There’s no business like the B2B business – and that’s doubly true when you’re talking about the way that banks treat borrowers. Banks make a huge amount of money off doling out business loans, and many CEOs have claimed that bank loans helped their dreams come true. It seems like a win-win for all people involved, right?
Well, if you look at the surface, absolutely. However, not all is as it seems. There are a lot of issues with taking out a business loan from a bank that most people never address – but should. Don’t believe it? Take a look at these five industry secrets no one likes to discuss.
- Many business owners end up losing their houses because they can’t make business loan payments. Business loans require collateral, and the most common form of collateral people put down is their home. Bank loans aren’t flexible on payment terms, which can make it hard for seasonal businesses or newbies to make loan payments on time. Sadly, once a loan payment is late, banks can take your collateral. If you put your house as collateral, you can end up homeless.
- Bank loan inflexibility is often what causes businesses to shutter. Keeping a steady cash flow is hard, if not impossible, in many industries. Unfortunately, banks don’t care about the reality of being a business owner and will often demand payment regardless. Off-schedule payments have driven many companies to ruin as a result.
- Only a very small fraction of government-sponsored business loan applications are approved. Most small business loans and grants that are kickstarted by the government have an approval rating as low as 5% of less. Everyone wants a bank loan, but unfortunately, banks just really don’t want to give them out.
- Your personal credit score can be reason enough to turn you away. It’s true. Banks can and do check CEOs’ personal credit scores when they make the decision on who to lend to. This is often what leads to longtime successful business owners being rejected for loans, despite having a track record for success. Infuriating, isn’t it?
- Most businesses can forgo a bank loan and still succeed. Alternative lending practices have boomed, and have better approval rates with more flexible payment terms, too. The only issue here is that people rarely ever really discuss them, which is why so few people have any education about them.
If it sounds like bank loans are giving business owners the raw end of the deal, it’s because they are. It’s an industry that’s extremely rigid, profit-driven, and to a point, capable of hurting companies just as much as it’s capable of helping them.
Truth be told, many business owners don’t really need a bank loan to get the funding they want. At Maple Advance, we make it possible for small business owners of all kinds to get approved for funding quickly, easily, and painlessly. Give us a call today, and you can have money on its way by tomorrow.