Getting the Money You Need by The Patria Company, 05/07/09 19:34:03

One of the questions that we have heard hundreds of times is this.  "Why don't banks lend money to the businesses that need it?"  "If I had $50K I wouldn't need to borrow it!"

We can wrap this up in one word - RISK.  Banks hate risk.  When a bank loans your small business money they will require a personal guarantee from the share holders.  They want a sure bet and they understand one thing - if you have made the money once before, the chances of making it again is much higher.  If you default on your payment and you have the money already... you CAN pay it back.

In fact, it recently has been so bad for banks that even if you had the cash in the bank they still would not loan you an equal amount.  This is commonly done by businesses as a form of leveraging.  If you can create post-tax net profit at margins larger than your interest rate, it only makes sense to use the banks cash and not your own; which could be invested separately to create additional profit.

So what can we do?  Talk with real people that are not tied down by chapters of regulations or tied up in red tape.  I can not even count the number of bankers that I have heard compliment a business plan only to turn it down flat.  Nor can I count the number of frustrated clients that I have heard tell me about going through months of scrutiny only to get turned away due to a personal credit score.

Set up your free account and get the money you need.