Bank Loans Hard To Come By For Small Business Owners

For many years, Canadian business owners felt as if there was only one choice when it came to securing additional capital in order to grow their businesses. It involved a trip to the bank, a ton of paperwork, the answering of a long list of questions and the possibility of it all being for naught! Thankfully, times have changed. Business owners now have other funding options. And because securing a bank loan seems to be so difficult for the average business owner to do, those options are now more viable than ever.

The problem with securing funding from banks is taking place south of the border as well. Just last week, Sarah Whitten of CNBC reported that there has been a significant growth in the number of small business owners who are getting turned down for bank loans. According to a Small Business Credit Survey by several Federal Reserve banks, “fifty percent of small businesses didn’t receive any financing they applied for in the first half of 2014.”

Just how hard is it getting for business owners to secure bank loans these days? Whitten notes that this is a 3% increase from 2014. Evidently, getting a bank loan is becoming harder and harder for the small business owner looking to grow his/her company. Sean O’Malley is the president and co-founder of SmartBiz. “Although small businesses make up a vital part of the economy, access to small-business loans has been restricted since 2008,” he is quoted as saying.

Obviously, it appears as if entrepreneurs need to seek alternatives to getting the funding they need. Whitten points to crowdfunding, which is a fairly new concept that requests financial assistance from members of the general public. An online petition, of sorts, is set up to make a plea for donations in return for perks from the company. “Perks may include copies of the company’s product, merchandise and mementos,” informs Whitten.

What crowdfunding platforms are out there? Platforms such as Kickstarter, Indiegogo and GoFundMe have all assisted people in raising funds in order to help them finance their particular objectives. “Kickstarter and Indiegogo both have all-or-nothing campaigns: a model that motivates backers and decreases risk for creators,” Whitten explains, “However, Indiegogo offers a flexible plan that allows creators to keep all funds regardless of success. Both platforms charge campaigns 5 percent of the total funds raised.”

What problems can arise from crowdfunding? Crowdfunding presents small business owners with a list of potential problems. Firstly, there is no way to determine just how long it would take for an individual to raise the amount of funds that he/she is looking for to finance a plan of action. If urgency is of high importance to a business owner, crowdfunding doesn’t exactly cater to that need. Secondly, there is no guarantee that the requested amount of funding will actually be raised. It’s all a gamble.

And if business owners make promises to their donors that they cannot keep, there are ramifications. “Warning: campaign creators on both platforms are subject to legal action if they do not complete their project or fail to fulfill promised perks,” reveals Whitten. As well, she notes that crowdfunding doesn’t apply to all situations. “Entrepreneurs seeking financing for new employees, advertising and renovations should seek other options,” she advises.

Why is a merchant cash advance a better funding alternative? Merchant cash advances provide distinct advantages over both bank loans and crowdfunding. Unlike bank loans, there are no credit checks and your chances of getting approved are 100%! As long as you accept credit cards and debit cards as methods of payment, you are eligible. Unlike crowdfunding, you don’t have to wait to get your money or worry about what you’re using it for. You can be funded within 24 hours to do whatever you like!

For more information on Synergy Merchants’ cash advance program, or to get your free, no obligation quote, give us a call at 1-877-718-2026 or email us at info@synergymerchants.com!