How to Determine if your Company Qualifies for Consumer Finance

The global economy has been on a downturn for the past few years. As a result, many companies have been struggling to keep their businesses afloat. One way that some companies have been able to stay afloat is by qualifying for consumer finance. Consumer finance can help a company keep its doors open by providing working capital to cover expenses and giving the company time to generate revenue.

If businesses want to boost sales by offering financing options to their customers, they will need to make sure that they qualify for consumer finance. With the right consumer finance program in place, businesses can offer financing to customers who may not be able to afford the total purchase price upfront. It can help companies toes close more sales and keep their cash flow positive. This blog will give insights on determining if your company qualifies for consumer finance.

Have A Direct Relationship With The Customer

To qualify for consumer finance, businesses must have a direct relationship with the customer. Companies will need to be able to offer financing directly to their customers without going through a third-party lender. Businesses often use a merchant cash advance to get the capital they need to provide financing for their customers. 

Not only does this type of funding not require a personal guarantee, but it also can be approved in as little as 24 hours. Typically, businesses must have been in operation for at least six months and process at least $10,000 per month in credit card sales to qualify.

Provide A Product That The Customer Needs

Another important factor that businesses will need to consider when trying to qualify for consumer finance is whether or not they are providing a product or service that the customer needs. If a business offers a product or service the customer does not require, they are unlikely to be approved for financing. 

Companies need to prove to the lender that there is a demand for their product or service to qualify for financing. Few people will be willing to finance a purchase they do not need. For example, financing in the water industry is much easier than financing a new video game console because people always need water.

Prove You Can Repay the Loan

When businesses apply for consumer finance, they must show that they can repay the loan. It means that companies will need to have a strong sales track record and a good credit score. In addition, businesses will need to have a well-defined business plan that outlines how they will generate revenue and make repayments. 

Companies must also use some form of collateral, such as real estate or inventory to secure the loan. Consumer financial marketplaces are another great way to get business funding without collateral.

Offer Competitive Financing Terms

To be eligible for consumer finance, businesses must offer financing terms that are competitive with other lenders. Companies will need to provide interest rates that are lower than the average APR charged by other lenders. In addition, businesses will need to offer flexible terms and allow customers to make early repayments without penalty. 

Many times, companies will provide financing terms that are similar to those offered by major credit card companies. It can help businesses attract more customers and close more sales. For instance, companies can provide customers with 0% APR for the first six months of financing.

Must Have A Good Credit Score

Businesses need to have a good credit score to qualify for consumer finance. A high credit score will show lenders that the company is responsible and capable of repaying the loan. In addition, a high credit score will give businesses access to lower interest rates and better financing terms. 

To get a good credit score, companies should make sure to pay their bills on time and keep their debt-to-income ratio low. Whether you’re a startup or an established business, having a good credit score is essential for qualifying for consumer finance.

Have Policy and Procedures in Place

Another important factor that businesses need to consider when trying to qualify for consumer finance is policy and procedures. Companies need to have a well-defined set of policies and procedures outlining how they will handle customer financing. 

It includes setting credit limits, issuing invoices, and collecting payments. These policies and procedures show lenders that the company is organized and capable of managing customer financing. Businesses can streamline qualifying for consumer finance with the right policies and procedures.