A business bank loan can come in a variety of forms and options provided by the lending institution or their relationships with brokerages. These loans are typically offered to larger corporations that need larger amounts of money for operations. Business bank loans will require an extensive proposal plan with a new and documented statement of success. In times past, this funding could only be offered by a bank or credit union. Today there are many governmental programs and private organizations offering assistance to entrepreneurs around the world. Choosing the best program should begin with seeking Gods guidance. “And I say unto you, Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you” (Luke 11:9). It is a good idea to search for lenders that have special programs that coincide with the businesses agenda. Institutions that deal in small business bank loans would be inappropriate to apply for if the amount requested is millions of dollars. SBA or Small Business Administration lenders allow for a certain number of financial agreements to be received by small establishments. The SBA guarantees a percentage of the funds loaned to small businesses requiring a pre-authorization before the funds can be distributed. When researching the services the SBA has to offer, it is important to note that the SBA is not, by any means, a business bank loan lender. They simply make a guarantee to the lender in the case of default.
The SBA may provide resources for contacting a plethora of lenders who offer funding for small and upcoming businesses. The best chances a borrower has of securing any business bank loans comes with franchise ownership. Banks are more ready to provide money for a franchise than for an unknown start up. A franchise will have already established methods for success. This success is documented in their financial statements, which are required if the borrower would like to receive a business bank loan. Fictitious financial statements as required for start ups are just that, fictitious. While the method may sound good on paper, there is no documentation to back it up and it is therefore considered a risk.
Funding that involves a tremendous risk will usually be denied without ample collateral being pledged as security. Even if the business bank loan, with the collateral, is approved; the interest rate may skyrocket to immeasurable lengths. Banks do not like to risk their money in faulty investments. They only allow for a .05% default rate. When their default rate increases beyond that .05%, they tighten up their lending reigns and no longer take on any risky ventures, with or without the security of collateral. It is wise to develop an effective moneymaking plan before applying for any business bank loans.