When a business owner is new and starting out, it is almost impossible to get approved for a loan without documentation first. Banks want to see that you are producing revenue in your business so that you can guarantee the return of their funds.
Fortunately, stated income business loans can help you get the cash you need. Stated income business loans are popular for self-contractors and workers who receive cash payments.
Stated Income Business Loans Defined
Stated income business loans are funding options that do not require financial documents. This loan is also known as no doc, or no documentation loans. Normally, lenders request income verification, proof of assets, bank statements, and tax returns. Self-contractors or freelancers often have trouble having this type of documentation.
Tax returns might not show the true value of the money that is made. The adjusted gross income might not be sufficient for the needs that lenders and banks require for proof. Self-contractors and freelancers might have multiple streams of income or receive payments in cash that they may not be able to show. This is why a stated income business line of credit is a great option for individuals who are looking for cash flow.
What are the Qualifications for a Stated Income Business Line of Credit?
- At least 6 months in business
- Credit score of 500 or higher
- $200,000 in annual revenue
- Most businesses and industries are accepted
- No personal collateral required
What is Needed to Apply for a Stated Income Business Line of Credit?
Unlike other traditional types of financing, you do not need much documentation to apply. Some documents you might be asked include the following but are not limited to:
- One-page loan application
- Business bank statements
- Merchant processing statements (if applicable)
Overview of a Stated Income Business Line of Credit
- Interest rate: this varies depending on your credit and time in business
- Repayment terms: the period is between 6 to 12 months
- Fees: origination fees 0% to 3%
- Payments: weekly, bi-weekly, monthly
- Time in business: minimum of 6 months
- Documentation: application, 3 months business bank account. No income varication required
- Processing time: fast, 24-48 hours
Why Stated Income Business Lines of Credit Are Popular with Small Businesses
- Money can be accessed instantly on demand
- Provides emergency cash flow
- No income documentation required
Benefits and Uses of a Stated Income Business Line of Credit
- Working business capital
- Improve cash flow
- Purchase new/used equipment and/or software
- Money to grow your business
- Employee recruitment
- Marketing/advertising for customer acquisition
- Emergencies that require financial aid
Business and Industries That Use Stated Income Business Lines of Credit
- Retail stores
- Auto repair shops
- Hair salons, nail salons, spas
- Food markets
- Convenience stores
- Any type of business that meets the revenue requirements
Tips About Applying for a Stated Income Business Line of Credit
If you are thinking about applying for a stated income business line of credit, you should begin by asking yourself some key questions. Some examples include what types of business financing is offered? Does the business loan originator have the knowledge to help me find the best product that suits my needs?
You will be able to make an informed decision by asking yourself important questions. Be sure to check your proposals and agreements thoroughly for terms and conditions that include the total cost, funding fee, duration, payment frequency and more.