The banks are not currently and are unlikely to lend to small growing companies anytime soon. They consider these small businesses to be too risky and banks do not take any risk at all risk. But that does not mean that your company can not get the money it needs to start or grow. You might have to change it in another way, which in the long term could be an advantage for you and your business.
For most small businesses, banks are not lending because they do not want any loans with any risk for their books. While they want your deposits and other office deals, theyre just reluctant to let money go out the door. They blame these small businesses for things like bad credit, insufficient cash flow or undervalued security, but in truth, many of these banks are not only able to lend what is considered to be risky companies. And if your company does not really need a loan, it is considered risky.
What can your small business do?
For established small businesses, if your banker refuses to call and most of them, look at some of the alternative funding methods that have existed for decades or have recently been cropped up to fill the lending shortcomings behind the banks. Knowing that banks have not always been the only and best options for small businesses. Banks tend to look at your total business profits before making a business loan decision. Alternative financing options tend to look more at the need for the business and its ability to conceal financial assets into cash.
Look at factoring. If you have customers in the wings, but do not have the working capital to get these jobs started, they bill the orders for 100 percent of the money you need to complete these jobs. Or, if youre on a lot of unpaid invoices, be sure to use them to get the working capital your business needs to face immediate expenses or start the next order.
Look at SBA loans. While these types of government-guaranteed loans still have to go through banks - SBAs 504 programs lead the way to helping many local small businesses to acquire and finance real estate and equipment. With the SBA 504 program, your local community development company will work with SBA and your bank to finance hard assets. When they all spread and share the risk, your chances of being financed dramatically increase.
Let your business finance its own growing needs. There are many growing companies that tend to have a lot of sales but still lose money more money than then. This is not a mirror of the economy or any market, but the one that manages the business.
Look for ways to reduce costs while maintaining your current sales level, or if not possible, look for ways to increase prices. You should always look for ways to reduce costs - even if your business is very profitable.
Continue shopping for low cost suppliers and suppliers. Look at technology to improve processes or ways to reduce staff costs. And constantly review your service providers - no sense about paying for services like phone, internet etc. If you can get your costs down and get the profits, you may not need any funding outdoors. The best business loan need not get one in the first place.
Companies are not easy and get harder the longer our economy stagnates. But people and businesses still need products and services to get through their days. They are looking for products that either make life easier or save time and money. And while many are more selective in what they spend their money on, they are still spending - good news for your business.
Getting and retaining customers letting them know who you are and what your business offers as well as keeping your business at the top of their minds is always a challenge. But successful companies are out there and find creative ways to meet and overcome these challenges. The same goes for financing your small business.
If you need capital to either get your business off the ground or fund your current growth, you might just forget the banks and become creative. Banks are not only ready to take chances. If you can not demonstrate sell your companys potential to the many different funding options out there some who really want to work with your business you can start thinking about another career. Finding new ways to capitalize your business is just one of the many challenges facing all businesses in their development. But the good news is that its not the most scary challenge youll face. If you need a business loan to start or grow your business, get there and get one.