You’ve come a long way since you first opened your business. And no one knows better than you just how much hard work went into making your company a success. But, of course, like all business owners, you feel you can now take your brand to the next level. It’s just that it would be nice to get a little financial assistance in order to make your dreams a reality.
So you go to your bank in order to secure a business loan. You’ve had an excellent relationship with your bank for many years. Therefore, it stands to reason that the financial institution would be willing to offer you the help you need. There’s only one problem. The bank won’t help you. Its loan officer simply can’t approve your application. You don’t have the kind of relationship with your bank you thought you did.
Sadly, this is a reality for far too many Canadian business owners. Their banks are not their business’ best friends. Here are three reasons why:
1. Your bank doesn’t trust you to pay back your loan without putting up collateral.
They say that all relationships are based on trust, right? Well, it’s imperative for a bank to be able to trust you to pay back the money you borrow. Most banks require small business owners to risk something of worth in order to be considered trustworthy. Collateral often takes the form of property, such as a home, vehicle or the business itself. Without it, you’re not likely to get the trust you deserve.
According to Australia’s Classic Funding Group, banks “usually require SMEs (small to medium enterprise) to pledge assets – such as property, vehicles or equipment – as collateral to provide security on loans. Without the necessary assurances, financial institutions may not be willing to take the risk.”
2. Your bank is displeased with your credit history.
Do you have outstanding debts? Do you have a history of making late payments? If so, this will give your bank’s loan officer pause. Your credit history is often selected as the top criteria for appraising your loan application, ProfitableVenture.com reminds us.
“If you have taken some loans in the past which you refused to pay back or defaulted in regular payments or maybe the bank even had to take you to court to get its funds back, then you may have a hard time convincing any other bank to lend you money,” reports the site.
3. Your bank isn’t impressed with your business plan.
How do you plan on making the money necessary to pay your bank loan back? It’s an important question that requires a believable answer. Your bank’s loan officer will ask this of you and expect a detailed business plan that outlines your reply.
“Established organizations tend to have tax returns, future earnings predictions and sophisticated business plans to obtain finance,” informs Classic Funding Group, “However, many new SMEs may not have sufficient documentation to show they have a proven track record of profitable performances. This lack of financial history and a comprehensive strategy for the future can make banks wary.”
Looking for a new friend? Contact Synergy Merchants to learn how our unique merchant cash advance program can help you get the business funding you need without collateral, a credit check or a business plan! Call us at 1-877-718-2026 or email us at firstname.lastname@example.org. You can also apply online for a free, no obligation quote!