Why are Banks not Lending to Businesses?
Gene Amato
Founder and CEO @ Capital Biz Solutions Inc. | Business Finance Consultant & Lending Advisor | Unlocking Capital for Every Business Challenge | Turning Bank Loan Declines into Approvals | US Army Veteran
There are several reasons why businesses may not be able to obtain bank financing, including:
·??????? Credit score
A low credit score, either personal or business, can make it difficult to get a loan.?Banks often want a personal credit score of at least 700.?
·??????? Length of time in business
Banks may not lend to businesses that are new or have been in business for less than a certain amount of time.?This is because they want to ensure the business has a proven track record.?
·??????? Collateral
Lenders may require collateral, such as equipment, real estate, or stocks and bonds, to protect themselves if the business defaults on the loan.?However, this can be difficult for new businesses.?
·??????? Debt-to-income ratio
Lenders consider a business's debt-to-income ratio to determine creditworthiness.?They typically want this ratio to be around 30%, but some may allow it to be as high as 40%.?
·??????? Cash flow
Lenders want to see that a business has enough cash in the bank to cover several months of expenses.?
·??????? Growth projections
Banks want to see a business's growth projections before financing them.?However, small businesses often grow slowly.?
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·??????? Interest rates
Rising interest rates can make it more difficult for businesses to service existing debt.?
·??????? Economic climate
An uncertain business climate can make it more difficult for businesses to get financing.?
At Capital Biz Solutions we have helped numerous business owners for over 10 years that have encountered these issues when dealing with their traditional bank. Banks are not fond of saying "no" to their customers, they truly want help. We are partnering with your local bank to pass their loan declines our way. At Capital Biz Solutions we can turn your bank declines into loan approvals in 48 hours. Please visit us at https://www.capitalbizsolutions.com/or simply call us at 508 864 7758 for a 30 minute free discussion to see how we can help your business with an approval for working capital.
To Your Success
Gene Amato CEO
Capital Biz Solutions, Inc.
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Providing Loans for Commercial Real Estate Owners across the US. Supporting Banking Professionals & CRE experts who love their Business Owner Clients.
3 周Good post Gene. From my seats in the business capital world...there are probably 15 or 16 reasons bank lenders say NO...industry buckets, loan size, geography, covenants, character, etc. Knowing why the banks say NO outside of normal credit / file reasons...is great way to find next lender who does not have issue with those unique issues.