As a small business owner, you’re not daunted by challenges. In fact, you routinely overcome problems (and the occasional crisis) that would sideswipe and setback many c-suite executives in large enterprises.
However, while you’re used to swimming upstream and defying the odds, there’s an obstacle in your path that can add frustration: getting a small business loan from your bank.
What’s the story here? It’s simple: most banks want as little to do with small business loans as possible. And it’s not just a matter of risk – which, of course, is a major factor. It’s also about profit. Underwriting a $50,000 loan takes banks about as much time (and therefore about as much money) as a $1 million dollars loan. Naturally, they make more profit from the latter, and so shift their policies accordingly.
If you are considering going to your bank for business funding, here are the top 5 small business loan requirements that small business owners face:
Banks use credit score as a primary criterion, because it’s an easy, automatic way for them to assess risk. But it’s not always an objective metric, because banks demand perfect (or near-perfect) credit. This leaves the vast majority of applicants on the outside looking in.
Extensive Credit History
Even if small business owners have perfect/near-perfect credit, their applications won’t go to the next step unless they have an extensive credit history. For many banks, this is a minimum of 2 years. That means start-up business owners don’t stand a chance.
All banks loans are secured by collateral – which is a non-starter for many applicants who either don’t want to pledge business or personal assets. What’s more, banks are notorious for under-valuing collateral.
Bank loan applications make tax filing seem like a trip to the ATM. Even a $10,000 loan requires an excessive amount of documentation – including comprehensive business plans with financial statements and projections, resumes of principals and managers, supplier contracts, and more. While each application is different, banks themselves suggest that applicants set aside upwards of 50 hours to compile, submit and often re-submit documents. And of course, documents deemed to be incomplete or “fall through the cracks” as they’re moved from one loan officer to another will delay the application process.
Last but not least – and possibly most egregious – is that banks specifically want to know what the small business loan will be used for. If they don’t approve, then the application will be rejected.
The Bottom Line
At Mulligan Funding, we’re proud to be a viable, credible and proven alternative for small business owners like you who both need and deserve a partner in your success. That’s why our clients:
- Do not require perfect or near-perfect credit. So-so credit or even bad credit is not a deal-breaker.
- Do not need years of credit history. Generally, 2-3 months is acceptable.
- Do not have to secure their loan with collateral. We expect our clients to fulfill their commitments and don’t need a Plan B in place.
- Do not have to submit a convoluted application package. Our streamlined application is a grand total of 1 page long, and can be completed online anytime in about 10 minutes.
- Do not have to get our approval for how they spend their loan proceeds. We believe that the best – and frankly, only – people that should decide if when, how and how much to spend is business owners themselves.
To learn more about our working capital loans, contact Mulligan Funding today. Each member of our leadership team has an extensive “real world” small business background. We know the challenges and opportunities you face on a daily basis, and will do everything we can to be part of your growth and success!
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!
The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.