The New Small Business Loan
By NGO on Jan 1, 2008 in Finance
Banks everywhere are nervous now that unsecured loans are making small business loans from mainstream institutions a thing of the past. No longer are businesses without the proper time, collateral or business plan being left out in the cold when it comes to funding. Whereas banks used to be the primary funding source for many ventures, a large majority of entrepreneurs have become fed up with the hassle of paperwork and time consuming processes when dealing with banks. Opting for unsecured loans paid back through credit card sales has become a fast easy way to secure funding and move a business forward.
Once a business owner finds out how easy it is to secure funding this way, rarely do they ever go to a bank for a small business loan ever again. For the most part, when funds are needed for such things as expanding a business or an equipment lease, owners simply want to focus on getting their business to where it should be. Many times banks require lengthy financial records and an explanation of how the money will be used. Then there is the long wait of finding out if the bank feels the business meets all the strict criteria for a loan. By comparison, some unsecured loans can be approved the very next day.
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On Feb 15, 2008, Jack McManus said:
There is definitely more of this kind of lending, as well as the new P2P lending. I wonder how banks will adapt to this.