Higher approval rates for small businesses.
Why small businesses are denied traditional loans?
Traditional Business Loans
A traditional business loan or a commercial loan is a debt-based funding agreement between a business entity and a financial institution such as a bank or credit union. It is typically used to fund capital expenditures or operational expenses that your business may not be able to afford.
How a Business Loan Works
Business loans are granted in a variety of industries to help with short-term funding needs that can facilitate the operating process of a business. The funds are typically used for operational costs and the purchasing of equipment but may also be used to meet more basic needs such as payroll or purchasing supplies or inventory.
Securing a Business Loan
Like any other traditional loan from a bank or credit union, the creditworthiness of an applicant is a key factor, as well as the collateral a business owner has to secure the loan. In most instances, the business that is applying for a loan will be required to present documentation in the form of balance sheets and other similar documents. This will help to provide proof that the business in question has a favorable and consistent cash flow to allow repayment of the loan according to the terms set forth. The business in question is you.
Business Loan Approval
If you meet the stringent requirements for approval, you will be expected to pay an interest rate that falls within the federal guidelines at the time the loan is issued. Traditional lenders providing commercial loans often require monthly financial statements throughout the life of the loan. You may even be required to insure any larger items purchased with the funds you receive.
Business Loan Denial
The problem with this type of loan for many business owners are the upfront costs that are incurred, as well as the credit history that is required for approval. Without the collateral and good/excellent credit score that is expected, business owners like yourself are getting denied funding. Because of this, smaller businesses, are relying on other alternative lending products, such as merchant cash advances.
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