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If My Business is Profitable, Why Don’t I Qualify for a Loan?

Sometimes even profitable businesses struggle to qualify for traditional loans. Find out why, and how Flexent can help.

Why don’t I qualify?

If you’re a profitable small-to-medium sized business owner, and business is growing, you might find it hard to believe that you may not qualify for a loan. It’s a common misconception that occurs in small business lending. If working capital is all you need, Flexent might be the real solution.

Roadblocks to liquidity

Getting a loan can be easier if you’re purchasing a building, vehicles, or equipment. But if you simply need extra cash to pay increased staff or pay your suppliers before you get paid on the sale of inventory, getting a loan for “liquidity” can be much harder to obtain.

If your business is in a high growth mode; you work with slower paying customers; you are less than two years old; your balance sheet shows negative equity (for any reason); you have had prior year losses; or any other “negative” criteria – all of these can prevent you from getting a loan.

Not a fit for the traditional lending model

Banks tend to look at the value of your business building and equipment, your personal net worth, your debt service coverage ratio, and your credit score. They typically do not place much value in accounts receivables, inventory or future sales opportunities. If you need to support your growth with these types of assets, you may not be a fit for traditional lending models.

If that’s the case, then one of two things can happen. Either the bank can’t lend, or they can only offer you a much smaller line of credit than what you need, that in turn also ties up your business assets and limits your ability to borrow later on.

The popular alternatives aren’t a great fit either

You could review online lenders but that’s expensive and non-regulated. Venture capital firms will take a large portion of the equity in your company and may want to monetize their investment sooner than you wish. And of course, there’s always borrowing from family and friends… again.

What can you do? Flexent

Flexent is an alternative lending solution offering accounts receivable financing and asset-based lending to companies. This allows businesses in these models to either borrow against the strength of their invoices or inventory.

The best part is that it’s not based on what you own or what you’ve done in the past. It’s all based on future growth projections. Most companies can have a cash advance in hand within 24 hours.

Companies that find the most benefit with Flexent

Service-based industries like staffing, consulting, and engineering firms are typically a great fit for the Flexent model. Even wholesale distributers and manufacturers make up some of our largest clients and success stories.

Could the next success story be yours? Contact us today to find out at 804-695-8247.

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If My Business is Profitable, Why Don’t I Qualify for a Loan?

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