising the amount of interest you pay. This solution is ideal if you do not have a dedicated credit control team to deal with debtors.
In contrast, with invoice discounting, we solely provide the finance and leave you to manage your own accounts receivable. This solution is likely to suit you if you have an established accounts team who have built strong relationships with your customers. The advantage is that your customers do not find themselves dealing with a third party, and of course the fees are lower (though if payments are slower, the extra interest could easily outweigh this).
How to take the next step
As you can see, Cashsolv can offer an innovative range of business finance solutions and an application process that is far less onerous than that of a bank. Unlike most banks, we don’t rely on computer algorithms to make decisions, instead considering each and every application on its own merits.
If you believe that Cashsolv can provide the finance your bank can’t, we’ll be happy to arrange a tailored package for you. In the first instance, we invite you to contact us for a free, impartial and completely confidential discussion about your needs and circumstances. Naturally, there is no obligation whatsoever at this stage – and unlike a bank, we won’t need to see piles of paperwork.
How we process applications
After you have contacted us, we will review your requirements in depth and try to gain an expert understanding of your unique circumstances. We will then be happy to recommend a number of solutions, and we promise that you will find the entire process both stress and jargon-free.
Of course, before making an in-principle decision, we will need to see certain financial documentation, but our requirements will be far less exacting than those of a bank or conventional financial institution. As already stated, your personal credit score, personal tax returns, business plan, corporate tax returns, accounts receivable aging, entity type and work history/CV simply won’t enter the picture.
The timescales you can expect
As we’ve indicated, emergency loans are intended for situations where there is no time to spare – you have bills in front of you that you simply can’t pay and you need cash immediately to stay in business. For this reason, we can have the money inside your account in under 24 hours.
With asset-based finance, intended to meet longer-term borrowing requirements, the loan generally takes two to three weeks to arrange, though we can act faster if you need the money quickly. Finally, with invoice factoring or discounting, the set-up time is usually three to four weeks, but after that we can lend up to 85% of the value of your invoices virtually the instant you issue them.
Cashsolv is here to help
Cashsolv is a company that exists for one purpose and one only: to provide the finance to keep small and medium-sized companies in business and growing. Unlike a bank, we don’t need a pile of paperwork to reach a decision and we don’t rely on centralised algorithms or inflexible lending criteria imposed by head office.
In short, we’re here to make finance work for your business. If you want fast, hassle-free business finance (and you don’t want to spend days putting paperwork together), it’s time we talked. To learn more, please visit our business loans page.
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