Traditional bank loans are a common financing option for many businesses. After the banking reforms of the past decade, it’s time to consider whether bank loans are right for your company or not. Here are three reasons to avoid bank loans.
It Takes Time to Get Approved
The approval process for bank loans takes time. It can take two to three weeks to get approved, and that’s once you complete the application. Then, it can take another 15 to 30 days to get the funds in your account. If your business needs immediate cash to handle a great opportunity or manage a cash flow problem, that’s time you don’t have.
Rejection Costs You Valuable Time
It can be difficult to qualify for a bank loan. If your credit score isn’t high enough, you can be rejected. You may not have enough collateral. Your cash flow may not support the repayment of the loan. If you aren’t approved for a loan, you’ve wasted time and possibly money in the process. You could have been focusing on other things.
Alternative Financing Options Are Available
Your business may have better options for financing. Accounts receivable or purchase order financing can be much quicker than traditional bank loans. You may qualify for a merchant cash advance. You can leverage your assets and get cash in as little as 24 hours to manage your business. These alternative financing options often come unattached, unlike a traditional bank loan. With a bank loan, you may be limited in how you can use the money. An MCA or accounts receivable financing won’t show up on your credit report. Some types of alternative financing don’t rely on your credit, but the credit of the customer or on the past credit sales. You aren’t limited to bank loans when you need financing.
Contact Aspen Commercial Lending for alternative financing options for your small business.
The times of going into your bank for all your loan needs are changing right now. The banks have tighter restrictions, more insurmountable guidelines and less of an appetite for small business loans. If it takes you 90 days (average time it takes to get an approval/turn down from your bank), how much did you loose? I would guess it was more than just your time.
The other benefit of going to a broker like Aspen Commercial Lending, is that we can review your loan request, offer expert advice, and help increase your chance of being funded. Let us help you structure your debt and make it fit your cash flow!