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In
addition, the SBA
takes most of your
business and personal assets (such as your home)
as collateral.
Other types of small business loans.
There are lenders that will give you a loan at a
higher market rate simply based on
having a lot of equity in your home. In such
a case, it will be easier to just use your home
and not involve yourself in all the other
complications described above. Many people who
are starting businesses don’t want to put up
their home as security. This will limit your
options. This means you don't want
to risk your home but you want a
lender to risk their capital on your new
business. Often, this outlook not always
realistic and won’t work. And surprisingly, the
SBA will often take everything your business
owns and also take your home as collateral
anyway for a small business loan. As a business
owner you intend to grow your business and you
may need another small business loan for
inventory, raw materials, expansion, relocation,
partner buyouts, etc. within the next 5 years.
If the SBA has all of your business assets and
personal assets as collateral, you will be in an
almost impossible position the next time your
business needs capital.
Another exception when a less than 2 Year old
business may be able to get a loan is if the business wants
a lower amount of money, say $20,000 or less and
the owner has strong personal credit. Some
institutions will make such a loan on the basis
that if you would have qualified for a personal
loan for such an amount, why would they turn you
down simply because it’s a business loan
request? They will just make you personally
guarantee it. It’s
really a personal loan set up as a business
loan.
Existing Businesses
It is
difficult to get a business loan through
traditional sources (Brick and Mortar Banks),
even if you have a relationship with them.
Traditional sources have approximatley a 92%
decline rate for business loan requests and may decline your
request for many more reasons than
non-traditional sources of capital will. They will
request financial statements, Tax Returns, have
many questions along the way, and will greatly
scrutinize your cash flow, assets and secondary
sources of payment. Many
business owners pay their Accountant well in
order to show that their business is making
little or no money. When
it's time to request a loan, business
owners will be surprised when the bank turns
them down when in fact they knowingly have
documented via the Business Tax Returns that
they didn't have any profit.
Show some profit on your Business tax return.
Once the bank has turned you down, all their
talk about how much they “value your
relationship”, doesn’t do you any good.
What
should you do? We can help! Our small business loan
options are far more encompassing than
traditional banks and our approval rates are
much higher.
Apply Today!
More about our Capital for Business Program!
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