Skip to content

3 Major Challenges Business Owners Face When Borrowing From Banks

If you are looking to grow your business (and which business owner isn’t?), it’s important to look into your financing options. Needless to say, you’ll need a decent budget to start the process of your company’s expansion. Do you wish to launch a new advertising campaign, purchase new equipment or renovate? No matter your idea, you’ll need ample cash to make it a reality.

Generally speaking, this is where a business loan application comes in. A common problem, however, is that entrepreneurs are often required to adhere to a litany of criteria that make bank loan approvals difficult. What major challenges do business owners face when borrowing from banks?

Here are three:

1. You need a strong credit score.

Your bank isn’t likely to hand over any cash to you if your history of repaying debt is sketchy. What is your credit score? If the answer involves a low number (we’re talking about a number lower than 670), you’re in for a dogfight to get the money you need to grow your business. As Susan Ward of The Balance tells us, banks need to be confident that they can trust their borrowers.

“Lenders typically look at the credit lines and past payment history in your personal and business credit reports when making lending decisions in order to determine your creditworthiness or likelihood of repaying your loan on time,” she writes, “Small business owners with insufficient business credit history are more reliant on their personal credit reports, and if they contain negative items, entrepreneurs will have an even harder time proving their creditworthiness and getting approved.”

2. You may have to offer up collateral.

What property do you own that the bank can use as a safety net in the event you can’t repay your loan? Are you willing to put your house, company vehicle or major piece of equipment on the line? Offering collateral can often be risky for business owners. Of course, your assets can be lost if there is any reason you can’t submit timely payments to your bank.

“The amount of collateral you must provide a lender for a secured business loan is based on many factors,” inform Michelle Black and Jordan Tarver for Forbes, “If you do need to provide collateral to secure funding, there’s a general rule that most lenders follow. Any assets you pledge should be worth at least as much as the amount your business wants to borrow.”

3. You could be in for a lengthy approval process.

How soon do you require the money to put your plans for business growth into action? If there is an urgent need, you may be disappointed. The approval process for bank loans can be lengthy and time-consuming. It often involves extensive paperwork and financial documentation. This can be frustrating for business owners who need funds quickly to seize opportunities or address urgent needs.

With a merchant cash advance, however, you can often get the funding you need within 24 hours! Not to mention, there are NO credit checks and NO need for collateral! To learn all about Synergy Merchants’ unique merchant cash advance program, please don’t hesitate to call us at 1-877-718-2026 or email us at You can also apply online for a free, no obligation quote!

Back To Top