3 More Ways Banks Make Borrowing Money So Hard For Business Owners

In our last blog, we revisited the topic of business loan applications and highlighted some of the top hurdles associated with them. They included having a low credit score, having no collateral and having little business experience. If you’re a small business owner who has any of the above as an issue, securing a business loan will be pretty hard. Unfortunately, there are a few more challenges in the world of securing funding.

Here are three more ways banks make borrowing money so hard for business owners:

1. They offer high interest rates.

It’s hard enough to secure a business loan. Why should it be made difficult to pay back? In many cases, high interest rates can be a deal breaker. Especially if your business is considered high risk, your loan can come with a sky-high interest rate. Of course, high rates can eat into your profits, making the repayment process even more challenging. It’s wise to shop around and compare offers from different lenders to find the best rates and terms.

“The interest rate on a loan reflects the bank’s assessment of the risk that you won’t repay the money,” informs the Business Development Bank of Canada, “To compensate for its risk, the bank decides how much additional interest to charge you over the rate it gives to its best, most creditworthy customers.”

2. They are concerned about your cash flow.

Earlier this month, we posted a blog that revealed how to improve your company’s cash flow situation. To have your business adequately generate more money than it spends, we suggested that you learn to forecast your operating costs, speed up your receivables and find ways to minimize unnecessary spending. Banks need to see that your business has a strong handle on maintaining a good cash flow in order to be considered for approval.

“If your business is profitable but doesn’t have consistent cash flow, you’ll need to address the issue causing your cash flow problem,” says Factoring Companies Canada, “For instance, you may need to invoice more often or change your policies to speed up client payments…Another approach is to reduce or slow your cash outflows. You can do this by finding ways to cut back on expenses or waiting until just before a payable is due to clear the balance.”

3.  The approval process is lengthy.

If you’re a fan of “the waiting game”, then applying for a business loan is for you. Simply put, it is not a quick process. Loan approval has been known to take several weeks or even months. Of course, the uncertainty that comes with such a waiting period can be stressful for business owners. This is especially true if they are in need of quick funding. What takes the banks so long to make a decision? Credit checks, business evaluations and risk assessments are just a few of the boxes they have to tick.

“Getting approved for a business loan from a bank can take a bit of time (usually 2 weeks – 1 month) and the criteria for being approved are fairly strict,” reports Ownr, “You must be in business for at least 2 years and have a strong financial history for your business.”

With Synergy Merchants’ unique merchant cash advance program, you can get your hands on the extra working capital your business needs within 24 hours! To learn all about it, please don’t hesitate to call us at 1-877-718-2026 or email us at info@synergymerchants.com. You can also apply online for a free, no obligation quote!