Pre-approved financing is, in essence, a financial confirmation that you can afford to spend a certain amount of money. It’s a process in which a borrower meets the guidelines of a particular lender for a loan.
As a business owner, it’s beneficial to have pre-approval to give you some confidence going into a purchasing situation. In the eyes of the seller, it gives them confidence about you and your business as a secure firm, as well as ability to make a purchase.
What is Pre-approved Financing?
Pre-approved financing is a process you undertake with your financial institution as a means of finding a suitable borrowing limit for a purchase your business needs to make. Businesses are required to provide the lender with information about their financial background and current credit rating. The information you give your lender determines a set borrowing amount for which you are approved. Pre-approval gives you a sense of a specific interest rate you can expect, should you go ahead with your purchase, and in some cases, you can opt to lock into those rates.
Pre-approved financing takes the guesswork out of pursuing assets that you may not be able to afford. It also allows you to move quickly when you find a fleet of vehicles or a line of construction equipment that you can afford. When your business makes an offer, your success won’t depend on whether or not you can secure financing, as the numbers have already been crunched. Pre-approval could prevent you from losing out on a competitive deal because you’ve exercised good financial foresight.
Benefits to Business Owners
The key benefits of pre-approved financing is securing an available interest rate at which to borrow and convenience to buy what you want.
In addition, lenders use pre-approval processes to measure your qualifications and how much you can afford to spend on a new fleet of vehicles, upgraded transportation, construction equipment, etc. Pre-approval guarantees you a certain rate in the event that interest rates rise while you’re shopping for the right equipment.
For businesses that are experiencing rapid growth and need to secure the right equipment to keep up with growing demand, pre-approval allows you to more easily secure the equipment you need without delay.
Finally, a good pre-approval rate and the knowledge you’ve gained throughout the process gives you a sense of what to expect in terms of your monthly payments and budget. Pre-approval not only gives you a set interest rate and a number to work with – it also tells you whether or not you can afford to repay the loan.
Travelers Finance can pre-approve your business for financing before you make your next purchase – big or small. By helping you to acquire the equipment and assets you need to grow, we provide confidence in your own purchasing power.