Star up businesses are known for having robust products, lean business models, and agile thinking. However, finding start up financing is not always the easiest endeavor. For many,…
Loan denials have been more frequent as of late. As banks tighten requirements for small business owners, entrepreneurs find their options limited. Fortunately, there is a way to finance your business without taking on debt or emptying cash reserves.
The Reasons for Loan Denials
There are a number of reasons for loan denials. For the past few years, banks and similar lenders have been tightening the requirements for business loans. Businesses have to show high credit ratings, strong cash flow, and an established history of borrowing capital and paying off debts. While these requirements may seem fiscally sound, new and small businesses are pushed to the sidelines. In a sense, traditional lenders are missing out on taking part in the success of emerging and growing businesses by employing such restrictive requirements.
Alternatives to Traditional Loans
There are many alternatives to traditional loans, and many offer quick approval and flexible payments. It would almost seem too easy to apply for an alternative lending program instead of jumping through hoops to get a traditional loan. However, savvy business owners must look beyond the ease of access and analyze the fine print of any alternative lending agreement. Cash advances, for instance, are one of the most popular alternatives for new and small businesses that have been turned down by banks. A debt-free infusion of working capital with no scheduled payments seems to good to be true, and it is. Payments are made from a small percentage of sales paid for via credit card. This means businesses have to make a tremendous number of sales in a short period of time to repay the balance plus interest. If the balance if not repaid, businesses have to handle large balloon payments and other fees which are triggered at the end of the terms. In some ways, a cash advance can be more harmful to internal business finances than a traditional debt-based loan.
A More Sensible Alternative
Instead of dealing with loans denials or taking on hefty fees with cash advances, business owners use asset based lines of credit. By using the value of assets owned by your business, you can get a revolving line of credit. Asset based lines of credit remove the bureaucracy and arbitrary loan board decisions involved with traditional financing. This alternative performs just like a regular business line of credit. As your business grows, so too will the amount of available financing.
CNH Finance offers the most comprehensive program for asset based lines of credit, nationwide. If you’re tired of loan denials and don’t want to get trapped in an unfavorable agreement with a cash advance, contact the experts at CNH Finance today.