Why Start-Up Loans Are Hard To Get


Appropriate small business start-up loans are not easy to find right now. Unfortunately, whenever the economy is unstable, the normal funding sources always dry-up fast. In many situations, the banks have not stopped lending money. Instead, the competition for the available funds increases as more-and-more unemployed people opt to start their own small businesses as a way to survive beyond their unemployment pay-periods.

The United States government is attempting to fund banks and the other traditional small business loan services with extra money to distribute to the small businesses that need a chance to receive approved start-up loans. However, while the government funding ideas are a nice gesture, the program seems to have one overwhelming problem. The banks and other financial institutions are not overjoyed at the prospect of taking on loans to increase their loan-output abilities to new businesses that might fold in less than five years.

The available figures on small business failures are different from each reference source that is analyzed. As a rule-of-thumb, most experts agree that the small business failure rate may be over 50% in our current economy. In simple words, small business lenders are taking a huge risk when they choose to provide new businesses with any type of funds that are earmarked as new business start-up loans. This risk increases when the loan money comes from a government loan that must be paid back.

In response to this banking loan crisis for small businesses, there are many sharks waiting in the waters with small business loan offers to make. Business credit card loans are very easy for everybody to get today. Unlike personal credit cards, business credit cards are not currently covered by the new consumer credit protection act that limits the amount of fees and interest that a credit card company may charge their customers. Payday loans are another quick source of money that offers loans to almost every person who applies.

There are no easy answers on how to find business start-up funds today. New businesses cannot show the long-term stability rates that most bank loans require right now. Further, it is impossible to submit multiple loan applications to banks until a lender is found. Each time that a bank checks the applicant's credit, a mark is placed upon the credit files. When loan applicants have had their credit checked more than once or twice over a six-month period, this triggers that person as a bad credit risk.

Some small businesses are having successes in applying for their start-up loans. When the economy is bad, loan application rates are up. Small business loans are a competition that requires the loan applicant to present their interests in a way that allows them to win the chance of a bank loan. It is often wise to contact your business attorney or financial advisor to determine if their skills can help you to secure one of these bank-funded small business loans.