Where To Get A Loan For Business: Even If The Bank Says "No"

by: Neal Coxworth

It has been extremely difficult in the last few years for business owners to get a loan for business. Many businesses with good credit, financials, and business plans still can get denied credit for the best SBA backed loans are larger commercial banks, credit unions or savings and loans.

This leaves many businesses to search for new options when they may never have had to in the past. A commercial mortgage broker or commercial loan broker is always a good place to check. They may have options for those entrepreneurs who own their property or have a lot of equipment associated with their business. Either one or both can be used as collateral for a financing. However, these loans may also take upwards of 3 months or more to fund and require extensive documentation and appraisals, so be aware of this time constraint before trying this option.

For those businesses that accept credit cards, a merchant cash advance may be a quick option that requires little documentation and can fund quickly, often in a week or less. While these merchant cash "advances" are convenient and can often help businesses in a variety of difficult credit situations, it is important to remember that often they can have high upfront fees, and interest rates that exceed 50%. Additionally, they also come with heavy-handed requirements to switch credit card processors or purchase new swipe equipment. Also, because they are not technically loans, but cash advances, there is no legal limit to the interest rates and fees being charged.

There is another option for businesses that accept credit cards and may have difficult credit and still need to get a loan for business. This option is characterized by:

Interest rates that are 50-80% lower than a merchant cash advance

No upfront fees

No requirement to buy equipment

No requirement to switch processors

Owner credit scores down to 550. Maximum loan amount of $500,000

a true, regulated business loan that can build positive credit history, unlike a merchant cash advance.

While it may be harder for retail owners to get a loan for business, there are cost-effective options out there for businesses that need working capital but cannot meet the restrictive lending requirements of the Small Business Administration or their local bank. The important point to remember is that not all options are the same, and some may affect the long term health of the business in unanticipated ways.