How hard is it to get a Small Business Loan

Posted by & filed under Small Business, Small Business Loans and Business Credit.

Why Getting a Small Business Loan is Difficult!

A small business loan is a total sum of money loaned out from a financial institution to a business to start, run or grow a small business.

Unfortunately, financial institutions are extremely disinclined to lend to small businesses.  According to a recent survey in U.S., 82% were denied financing by their bank to over 10,000 business loan applicants.

In addition, given that the underwriting costs for estimating, validating, and processing a small loan are the same as for a larger one. Banks can increase their profits by centering on larger loans vs paying an underwriter large salary to focus on small low revenue loans. Also, small businesses don’t get a fair shake as they are being rejected for financing more often than larger, smaller businesses also typically pay higher interest rates on loans than big businesses.

Consider that you may have an outstanding credit rating and a good business plan but still not be able to get a small business loan because you have no asset-based guarantee. Even established business people can find themselves in this position. If they do not own sufficient physical belongings, such as a house or other asset.

You will also find out that many lenders just don’t offer seed money. While they’re without a glitch willing to give a small business loan to help a business grow but they can’t take a risk or start-up business.

Keep in mind that the supreme thought of lenders is risk management and approval will be the turning point on their charge of your ability to pay back the loan.

Increasing your chances with a great application

Aside from sufficient security, financial institutions will need the following before

considering a loan application:

  • A business plan papers that will show them your company’s products, market, cash flow and other financial plans. Business lenders scrutinize your business plans to reassure themselves that the business they are lending to is likely to be successful.
  • If you have a traditional business, your loans/credit history, bank accounts, and other supporting financial information, you should all include accounts receivable and accounts payable statements, and reference from clients that indicate that you have a solid history of making payments on this time
  • A personal financial summary, including details of assets such as property, vehicles, savings, etc. and obligations such as debts, loans, credit card, etc.

 Alternative lenders are a Better Choice Than Banks

Alternative lenders are an increasingly important source of financing for small businesses. They are more local institutions and are more likely to lend to small businesses in their communities. Banks, on the other hand, have grown larger and more national lenders. Larger banks have less choices at the local level such as bending lending policies.

BitX Funding is a great option to consider for small business loan of all types as we are a marketplace for small business loan. We listen to your needs and connect you with the correct funding source. If you’re a startup we have options for you and if you’re a larger business that needs $5 Million in SBA funds no problem. Why struggle trying to find the funding that fits your needs when our trained staff can guide you through the process all the way to a yes?

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