Importance of Getting Pre-approved BEFORE You Need Capital
Most business owners would agree that they would prefer to borrow as little money as possible. But enticing expansion opportunities and unplanned emergencies are often unpredictable. So whether you need money to grow your business or to help weather a storm, it’s comforting to know that you’re eligible for the funding you may need. More importantly, it’s reassuring to know that you can receive money as quickly as possible.
What are the benefits of seeking pre-approval before you need capital?
Before diving into the pre-approval process, it’s helpful to know some of the many benefits of getting pre-approved early. In addition to being able to move faster once you need capital, you can proceed with greater confidence when a great business opportunity strikes. Here are the top benefits of seeking pre-approval before you need capital:
1) Be ready to capitalize on a life-changing opportunity
Imagine owning a medical equipment company and landing a coveted government contract for 500 ventilators during COVID. Now imagine you have to turn down the opportunity because you have no idea if you’ll be approved for the capital you’ll need to manufacture the equipment. Knowing that you’re pre-approved will give you the confidence to sign the contract and boost your revenue by $10,000,000.
2) Know how much you can afford to spend
A key advantage of being pre-approved is knowing how much money you can afford to spend. Whether you plan to use the funding to expand your offices overseas or to invest in new facilities, you will be able to set your budgetary parameters more easily. Without pre-approval, you are left to speculate about whether you are eligible for a loan and to guess how much funding you might be approved to receive.
3) Gain a better grasp on your finances
Going through the pre-approval process forces you to be prepared and take stock of your finances. This process can prove to be eye-opening and educational for some business owners who rely upon a CFO or controller to keep track of their receivables and assets. For instance, you may discover that your profit margin year to date is a lot thinner than you thought. Or you may find that your credit score is lower than you thought.
4) Discover opportunities for improvement
Not everyone who seeks pre-approval will receive good news. If you aren’t pre-approved, you can identify the weak areas on your application and start addressing them right away. Common deficiencies that can harm your chances of being approved include incomplete documentation, weak cash flow, and lack of collateral. You can also take steps to boost a low credit score to increase the likelihood you will be approved for funding.
5) You can enjoy peace of mind
The psychological benefits of having the pre-approval process under your belt cannot be overstated. You can rest easier at night knowing you can secure the capital you need to overcome an emergency or take steps to expand your business. And should a life-changing opportunity present itself to your business, you can focus entirely on your action plan as opposed to worrying about gathering documentation required for funding approval.
What are some common reasons why people fail to seek pre-approval?
- “We’re too busy to worry about pre-approval right now…”
- “Our business is doing fine right now…”
- “I don’t think we would be approved for funding right now…”
- “The pre-approval process takes too long…”
- “We already have some cash reserves set aside.”
The benefits of being pre-approved before you need capital are too compelling for savvy business owners to ignore. However, pre-approval is simply not a priority for many business owners. And some business owners have never even thought about applying for funding at all. There are many excuses behind this tendency but the majority of people who fail to seek pre-approval fall into one of three groups.
The first group simply doesn’t think about pre-approval because business is plugging along without trouble. The second group worries that they would be rejected for funding, so don’t even try. And the third group avoids the process because they think it would be a time-consuming hassle. Regardless of the reasoning behind the lack of initiative, it’s never pleasant to look back on a missed opportunity with regret that you did not take a simple step sooner.
What are the steps to being pre-approved?
Getting pre-approved for funding is an easier process than you may think. Today’s applications are often surprisingly short, with many applications for reputable funding agencies being only a page long. In most cases, there are three simple steps to getting pre-approved:
- Step One: Complete an application. Many of today’s top funding agencies offer a simple one-page application you can complete online.
- Step Two: Provide documentation. The type of documentation requested will depend on your business type and amount of funding needed.
- Step Three: Select your funding type. Your lender can review the various types of funding for which you are eligible.
Once you are pre-approved, you can take comfort knowing that you could receive funding in as little as 24 hours. And with the variety of different funding types available, you can choose the option that is the best fit for your business. Here are a few types of funding solutions for which you may receive pre-approval:
- Business line of credit: This option is a popular choice among project-driven businesses or those with pronounced peak seasons.
- SBA loan: This loan type typically offers longer terms and attractive interest rates. Most or all of the principal is guaranteed by the SBA.
- Merchant cash advance: This solution allows businesses to repay their debt by having a portion of their future sales sent to the lender.
- Equipment leasing: This option is a popular choice for medical practices that can’t afford to pay $1 million for an MRI machine.
- Invoice factoring: This type of funding enables business owners to receive capital based on their outstanding accounts receivable.
If you aren’t familiar with some of these alternative funding types, then it’s a good idea to carve out some time to speak with an experienced lending professional about the pros and cons of each. And because your business might be pre-approved for all the funding types listed above, it’s important to carefully compare how each type could impact your business.
What is the key to a smooth pre-approval process?
Securing pre-approval can be a difference maker to a business owner. But it’s critical to realize that not all lending organizations are created equal. The key to a smooth pre-approval process is to select a trusted, experienced lender who will guide you through the requirements. Ideally, the lender you choose will possess the following:
- A skilled team of lending professionals with decades of combined experience
- The ability to loan up to $5 million to approved clients
- A variety of flexible funding options, such as term loans, business lines of credit, and SBA loans
- An impressive collection of positive reviews from business owners
- Funding options for businesses in a variety of industries
- A personalized approach to their client relationships
- A positive standing with the Better Business Bureau (BBB)
Choosing a funding organization with these attributes will help put your business on the path to financial success moving forward. And in many cases, you may find that you continue to work with the organization long after your debt is repaid.
What can you do today to get started?
Now that you’ve decided to prepare your business for future opportunities, the next step is to get the process started. As one of the most trusted names in the lending industry, Moby Capital is here to help you make this process smooth and easy. In fact, you need nothing more than a computer or mobile device to complete your initial application. Here is what you can expect when you choose MobyCap as your trusted lending expert:
- A variety of lending solutions: We never use a cookie cutter approach at MobyCap. We offer all the funding types described above.
- Sound relationships and education: We will take the time to review all funding options with you to make sure you choose the best one.
- Detailed quotes: We will provide a written quote that carefully outlines key details, such as interest rates, terms, and fees.
- Unparalleled responsiveness: We know that every minute counts in the business world. We can help you secure pre-approval quickly.
- Business funding up to $5 million: We are proud to offer funding thresholds that are among the highest in the industry.
- A focus on the future: When you work with MobyCap, you can depend on us to help you with your funding needs for years to come.
To move forward today, please contact us by phone at (512) 237-7786 or by email at firstname.lastname@example.org As a BBB-accredited business, we have experience serving all industries and welcome the opportunity to work with your organization. Depending on your funding needs, you could have the capital you need within 24 hours. We look forward to serving as your trusted resource for all of your funding needs!