Troy, MI (PRWEB) January 15, 2013
1st Capital Loans, a Michigan based business development firm, announces today a new Small Business Growth Loan to assist small businesses with working capital for any business purpose.
The product is available for virtually any business in any industry except those involved in the financial sector. To qualify, a small business owner needs just 11 months in consecutive operation, a 520 fico score and $200,000 in annual gross sales. The amount of approval is based on 5% - 10% of the annual gross sales of the small business, so a small business with $500,000 in annual gross sales can expect $25,000 - $50,000 in approval. Liberal underwriting conditions and consultative pre-qualification measures allow for approval rates of 50% - 60% of all small business applicants, with an average of 3-7 business days from the time of application submission to close on the funding.
All funds are deposited directly into the operational bank account of the small business. The structure of the loan works similarly to a continual line of credit, where once the loan is initially funded and the balance on the first loan comes down to 60% paid, a renewal process can be initiated. When the renewal is initiated, the small business applicant is funded the full amount of the renewal but does not have to begin paying down on the renewal loan amount until the first loan’s balance is paid in full. This provides a free "floating" period giving the small business applicant a longer period in which to pay off the renewal monies without any additional costs for the financing. The process also provides a higher accessibility of capital for the small business applicant allowing for continued investment back into the operation to stimulate growth. This structure continues for the duration of the relationship as long as the small business applicant desires additional renewals.
No physical collateral is used to fund the loan, as the loan is backed solely by the forecast of sales going forward of the small business. As a result of the higher risk associated with the lending procedure, the loan is structured with cost factors and short payback periods that are set at the time of approval. The cost factors vary based on business type and time in business, along with credit analysis results, but the range can be anywhere from as low as 10% to 25% on average for short payback periods of 8 – 12 months, and 25% - 30% for longer payback periods of 15-24 months. For example, an applicant that’s approved for $100,000 with a 12 month payback period and a 25% cost factor will have a total payback amount of $125,000. Choices of payback structure can be fixed or non-fixed, with the above example having the payments divided up in monthly payments of $10,417 or weekly payments of $2,604. For seasonal businesses or businesses that prefer to not utilize a fixed payment schedule, the payment can be taken from a percentage of the daily gross sales of the business, where the percentage calculated will be determined based on the average daily sales amount of the business, coupled with the approval and payback period structured.
Small business owners traditionally seek external financing at least once in a 12-24 month time period for a variety of business purposes, and due to the difficulty of obtaining equity financing, the majority usually seek out debt financing products via large or small financial institutions. Nevertheless, the financial crisis of 2008 led to these same financial institutions tightening their underwriting policies to small business owners, making it difficult to obtain loan approvals to fund the vast amount of small business needs. The loan from 1st Capital Loans will provide small business owners with another option when traditional sources of working capital aren’t available for business emergencies, business opportunities, renovation projects and other business purposes.
1st Capital Loans is a business development firm focused on providing innovative small business financing and business development solutions to assist the small business owner with growing, developing and sustaining their business. The professionals at 1st Capital Loans bring years of experience in financial services to the marketplace along with a number of strategic partnerships that assist with education, market trends and market research to better help us serve our prospective and current clientele.