As we close out the last quarter of 2014, many of you may be requesting line increases from a bank to support current business operations or taking on new challenges in 2015 that require capital.
Either way, I thought the two articles from Forbes and Entrepreneur were relevant topics to share.
Why small business lending has not recovered
Transaction costs to process a $100,000 loan are comparable to a $1 million loan, but with less profit. As a result, banks are less likely to engage in lending at the smallest dollar level. Some banks, particularly larger banks, have significantly reduced or eliminated loans below a certain threshold, typically $100,000 or $250,000, or simply will not lend to small businesses with revenue of less than $2 million, as a way to limit time-consuming applications from small businesses.
Let me assist you with an alternative to BANK FINANCING!
Asset based lending and factoring services create borrowing based financing solutions incorporating Accounts receivable, Inventory, & Equipment.
- Month to month contracts- No PG’s
- 90% loan to value against accounts receivable & contracts
- Over advances and P.O. financing options
- Letters of credit to suppliers
4 Mistakes to avoid when applying for a bank loan
- Mistake #1: Underestimating the value of personal credit: Bankers look at your personal credit history to get a sense of your track record with financial responsibilities.
- Mistake #2: Applying for the wrong type of loan: Business owners using credit intended for a short period of time for a long-term purchase.
- Mistake #3: Expecting a loan without collateral or historical cash flow to pay it back: Be sure to detail the revenue to repay the loan & collateral to back it up.
- Mistake #4: Waiting too long to approach a banker: Small business banking is about relationships. Not only will you develop that face-to-face relationship, but you will also have the opportunity go get your business financials organized and in shape with a banker’s eye in mind.
Email me for a short list of local bankers interested in your type of credit request: