One of the most popular stories that our licensed funding specialists hear on a regular basis here at Synergy Merchant Services involves the nightmare that Canadian business owners go through in order to secure loans from their banks. Even though many of them have longstanding relationships with these banks, they apparently are still forced to go through a laundry list of requirements in order to even be approved for any money.
Especially in today’s economy, with it still searching for recovery from a global recession, banks have become less likely to approve Canadian businesses for loans than ever before. This has been documented a number of times on this blog, but it still seems to be something that business owners struggle with understanding.
They feel that if they have developed working relationships with banks, that they should count for something in their times of need. The truth is, however, banks are even less likely to provide money to those who actually need it. Instead, the more a business owner can prove that he or she doesn’t need the money, the better the chances are that he or she will be approved to get some. Weird, right?
NewYorkLife.com, the website of a New York-based insurance company, puts it this way: “Want to feel stupid, incompetent, and a bit foolish? That’s how some business owners describe themselves after meetings with lending institution loan officers. Like beggars, they complain, they must plead their cases, jump through hoops and just about put up their first-born child as collateral.”
Needless to say, it is difficult for business owners to get bank loans on both sides of the border. Securing a line of credit is becoming more and more commonly known to be a “frustrating ordeal”. As the site notes, it is often “hard for lenders and business owners to see eye to eye.”
As they say, “the only thing lenders care about is your ability to repay the money”. This is why collateral is often requested of a business owner trying to secure a loan. It is a bank’s way of saying that if you have any trouble paying them back, they will own something that belongs to you. The risk is placed on the shoulders of the business owner, not the lending institution.
This is why Synergy is so proud of its policy to receive a payment only once a business makes a sale. The numbers that matter to us the most are the ones that represent your average monthly credit and debit sales volume.
As NewYorkLife.com mentions however, “most lenders are number crunchers. They’ll want to study the figures. Put together a balance sheet or income statement and a summary business plan (description of why you want the money).” We still can’t understand why so many entrepreneurs go through all of this hassle.
Thankfully, many of our clients have the opportunity to add another story to their portfolio once they have received a quote for a merchant cash advance from Synergy. That, of course, being how simple and easy the process was and the fact that they are relieved that there are other options to attain working capital out there.