Loans for new and young businesses with short track records
- September 6, 2016
- Posted by: robertonotte
- Category: Start-ups
Small business owners who have started a brand new company often struggle to get financing from banks or other traditional lending institutions if the business owner, like many small business owners, has not been in business for a long period of time and thus lacks years’ worth of revenue, sales, profitability and other data to provide to a bank in support of a small business loan application. Indeed, most banks’ small business loan applications often require extensive information and documentation that a small business owner, simply because he or she has not been in business for very long, cannot supply. This leads to the bank simply rejecting the small business borrower’s application out of hand. However, if you are a small business owner who has been denied credit based upon your inability to supply years’ worth of historical sales, revenue or profitability data due to the relative youth of your business, do not despair. There are financing options for you, even if your business is new or in its relative infancy.
New Businesses By Their Nature Do Not Have Extensive Information Often Required By Banks to Apply for a Loan
It is common knowledge banks have tightened their lending standards considerably since the 2008 economic crisis. This is true for mortgages in the United States, but is also true as it relates to business lending and, in particular, loans to small business. Due to their experience during the financial crash of many soured loans and the number of non-performing loans already on their books, banks and other mainstream financial institutions are requiring more and more information to evaluate potential borrowers for any type of loan, including small business loans. This is particularly true if the business is relatively new and does not have years and years’ worth of consistent profitability to demonstrate a consistent track record of success.
However, bank loan officers typically do not know how to objectively assess the risks associated with a new business venture. This leads them to reject loan applications from new or young small businesses at an extremely high rate. Indeed, the rejection rate for small business loans submitted by the owners of young small businesses has skyrocketed since 2008. (This is on top of the fact that many banks rejected a large proportion of these loan applications even before the 2008 financial crisis out of a concern for such businesses’ inability to demonstrate a long track record of consistent success). This has lead many owners of small businesses that are relatively new or just starting out wondering where to turn for the financing they need in order to keep expanding their business.
Merchant Cash Advance as alternative to traditional business loans
Have you been denied a loan by a bank or other financial institution because you were unable to provide all of the granular detail and extensive documentation that the bank demanded in order to even process your small business loan application as a result of the relative newness of your small business? MCA offers loans to companies that have been in business as low as 6 months, offering up to 150% of the business’s monthly revenue and not requiring extensive documentation like would be the case if you are applying for a small business loan through a bank or other traditional lending institution. Instead, we require no more than for small business owners to answer a few simple questions about themselves, their financial goals and their business, and then provide four months’ worth of corporate banking statements.
Remember There Are Financing Options for Small Business Borrowers with New or Young Businesses
- Banks have tightened lending standards since the 2008 financial crash.
- Banks often require extensive documentation and information that owners of new and young businesses often cannot supply simply because of their businesses’ relatively young age.
- Do not become discouraged, alternative financing options (such as MCA) help small business owners in need of funds to grow their businesses.