Most cell phone repair shop owners do not have the funds to invest and grow their business. Since their credit scores are generally poor, they are often rejected by banks for loans.
If this sounds like you, do not worry. There are financial institutes that dole out loans to new and small repair business owners.
For RepairDesk users, in particular, there’s RepairDesk Capital. Those using other cell phone repair shop POS might not be able to avail RepairDesk Capital but for them, there are other financial institutions that offer loans to people with a low credit score.
Why Should You Apply for a Loan?
Whether it is RepairDesk Capital or any other loan that you are eligible to apply for, getting a loan has many advantages. Here’s what cell phone repair shops usually use their loans for.
The top reason why cell phone repair shop owners apply for a loan is to buy inventory. Being the biggest business expense, inventory investment takes time to show any return. So a loan that you can return in a year or more would be helpful.
A good way to go about ascertaining if getting a loan to invest in inventory is a good idea is making sales projections and comparing them to the cost of the debt. Since sales figures can vary on a yearly basis, it would be wise to be conservative in projecting sales.
If your main source of revenue is repairs, investing in more advanced equipment makes sense. It is also the second most common reason why cell phone repair shop owners take loans. Moreover, you may want to add more types of repairs so you’ll need additional equipment for that. For instance, if your shop deals with cell phone repair and you want to expand to computer repair, you’ll need more tools.
You may also need funds to subscribe to a good cell phone repair shop POS. Or you may just need new display shelves or have to renovate the shop to give a more posh feel and charge a premium. All of this is possible by getting a loan.
Market Your Services/Products
The third most common reason to get a loan is when repair shop owners want to market their services or products to reach a larger audience. RepairDesk cell phone repair shop POS also has internal marketing tools but they only work with existing customers. To attract new customers, you can use social media. Successful cell phone repair shop businesses usually spend $500+ monthly as Facebook ad spend alone.
You may also order big signs to display outside the shop to increase your shop’s visibility. These act as a marketing gimmick as well.
Move To A Bigger Location
You usually move to a bigger place when the business is booming and you do not have enough space to accommodate your existing clientele. But just because you’re doing well does not mean you have the money to move into a bigger place.
The added expense could be renovation costs, more expensive location, inventory purchase, moving costs, etc. A loan can cover all of these expenses.
Build Credit Score
Having low credit score may not get you bank loans. But if you get a loan via other financial institutes, it still builds your credit score. So, loans make for an excellent way to build your credit score.
Moreover, the next you apply for a loan, you will have more options and better terms.
What Are The Pre-Requisitions For The Loan Application?
Different financial institutes will have different requirements. However, the pre-requisites for a RepairDesk Capital loan are pretty simple.
- You have a credit score of at least 500.
- You have an incorporated business for at least 6 months.
- Your minimum acceptable monthly revenue is $6000. There have been instances where a loan has been approved for a shop generating $5000 monthly revenue but that is rare and under very special circumstances.
- You have a strong plan and great ideas for the use of funds.
If the above requisites resonate with you, you pass the minimum qualification to get approval for a loan.
How To Apply For A RepairDesk Capital Loan?
All you have to do is connect your bank account or upload your bank account statement to begin the RepairDesk Capital process. Based on the size of your business, you may have to provide additional documents but that comes later when you’re presented with the offer and the contract.
Your data is compiled and the optimal lending options are accordingly explored by maximizing the funding amount while optimizing the pricing. Once that is done, you are made a loan offer.
Your approval can take as little as 24 hours. Yup, that’s right!
Should You Have An Excellent Credit Score?
No, you don’t need a good credit history or excellent credit score to apply for RepairDesk Capital.
On average, most cell phone repair shop owners are young. This means that they have less credit history or there are issues with their credit history. So, they have a lower score. Considering that, they are never approved for banks loan.
With RepairDesk Capital, however, your lousy credit history is not a deal-breaker. You can still be eligible for a loan. So, RepairDesk Capital is a big value add for you.
Nonetheless, there are certain aspects that will be factored in when determining the parameters of the deal. For instance, the total revenue that your shop is generating and your average bank balance are important metrics to consider. Additional considerations include the FICO score and credit score. However, they will not impact the approval of a loan. Because the credit score threshold isn’t high.
Jon Fry, founder, and CEO of LendFlow, our RepairDesk Capital partner, says that apart from the bank statement, other inputs include,
“How much revenue are you doing? How much balance on average is in their bank account? Those are going to be the most important metrics. The FICO, the credit score, is going to be weighted as well. So it is going to have an impact. If you have a very poor credit score, you’re going to be deemed a higher risk and that risk is going to be priced into the product, into the loan. So, well, the threshold is not very high.”
So, if you have a low credit score, you are a high-risk candidate for a loan. The risk factor will be added to the loan.
If you have a credit score of 700 or above, you get full points. A credit score from 600 to 700 is considered slightly risky. If your credit score is between 500 and 600, you are considered high risk.
For high-risk customers, the loan will be comparatively more expensive.
As far as the revenue is concerned, the minimum acceptable monthly revenue is $6000. But if you’re doing $10,000+ in monthly revenue, you will get better loan offers. At $20,000 monthly revenue, the options open up further. And if you’re doing $50,000+ in monthly revenue, you get the options of getting term loans, opening lines of credit, and more.
What Loan Amount Should You Expect?
The loan can range from $2000 to $100,000 and more, depending on your requirements and your means of paying back the loan.
As a new cell phone repair shop owner, you may not have a good credit score but that does not mean you shouldn’t get the same opportunities as someone with a good credit score to grow your business. So, if you have a solid plan to grow your business and use RepairDesk, apply for RepairDesk Capital today.