Starting the process of obtaining funds for your company is an important step, and at MG Merchant Services, we are dedicated to making this process as straightforward as possible. Let’s dive in as we walk you through each step of the application process.
WHAT IS THE APPLICATION PROCESS?
- Fill out a one-page application.
- Consult with our advisors on the best funding option for your business.
- Provide the required documents for your selected funding options.
- Get your application approved and funded!
DOES MY CREDIT HISTORY MATTER?
Your credit score is an important aspect of getting funding. While it is not the primary factor of acceptance, it substantially impacts the cost and conditions of your loan. A lower credit score indicates a more significant risk, which can increase your interest rate. If you want a lower interest rate to help pay off your loan quicker, consider enhancing your credit score first. Otherwise, as long as you have a FICO score of 500, we can assist you in finding a business loan.
WHAT ARE LENDERS LOOKING FOR?
The Debt Service Coverage Ratio (DSCR) is a crucial factor for lenders to assess a business’s ability to repay its debts. The DSCR is calculated by dividing the cash inflow before expenses by the yearly loan payments. The DSCR is a critical factor in lenders’ decision-making process, as it helps them determine if a business can afford additional funding. To approve business funding, lenders consider factors such as bank payment history, outstanding loans, business industry, and rent/lease agreements.
Frequent negative balances, high deposits, and revenue trends can indicate a business’s financial health. Therefore, lenders prefer fewer than 3 to 5 days with negative balances per month. Industries with robust cash flow get approved quicker, and those with weaker patterns may face more rigorous underwriting standards.
WHAT ARE COMMONLY REQUIRED DOCUMENTS?
Small business funding products vary in terms of documentation required by lenders. Common documents include:
- Bank statements, you will typically need 3-4 months, while larger loans will ask you to provide up to 12 months.
- Business licenses or certifications may be required depending on the state.
- Proof of business ownership may include articles of incorporation or related documents.
- A copy of the lease agreements for business property.
- General identification, a driver’s license or equivalent.
Additional documents for loans above $150,000 may include:
- Personal tax returns.
- Business tax returns.
- A balance sheet.
- A profit and loss statement.
- A business debt schedule.
These documents help determine the business’s financial health and determine the most viable payment structure for the loan. Preparing for these documents ensures optimal funding results and a quicker turnaround time.