No matter how you’re going about getting funding, alternative lenders, banks, private equity firms, venture capitalists, and other investors need to be sure they will get a return on their money. In order to ensure your company is a safe financial investment, you must have the following business funding qualifications:
- Have been in business for at least six months – this will show lender and funders that you are established and reliable, and not just some fly-by-night operation looking for free money.
- Be established as an LLC, limited company or S corporation – establishing your business is extremely important for legal reasons as well as receiving funding. These categories determine how your business is structured to handle liability and cash flow.
- Have a credit score of at least 500 – credit score qualifications vary by institution. Banks require 700 and up, while FundKite may accept 500. FundKite understands a business may have low credit from a mistake made early on, or may have a very high credit score from being so new. Performance and potential is more important than a high score when seeking business funding in alternative lending.
- Be able to pass a background check – some background checks can produce information signaling the applicant is untrustworthy or morally misguided. Not all funders will look into a background check, but if you are reflecting your business, it’s important to have a clean slate just in case.
- Have gross monthly sales of at least $10,000, yearly of $100,000 or a solid business plan – the numbers all depend on what industry you’re in and how long your business has been around. The higher the revenue the better, because even in a slow month it is less likely the business will miss a payment.
- Have a business bank account – business financing institutions are much different than personal loan institutions. You must prove you are an established business with an official bank account. Underwriters will often look at bank statements to determine what your revenue flow is like and how much money your company can safely take on.
- Know what it’s for – if a lender or funder calls you and can’t say what they need the money for, they assume it could be a beach vacation in Bali. If you know you need to to buy a new oven or expand your facility for more orders, then say it. The companies providing the business funding like to know where it’s going.
Once you meet these qualifications, financing institutions are much more likely to feel you are a trustworthy business investment and would be happy to help you grow your company. Interested in getting funded with FundKite? Click here to apply!