Traditional lenders are still skeptical when it comes to local, independent enterprises. Alternative lenders are great. But, you need to meet certain requirements to be a viable candidate.
Here’s a to-do list that will be of help… and make sure your business is organized enough before filling in the loan application.
- Get the best insurance policy: Make sure your business has an excellent insurance that covers property damage, floods, fires, accident insurance coverage for your employees and customers. Auto repair shops are at a much higher risk than other small businesses when it comes to property damage as they work with flammable materials like oil and gasoline . This factor may impact the view of your business strength in the eyes of the lender.
- Keep records: Remember, keeping complete and accurate records of your financial activities are extremely important. Yes, alternative lenders are more relaxed than banks, but you will still need these records to allow lenders to gauge your company’s finances accurately and suggest a reasonable payback plan. Also, consistent record keeping will help you earn their trust; unclear records may lead to unnecessary doubts.
- Utilize credit cards: Many auto repair shops are ‘cash only’ enterprises. But a large number of alternative lenders provide a lump-sum payment to business owners in exchange of future credit card sales (you may know this already, as ‘merchant cash advance’). To get fast cash and working capital, utilizing credit cards is a better idea if you want to explore alternative lenders.
- Comply with the law: Ensure you follow the laws and regulations strictly. No lender would want to do business with a company that does not follow the legal guidelines.