Struggling to Get Small Business Loans

inRich.com gives examples of small businesses that struggle to get a loan. One business took over a year to receive a loan and another found a bank turning down a loan despite good personal credit and money on deposit with the bank.

The article goes on to describe the long and difficult process of getting bank loans. Even a bank branch manager admitted that one of the small businesses turned down for a loan should've easily won the loan.

Some businesses have better luck with a community bank or a regional bank thank with a national bank. Less paperwork and bureaucracy. But the bank is not a business owner's only option.

Many lenders offer options that make it possible for a small business to receive a loan and much faster than at a bank. Check the financial assistance section of the Small Business Administration's (SBA) web site. The section covers grants, loans, bonds, capital, and more.

The SBA addresses the following loans:

• 7(a) Loan Program: "This loan is available on a guaranty basis. This means they are provided by lenders who choose to structure their own loans by SBA's requirements and who apply and receive a guaranty from SBA on a portion of this loan. The SBA does not fully guaranty 7(a) loans."
• CDC/504 Program: long-term loan for boosting a community's economic development.
• Micro-Loans: Loans up to $35,000 for start-ups and growing small businesses.
• Disaster Recovery: for victims of a disaster -- not just businesses.
• Special Purpose Loans: For businesses looking to grow internationally or do business with those affected by NAFTA.

SBA loans help loan applications improve their credit score where they might not be able to do so using traditional loan methods.

Companies have many options for business loans beyond traditional banks including:

• Government assistance like SBA -- longer payback, but complicated process (government bureaucracy).
• Friends and family -- better chance of lower or no interest, the loan could affect the relationship.
• Home mortgage -- cheap and long term, but it means putting your home at risk should you miss a payment.
• Credit cards -- small amounts and high interest. If you don't pay off credit card every month, you accrue interest
• Venture capital -- large amounts, but hard to get and usually means sharing ownership.
• Finance companies -- offers flexible solutions that requires your finding the one that fits your company, but they can be expensive and some require collateral.

Be ready to answer basic questions. Also collect all your relevant information and paperwork such as:

• Business plan and projections.
• Business financial statements.
• Business tax returns.

You may need to provide more than this depending on the lenders. The lending company will also want to know:

• How much money you need.
• What the money is for.
• How you will repay the loan.
• What will you do if you can't get the loan.

Here are questions to ask a lender. Do your research and ask lots of questions.