If we were to ask most people about where they might find the capital necessary for a new business beyond family and personal savings or credit, they would likely look no further than their local community bank. Unfortunately, getting approved for a commercial loan from a bank is very difficult. Why? Underwriters will focus critically on the 3 C’s of lending when deciding whether to approve you for a loan – Credit, Collateral, and Cashflow. This is also sometimes referred to as the Stool Theory because each ‘C’ can each be considered one leg of a stool.
Bank underwriters are looking for successful loan applicants to have all 3 legs of the stool solidly in place. Take any one leg away and the stool wobbles and likely will fall, along with your chances of you getting approved for that loan that you need. So, what does one do if they lack a leg of the stool? Fortunately, other options exist in the world of commercial finance to fund business opportunities that most community banks would find shaky. Ok, so what happens if you are missing 2 legs of the stool? Alternative lenders have products that may also be applicable to situations like this.
Banks look at the applicant, whereas alternative lenders also consider the business opportunity during the underwriting process. Personal guarantees are a must with banks, however, some alternative lenders can be much more creative and flexible in their approaches to funding your business. Banks are limited to loans and traditional lines of credit generally. Alternative lenders offer those as well, however, they look at other options such as equipment leasing, hard money loans, equity and mezzanine financing, and unsecured business lines of credit just to name a few.
At D.P. Martone Capital, we are experts at assessing your personal situation to determine the right product for you. The newer your business, the more difficulty you will face with traditional lenders. We look beyond your size today and offer financial products that scale with your business as it grows and your needs change.
Growth Beyond The BankSM is more than a slogan for us. We offer a one-stop shop of commercial financing solutions no matter the size of your business or your credit profile. And, we can offer more options to finance the growth of your business or commercial real estate investment than any one bank, no matter the stage of your opportunity.
Bring us your financial challenges so we can listen and design a solution that is uniquely tailored to you.