Traditional Business Loans and Business Financing Channels

Business loan headacheMost business owners who have ever pursued a traditional bank or business financing company for business capital or a business loan realize it can be a very frustrating and time consuming process.  Most banks will not even consider providing a business loan if you:

• Are in business less than 2 years.
• Have had any credit problems or a low credit score.
• Do not have the collateral to cover a loan (typically 2:1 coverage.)
• Want to borrow less than $100,000.

Even if you qualify, you must provide the following minimum documentation to be considered:

• A comprehensive business plan.
• Audited personal and business tax returns for 2-3 years.
• A detailed Financial Statements.
• Personal Guarantee regardless of legal entity.
• An application fee and closing costs.

Spend time researching the financing history of small business owners and you will see the extreme cost of acquiring capital through traditional sources.  Many hardship stories of business failures and stumbles start with an attempt to acquire a business loan. Personal guarantees have caused many business owners to lose their home or retirement accounts.  Requirements of co-signatures have strained family relationships past the breaking point because of mounting debt and shrinking avenues for personal credit. While traditional business loan sources provide the least expensive rate on money lent, their requirements and repayment terms can become overwhelming should a business have any unforeseen changes in revenue.  Many business owners consider interest charges only a small part of the “true cost” of a business loan.

For businesses with confidence in their future, now there is an alternative to obtain needed capital that’s growing in popularity with small business owners, the Business Cash Advance.