The Need for Speed: Why Small Business Bank Loans Take Months to Materialize - if at AllElena Velikova
One of the strangest contradictions on today’s business landscape, is while virtually every business — regardless of sector, industry, field or marketplace — is striving to do things faster, banks have dramatically dialed back the speed at which they process and potentially approve small business loan applications. What’s the story here? To start with, it’s not that banks are inherently slow and bureaucratic; and if you have any doubt about this, see how rapidly an entire army of bank employees at the local, state and even national level will mobilize if you miss a single mortgage payment. It’s extraordinary. Rather, as reported by Forbes, since the Great Recession erupted in 2007/2008 banks have systematically shifted their focus upstream to larger — and more lucrative — business lending. After all, it costs about as much for a bank to underwrite a $100,000 loan as it does a $2 million dollar loan. Of course, banks cannot come out and declare a war on small business — because many of the same people who can’t get a loan are folks who take out mortgages, buy mutual funds, and purchase many other products and services that boosts their bank’s bottom-line. In other words, it’s not good public relations to give customers a warm handshake one minute, and a cold shoulder the next. Banks have an image to protect, after all. And so, borrowing a page from the passive aggressive playbook, banks make the small business loan application process confusing, complex, burdensome and prolonged for all but the most credit-worthy borrowers (i.e. personal and business credit scores around 700, cash flow positive for at least a few years, and so on). In this way, banks aren’t outright saying no, but they’re implicitly saying no. Fortunately, there is an alternative — which is for small business owners like you to explore the (aptly labeled) alternative lending marketplace, where fast business loans are easy to find; and more importantly, relatively easy to get even if you have bad credit, a past bankruptcy, a not-yet-profitable business history, and so on. Yet with this being said, not all lenders are created equal. Frankly, some aren’t even lenders at all, but are instead running scams that typically involve major red flags like demands for up-front payments, no physical address, aggressive “consultants” who try and upsize loans, and other things that don’t pass the smell test. To help you find the right partner, here are some tips to keep in mind:
The Bottom Line The speed of business is getting faster by the day, which means waiting months for a loan from a bank to materialize — if at all — is, for most borrowers, a non-starter. Fortunately, there are alternatives and options that fill the gap, and help owners like you keep your small business dream alive — and thriving. |
Add comment (Comments: 0) |   |