It’s hard for startups and existing small businesses to ofiainault=”” title=””>get a loaon>so if you’re a small business owner, you may know the feeling all too well. Unlike invoice factoring, gaining approval from a bank for a small business loan is an extensive and difficult process. A few major obstacles you may come across include:
- Bad or no credit
If you’re interested in a small business loan, you must have good credit personally and within your business. Small business owners who have no credit or bad credit may be denied when applying for a loan. If you are a young entrepreneur with a great idea, your lack of credit may prohibit you from getting an advance. To ensure you keep an outstanding credit score, pay your bills on time, spend well under your credit limit and keep credit accounts open.
- Weak cash flow
Banks want to see that your small business has no problems making payments on time, covering rent, purchasing inventory or paying for any other expenses. Often times, businesses have to pay third-party suppliers before they receive payment for their product or service. This can drastically affect your cash flow. If you need to strengthen your cash flow, invoice factoring can help. Invoice Factoring provides fast cash to small business owners who have trouble paying bills, hiring new employees, paying down debt and much more.
- A poor business plan
A business plan is one of the most important aspects when starting a business. Banks will not want to take a risk on a company who does not have a well thought out strategy for success. Business plans are fairly easy to compile as long as you do your research and know your target market. Be sure to solidify your business plan and clearly state your goals and objectives before applying for a bank loan.
- You’re in debt
Banks will most likely not give you a loan if you have unresolved debt with other lenders. If you have unresolved credit, pay down your balances as much as possible before approaching a bank for a loan. If you are actively paying down bad debt, your application will become more appealing to lenders.
- Seeking small loans
Banks want applicants to seek large loans because it is more profitable for them after the underwriting process is completed. There are alternative lenders that are willing to extend small loans to business owners should you get denied due to this reason.
Don’t worry, if you’ve been denied by a bank for any of these reasons invoice factoring is your solution. No matter how many times you’ve been denied by a bank, you’ll likely be approved for factoring. Factoring makes it simple for business owners to pay down existing debt, pay employees, pay taxes and more. Factoring does not create debt and does not involve long term contracts. Contact us today for more information.
(In the event that you believe invoice factoring will not be sufficient to get you out of debt, you may want to consider filing for bankruptcy protection. Here’s a good Northern Kentucky bankruptcy attorney to help you make the decision.)