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Banks Are Getting Tougher on Small Business Loans

So, we know that looking to a bank to obtain any type of business loan is risky business. Collateral issues, co-signer issues, and sky-high interest makes it one of the worst things a merchant can do when he or she is in need of funding. Studies are showing that the ability to get a bank loan is getting even tougher (as if it wasn’t before), and while some may be annoyed with this, it may just be a blessing in disguise for merchants big and small.

Those looking for high risk business loans are really feeling the pinch. While banks charged high interest rates and the rate of high risk merchants that were actually given a traditional bank loan is slim, some relied on this as their go-to option when they need funding. Those living in small towns with a good relationship with their small-town bank typically had luck, but the vast majority of us did not. The clamp is tightening down, thanks to narrow net interest margins, thanks to the Feds low interest rates. This doesn’t help the banks – but it could have helped high risk and traditional merchants who were in need of funding.

The lack of bank loans isn’t a downer for merchants, but for those who are not sure of their other options is can be. The first thing a merchants – mainstream or high risk – should do when they are in need of business funding is to call their merchant account provider. You do have a merchant account provider, right? Every merchant that accepts plastic card payments needs a merchant account. If you have one, good. If not, look at your options. Many merchant account providers offer merchant cash advance services, which is a “buy in” to your future sales. With this method, money is deposited into your merchant account, and repayments are made each time you process a credit card sale. This is safer and easier than a bank loan – and the repayment process allows you to keep your sales while keeping your repayments on schedule.

Small businesses, high risk businesses, and pretty much any type of business shouldn’t look towards a bank for a loan. When in need of business funding, look no further than your merchant account processor.