Business Bank

Statement

Business Bank Statement

To get any type of funding (debt/equity) from us at all, we will need to see your business bank statements to better understand how your company is managing its finances. Your bank statements provide an overall view of your income and expenses and help lenders determine if you’re a strong candidate for funding and/or the amount requested.

You can NEVER get a loan from us without a business bank account and/or business bank statement.


Why a bank statement is required for funding from us
Your business bank statement impacts your ability to access a loan or other financing. While, your business bank statement is required for all funding application with us, it is very vital for any of our collateral-free loans. We will review several months of your company’s bank documents to get an idea of your average daily balance, cash flow and income. If you were an employee at a business and applying for a loan, the lender would request your personal bank account or payslips to prove you had a steady source of income.

Same with a business. As a small business owner, you don’t have a payslip, so your business bank statement is a key document. It gives us insight into whether you can repay the loan you’re requesting and alerts us to potential lending risks.


What we look for in business bank statement
Using a bank statement allows a lender to verify if you meet the loan requirements.

For example, a low or negative account balance warns us that an applicant might be unable to handle repayments. Bank statements will also show recurring payments you’re making and any deposits made by another funding company. Depending on how much these financing amounts affect your statement totals, we might realize that your business can’t meet the minimum balance requirement on its own.



List of WARNING SIGNS when reviewing business bank statement

Non-Sufficient Funds
Your average daily balance says a lot about the way your business functions.

If a company’s bank statements indicate a struggle to keep a positive daily balance, getting approved for a collateral-free loan may prove difficult. We use your business’s bank statements to determine whether you’ll be able to repay our investment. Avoiding non-sufficient funds and overdrafts is a part of keeping your account balance positive. That isn’t to say that 1 or 2 incidents will diminish your chances of getting a collateral-free loan.

Keeping your account balance positive and minimizing your amount of non-sufficient funds and overdrafts will help increase your chances of approval.



Daily Deposits
Here’s another thing why we ask for bank statements and we want to see: frequent deposits to your account. If your business is receiving multiple deposits a day, your business is, in general, viable.

However, if you haven’t received a deposit in weeks, we might shy away from financing your business. A lack of daily or frequent deposits can result from a handful of things, none of which are particularly promising for your business’s chances of being approved.



Recurring Payments
We will also scan your bank statements for any recurring withdrawals. This confirms if your business is already repaying a debt owed to another lender.

Some lenders will shy away from being what’s referred to as a “second position” lender because there’s an increased risk of loss. Legally, if a business defaults, the second lender must wait for the original lender to be repaid before they begin seeing compensation for their loss.

If your business is repaying pre-existing debt, it doesn’t mean you have no chance at being approved — but we will want to know of any remaining balances your company may have.




How Do We Verify Business Bank Statements?

We want your financial institution to confirm your business bank account details with verification (or proof) of deposit (VOD or POD). The request and fulfillment requirements vary from lender to lender. Sometimes we can directly confirm details electronically (helps lenders authenticate customers’ account information).

However, other lenders might want you, the borrower, to obtain physical documents, including a letter on your financial institution’s letterhead.

Verified information can include the following:

• Your account number and type
• Balance
• Names on the account and any authorized signers
• Account open and close dates
• An audit trail of your business bank account’s deposits



Key Takeaways
All the bank statements we review should indicate that your business is healthy and consistent at the end of the day.

While the definition of a “healthy business” varies from lender to lender, if your business is making enough to operate comfortably while paying expenses, employees and debt, then chances are, you’ll be considered a good candidate by us and even other lenders.

Although minimum time in business requirements varies by lender, you’ve demonstrated your consistency if your business has shown the ability to turn a profit. This is incredibly important for us to see because we want to ensure that your business is sustainable before extending capital to your company.

Don’t be afraid to share your business’s bank statements with us, even if you’re worried they aren’t impressive.