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7 FAQs on Capital Loans for Wholesale Companies

FAQs capital loans wholesale companies.jpgYou can’t grow a wholesale company when you’re broke.

As a wholesaler who’s facing cash-flow problems, it may be time to get your financial house in order by applying for a capital loan.

If you haven’t ever applied for a capital loan before, it’s perfectly natural to have a lot of questions. To make the decision-making process easier on you, here are seven of the most common questions our customers ask us—and detailed answers that should put your mind at ease.

How long does it take to get a capital loan?

It depends where you turn to for money. If you try to secure a loan from a traditional financial institution or the Small Business Administration (SBA), it can take two or even three months before money is in your business’s bank account. If you try to partner with a venture capitalist, it might take even longer. For the fastest funding available, look for a non-bank lender. These alternative financiers can fund your business in as little as 24 hours.

How hard is it to get approved for a loan?

Once again, it depends where you apply. In the aftermath of the 2007–2008 financial meltdown, banks are approving fewer and fewer small business loans. Generally speaking, they prefer to fund businesses that have perfect credit scores and flawless financials. It’s similarly tricky to get funding from the SBA—and even harder to convince a venture capitalist or angel investors to finance your operations. For this reason, many wholesalers look to non-bank lenders for capital loans. They are much likelier to approve financing.

What can I do with the money?

When you get a loan from an investor or a bank, you will almost certainly have to spell out precisely how you intend to put the money to work. Non-bank lenders, on the other hand, offer small business owners much more flexibility. You can use a capital loan from a non-bank lender to buy new equipment, open a new location, remodel an existing location, improve your marketing outreach, and more.

Can I get a capital loan even if I have a bad credit score?

Banks won’t finance your business if you have a poor credit score. Venture capitalists and other investors might think twice, too. You can, however, get a capital loan from a non-bank lender even if you have a suboptimal credit score. Your business just needs to be able to demonstrate the ability to generate revenue consistently.

Do I need collateral in order to secure a loan?

In virtually all instances, banks will require borrowers to put up collateral (e.g., a car or house) in order to secure financing. That way, in the event a business collapses and the owners are unable to repay their loans, the bank will make its money back by selling the collateral. Non-bank lenders make no such stipulations. For this reason, they understandably tend to attach slightly higher interest rates to the loans they provide.

What documents do I need to apply for a loan?

Many types of lenders—including banks, the SBA, and venture capitalists—ask small business owners to turn over mountains of documents during the loan application process. This is particularly challenging because it can take a lot of time to track down each requested item. Because these kinds of lenders are stingy with their funding, the volume of documents required deters many small business owners from applying for financing in the first place. While non-bank lenders will ask you to submit some relevant information while applying for a loan, you should be able to complete the entire application process in 15 minutes or less.

Will I be able to get enough money to grow my business?

If you’re able to secure financing from a bank, the SBA, or an outside investor, you will most likely be able to get however much money you need. The same holds true for industry-leading non-bank lenders that tend to underwrite loans of up to $1 million.

To learn more about how your wholesale business can benefit from a capital loan, check this out.

The small business loan process