Why Most Small Businesses Do Not Get Bank Loans

1.  Banks Are Asset Lenders:
Banks primarily make loans against hard assets, which are pledged as collateral, i.e. buildings, property, CDs, and homes.  Most small businesses and their owners do not own enough equity in their assets to justify a bank loan.

2.  Banks Want a Guarantor(s):
Banks often require additional people to guarantee the repayment of the loan.  The majority of small business owners don’t have willing/able friends to  guarantee their loan.

3.  Banks Lend Money to Older Successful Businesses
Getting a business loan requires that you have at least a 3-year profitable track record.  This record must be documented on tax returns and financial statements (both business and personal) which are thoroughly scrutinized.

4.  Banks Require Stellar Credit Ratings 
Owners and businesses that do not have strong credit scores do not get business loans.  Slow pays, NSF, and high debt to income ratios are disqualifiers (not to mention being turned into collection, write offs, tax liens, judgments, and prior bankruptcies).

Cash Flow Financial recognizes that these stringent requirements prohibit the majority of good small businesses from obtaining working capital financing.  Request a funding proposal and see how we can get you the funding your business deserves.