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Bank Lending Getting Tighter Around Business Funding

Bank Lending Getting Tighter Around Business Funding

In need of a business loan, but struggling to find a bank that will give you one? You’re not alone. Find out why banks are so tight on business loan funding and what you can do when they say ‘no’.

The bank is usually business owners first stop on their search for finance. This is mostly due to the business owner feeling as though the bank knows their business already, and it feels logical that they would be the best chance of qualifying you for a business loan. However, banks commonly turn out to be much more difficult to deal with than most people expect. Banks have a tendency to offer very limited capital flexibility, have an exuberant funding turnaround time and require an excessive amount of information to do so. But, why is that? Here are the top three reasons why getting a bank to fund your business loan is so challenging.

Limited Flexibility

Like any large organisation, there are rules and guidelines that must be followed in order to ensure success. If you don’t fit into their very specific criterion checklist, then you don’t qualify. Period. Regardless of how great a relationship you may have with your banker, they must submit your loan documents and paperwork to a credit committee. Which means your approval is judged solely on how you look on paper, with absolutely no face-to-face perceptions.
This credit committee has a strict series of checks and balances that they must adhere to in order to limit a bank’s risk exposure. What this means for you, is that their due-diligence is going to make your business loan application take weeks end even months to complete! Typically, an alternate lender, such as a private lender, can fund a short-term business loan within days and with very little paperwork comparatively.

Extensive Checklist

Often, when a business is applying for a loan, it is because they need the money now. One of the biggest downside to bank loans is not only the extensive amount of paperwork, but also the lengthy turnaround time. Combined, this often makes the loan obsolete, for it takes too long to be useful. Going to a private lender specialising in business loans, should time be of the essence, is an excellent option to consider, as their sole purpose is on funding business. Unlike banks, who, honestly, really don’t need your loan to succeed.

Modern Businesses

Many of today’s businesses simply don’t fit into banks traditional mindset. Their strict rules and regulations have no leeway for modern business models. Which is not to say that the business is no good, but simply that banks find them too risky since they don’t fit within their limited checklist.

If you are having trouble finding funding for your business loan, Quick Business Finance offers short term business loans across the Gold Coast, Brisbane and surrounds. Call us today to discuss funding for your business.