The state of small business loans: Fact or Fiction?
There are a lot of questions and misconceptions about business loans. Let’s challenge some common beliefs.
It’s nearly impossible to get a business loan.
Fiction Joshua Sophy of Small Business Trends reports that “small business loan approval rates at big banks bounced back in November 2014 to 20.8% after a setback month in October.” Loan approval rates at small banks were 49.8% in November, down 0.4% from October.
While that’s not the equivalent of a drive-thru business loan window from American banks, the environment is improving and sound business propositions are getting funded – in fact, Northwest’s business loan approval rate was 59.7% in 2014.
My business is going well so I don’t need a loan.
Fiction “The truth is it’s easier to secure a loan or a line of credit when you don’t need one rather than wait until the situation is dire,” Ami Kassar, founder of MultiFunding.com, explains.
Think about it – is a lender going to be more receptive to your pitch for additional capital when things are going well, or when you need a desperate infusion to keep the doors open? Plan for long-term financial security as well as your short-term business goals.
I don’t need a bank because I can get a small business loan from the U.S Small Business Administration.
Fiction The U.S. Small Business Association guarantees loans and helps business owners find appropriate lenders, but it does not dispense federal dollars. Your business may be eligible for governmental grants, but the guidelines for these programs are very specific and strict.
If I default on a business loan, my personal assets are in jeopardy.
Fact Lenders often require a business owner to co-sign or personally guarantee a loan. If the business becomes incapable of repayment, the lender may turn its attention to the co-signer or guarantor.
Business loans can be a huge source of support when used correctly.
Fact. Northwest can help shepherd your business through the loan process. Northwest offers commercial lending opportunities that may save you thousands of dollars with competitive, low rates, creative financing based on your specific situation and fast loan turnaround from local decision makers.
We want to see our communities grow and thrive. If you are considering a business loan, please visit our commercial lending page.