15 Mar Do you require financials for my short term loan application? No, we do not :)
Another in our series of ‘Question’s we are asked about short term lending’
A question we are asked pretty frequently is: “Why don’t you require financials when assessing a loan application?”
It’s a fair and reasonable question, that comes from people who’ve really only ever known traditional bank finance, and the hoops that need to be jumped through to get it.
Our funding method is a little different. We are more interested in the exit strategy, the end result.
To be blunt: how the loan will be repaid.
How short is short term lending?
Majority of our short term lending is less than 12 months.
Why, you ask, would we lend for less than 12 months?
- Our lending fits a clients’ specific, time-bound need
- Short term lending with an exit strategy doesn’t require financials
- Often no valuation is required
- We don’t like to be tied down!
- It’s not prudent for our funding partners to keep all their eggs in one basket for long periods of time
- It has less requirements for our clients…..here’s where the financials DON’T come into play
How does it all fit together?
An exit strategy supports the short time frame of the loan. It means you don’t need to prove, through the provision of financials) that you can service a loan facility over a 20-year term.
Short term business funding provides funding for long enough that you can complete your project, execute the exit strategy, and move on.
Our goal is to support businesses through their immediate need, then help them find a long term solution that works.
Using an exit strategy over a full financial analysis ensures that we can get you an approval, and the subsequent cash, quickly and easily.
There are no credit teams, no corporate silos, no offshore analysts.
Just your deal, based on its stand-alone merit.
So what is an exit strategy, and how do I find one?
An exit strategy refers to how you will pay out the loan at the end of the term. All loans have them, if you’ve had a home loan, you will likely know of a particular exit strategy by the name ‘monthly repayment’. In our world, monthly repayments don’t exist. Our exit strategies are paid generally in one lump sum at the end of the term, there are no monthly repayments.
Your exit strategy could be through:
- Sale of an asset (quite likely what you are funding if you are completing a development)
- Refinance of the loan to a traditional funding partner (for example a bank)
- Repayment from business cash resources
- Business partner buyout
It’s important to have a plan, upfront, about how your project will reach its conclusion.
So now that I have my exit strategy, what can I fund?
- Opportunistic purchases of stock or property requiring quick action
- Covering unplanned expenses (new manufacturing equipment, customs requirements, buying out a business partner, etc.)
- Boosting cash-flow to smooth out peaks and troughs
- Paying out existing debt
- Buying out a business partner
- For urgent property settlements
- For bridging loans between the sale of one property and the purchase of another
- Expansion of business when extra space, equipment, or staff are needed
- Premises refit/refurb
How do I get started?
Drop us a line here and one of the team will be in touch to discuss how we can help.