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Bankable vs. Nonbankable Businesses

Traditional bank funding is great for business! It is often the cheapest option for businesses to raise revenue and fund operations, with low-interest rates and long repayment terms. However, this is often the most difficult source of funding for businesses to obtain, usually having a laundry list of requirements regarding a company’s current financial profile. This creates issues for most businesses since not everyone has the significant assets, profits, cash, or collateral as a giant conglomerate like Amazon, Target, or Apple. Usually, this means one thing from a bank's perspective – nonbankable. 

What Is a Bankable Business? 

Bankable and nonbankable businesses are financial jargon, used to describe whether or not a company meets the standard requirements of most banks to get any type of business funding. A bankable business indicates to the banking institution that the company is sufficiently healthy enough to pay back the principal of the amount borrowed with interest. It’s a basic indicator of the company’s projected success. In order to receive funding from a bank, businesses need to have extremely low risk and prove their stability in order to ensure that the bank will be paid back. 

Is My Business Bankable? 

If you find yourself in the situation of wondering whether or not your company is bankable, you’re not alone. Many business owners, especially small business owners, think about the same thing every day. Rather than wasting time chasing the pipe dream of getting a business loan from the bank, most people would rather know if they qualify now and if not, how they can qualify in the future. 

A few things to consider when determining your business’s bankability are financial and non-financial factors. Financial factors are things such as…

  1. Cash flow – is your business cash flow positive? 
  2. Do you have a good history of repaying debt? 
  3. Working capital – does your business have enough cash to cover operations? 
  4. What other types of collateral can you offer? 
  5. Do you have audited financial statements? 

If you feel like your company has the five statements above covered – you have cash flow, your payment history is squeaky clean, and you have multiple types of collateral that banks can take in case of not being repaid – you’re probably off to a great start. 

If you aren’t feeling so confident in your company’s current financial state, think about non-financial factors, such as…

  1. Does your business have a strong employment history and management team? 
  2. Is your industry growing? Stable? Declining? 
  3. Do you have a presentable business plan for the funds at stake? 
  4. Are you able to provide a personal guarantee? 

While these non-financial factors can certainly help your case in the eyes of a banker, it’s not a guarantee that you have a bankable business. Usually, a business will have to have all or some sort of a combination of the two in order to have strong bankability. 

How to Become Bankable? 

Oftentimes, businesses think that once they are deemed nonbankable that they stay that way forever, but there are plenty of ways to help your business improve its financial profile. Midwest Business Funding is one of these ways!

We help businesses in all different kinds of circumstances and situations build up their financial portfolio in order to become bankable again. If you think about it, in order to be a bankable business, your company needs to have a healthy financial report card. Sometimes, that means borrowing money to help cover expenses during a time of growth, the launch of a new product or service, or maybe investing in new equipment or buildings to expand your capabilities. 

The majority of MBF’s clients are on the precipice of enormous growth and have tons of untapped potential right in front of them that’s been out of reach due to being undercapitalized and denied traditional funding. We help bridge the gap so that businesses can grow, flourish, and become bankable once again. 

What Should I Do Next? 

Whether you think your business is bankable or not, the team at Midwest Business Funding is always here to help you see your options and which route will be the most beneficial for your business. We are a client-first, results-driven organization that focuses on helping businesses grow and ensure that their financials are aligned with organizational goals. After talking to our team, you’ll feel better equipped and confident that your company is taking the right step towards better financial health, and we’re excited to help you every step of the way.

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