For many businesses, adding more working capital is more important than acquiring new customers — since it is often the former that creates the capacity and context for the latter to happen. If you are at this decision point, then here are 4 common business loan mistakes you must avoid to maximize results and flexibility, while minimizing risks and costs:
Business Loan Mistake #1: Not exploring your options.
Don’t settle for the limited selection provided by your bank or credit union. You should take this opportunity to explore all of your options, including solutions in the alternative lending marketplace. Like thousands of business owners each year, after you conduct your due diligence and crunch the numbers, you may be pleasantly surprised by what you discover.
Business Loan Mistake #2: Believing that you need collateral to get a business loan.
Banks, credit unions and many other lenders insist on sufficient collateral before reviewing (let alone approving) a business loan application. But the belief that all business loans are secured is not the case. There are many products and solutions available, such as working capital loans, merchant cash advances, and business lines of credit — that are unsecured, which means you do not have to pledge your business and/or personal assets.
Business Loan Mistake #3: Waiting until you have an urgent or emergency expense before applying for a business loan.
Business loans are not just for covering urgent or emergency expenses, such as a seasonal shortfall, or covering building or vehicle repairs. The most successful businesses use business loans to make timely investment in new technology, new locations, new people — and the list goes on. As the old but certainly applicable adage goes: “you have to spend money to make money!”
Business Loan Mistake #4: Not thinking about how much money you actually need.
Before you apply for a business loan, you should narrow down the amount of money you actually need and stick to it throughout the loan process. Some less than ethical lenders will encourage you to borrow more money than you need because they are looking to make a bigger profit. When you borrow more money than you need, it can be more difficult to pay back, plus you’ll have “dead money” sitting in your bank account which isn’t being helped by inflation.
The Bottom Line
At National Business Capital, we help business owners across the country succeed and thrive. Unlike banks and credit unions, many of our business loan solutions do not require collateral, and impaired or bad credit is not a deal-breaker. What’s more, we assess loan applications within 24 hours, and our approval rate is around 90 percent — compared to about 20 percent at big banks. Further, we never push our customers to borrow more than they need – Your success is our success so we tailor each loan to fit your unique situation.
To learn more, contact us today for your free, no-obligation consultation. Or if you are ready to get started now, complete our short, secure online application form. We’ll be in touch within 24 hours to discuss next steps, and see how we can play a role in your success story!