Tag Archives: businesses
More About Business Loans
The recession has hit the United States economy hard. There has been news of gloom and doom all around. Businesses of all shapes and sizes have been going bust and bankrupt. This created an atmosphere that hit the business houses hard and especially the small businesses. The small businesses have run out of liquidity and that has severely impacted their ability to do business.
With the ambience of severe distrust in disbursal of loans to the smaller enterprises by the banks and other lending institutions, the smaller enterprises are hamstrung because of the lack of funds.
The scarcity in lending has also been because of the defaulting over the loans by many borrowers. Business Loans are going to play a critical role in reviving the fortunes of the small business houses and thereby improving the economy in general.
The Federal Government acknowledges the fact that with the amount of money in the economy going down, spending is going to plummet and so will the economy. Small business houses, which have a rough time obtaining finance from the institutional lenders, have been struggling to keep their business up.
These institutional lenders have refused to give business loans as they fear that these will be unsecured loans and hence will never come back.
The Small Business Administration (SBA) set up in 1953 as an autonomous institution to provide financial assistance to small businesses has a critical role to play in reviving the fortunes of small business.
Small Business Administration (SBA) understands that the institutional commercial lenders in the market would not offer the small businesses the required capital to keep their business growing and thriving with the financial stimulus.
Small Business Administration (SBA) has developed multiple financial assistance programs specifically for the small business houses. These programs will also enable the institutional lenders quell their fears about unsecured business loan.
The Small Business Administration (SBA) will assist the small businesses in understanding how to get a business loan. SBA has three separate loan assistance programs for the small businesses.
Each of these assistance programs is planned and aimed to cover all kinds of businesses thus providing the business owners the scope to apply for varied types of loans, as required. Since the financial assistance programs are actually delivered by the Small Business AdministrationsÂ’ partners and these are not really direct assistance programs from Small Business Administration, all small businesses need to consult the respective District offices or can also get in touch with the institutional lending associates in their specific area prior to applying for any kind of loan.
The Business Loans hence, have played a stellar role in lifting the business morale of the sagging small enterprises in the United States by arranging the much needed financial stimulus.
Business Loans – 7 Reasons Not To Use A Bank (Page 1 of 2)
So you’re a small business owner and you need a business loan to further the objectives of your company. Where do you turn?
When it comes to a business loan or commercial real estate loan, there are many good reasons NOT to turn to a traditional bank. Here are some of the most important reasons. Many small business owners, will find most of these points directly applicable to them.
“THE BANK TURNED ME DOWN”
Of course the biggest reason most small businesses go looking for alternative sources of commercial real estate loans is because they have been declined by the banks. Small businesses are often forced to look for other sources of funding because the banks will not provide it. This is not even listed below, since there are many positive reasons to prefer non-bank funding, EVEN IF YOU CAN get an approval from a bank.
REASON 1 – The minimum loan amount available from banks is too high
In many cases banks will not offer a commercial real estate loan for less than $250,000. So if you only need $100,000 you will be pushed to borrow more than you actually need. Or if your property will not support a $250,000 loan you are out of luck with the banks.
The solution is to look for an alternative funding source that can provide a lower minimum amount. Some commercial financing services will go as low as $100,000, and will often give you better terms and much better service than the traditional banks.
REASON 2 – Many traditional banks will charge you an up-front “commitment fee” just to examine and process your application
Banks usually think they are doing you a favor by processing your application, so they will often make YOU pay for their attempts to win your business.
The solution is to find other established and credible lenders who are eager to offer you better service without charging you a fee for processing your application.
REASON 3 – Most traditional banks will severely limit the amount of cash you can get from a commercial real estate loan.
Banks usually have very narrow rules about where you can use the cash derived from a commercial real estate loan. If you need a cash injection for your business, or want to use the proceeds from a commercial mortgage as a down payment for another property, most banks will not be interested in that type of loan.
Look for a lender who does not restrict your use of the cash derived from commercial real estate loans. Some services, (see links below) can provide commercial loans that give you up to $1 million in cash to use however you want.
REASON 4 – Most traditional banks require detailed business plans before approving a commercial real estate loan.
Many small businesses have business plans, but they are usually not sufficiently detailed to satisfy the banks. As a result, applying for a commercial real estate loan from a bank can turn into a very time consuming and expensive process. Creating the type of business plan that is adequate for the banks will usually cost thousands of dollars.