Halloween is just over a week away! People all over Canada are currently coming up with ways to scare their neighbours. Dressing in ghoulish costumes, carving up pumpkins and decorating the house so that it appears haunted are all part of the fun. Naturally, however, not everyone likes to be scared. This is especially true for loan officers at banks.
As far too many Canadian business owners are aware, it can be extremely difficult to secure a business loan from a bank. There are numerous requirements that many business owners simply cannot meet. It can be argued that banks are scared of not having their loans repaid. In many cases, they have legitimate reasons for their concerns. After all, no bank is interested in lending out money that won’t come back to them with interest.
So what is scaring your bank away from approving your business loan?
You have no collateral.
“You mean to tell me that if you aren’t able to repay your loan, we’ll be left on the hook for the unpaid money?” Essentially, this is a question that a loan officer would ask (or probably think) if he or she was informed that a business loan applicant had nothing of worth to put on the line. Collateral is generally required (your house, for example) so that banks can rest assure that they can seize your assets if you can’t pay them back.
You have bad credit.
Have you had any late payments on a credit card? Have you ever defaulted on a loan in the past? Have you ever declared bankruptcy? Do you have any accounts that have gone past due? Answering “yes” to any or all of these questions will scare your bank away from approving your loan. As well, if your business is fairly new, you may not have enough years of operation under your belt to have established a respectable credit history.
Your cash flow is weak.
Banks get scared when business owners can’t show that they have enough cash flow to make their monthly payments. Cash flow is also necessary to pay employees, buy inventory and pay rent. It’s important for small business owners to clearly outline how much money they have coming in and how much money is going out each and every month.
You have demonstrated a lack of preparedness.
You can’t simply walk into a meeting with a loan officer and expect to be given money. You need to do your research. It’s important that you’re able to give clear and detailed information about your company’s history, ability to make sales and reliability to pay back loans. A thorough business plan that outlines what you intend on doing with the loan is necessary. It should demonstrate how you intend to have your business profit to ensure the bank a return on its investment.
Have you considered applying for a merchant cash advance?
A merchant cash advance requires NO collateral and NO credit check. Your cash flow isn’t a concern and you don’t need a detailed business plan either. This is because a merchant cash advance is not a loan. Instead, it is a purchase of a merchant’s future credit card and debit card sales.
Divvia’s merchant cash advance program comes with an easy application process that requires minimal paperwork. Please don’t hesitate to call us at 1-877-748-2884 or send us a message on our Contact Us page for a FREE, no obligation quote!
