"It takes Money to Make Money"  Even today, when the current financial and economic environment has undergone such drastic changes in the availability of capital it is still absolutely critical that businesses locate a good source of unsecured financing.  Unfortunately, it is now much difficult for even the most qualified borrower to obtain funding than it has ever been.

1.  There are several good reasons why business owners should not go directly to the bank themselves.  Essentially 80% - 90% of people who try to go to banks by themselves get turned down.  Even when they are well-prepared and have excellent credit.  The true reason for the denial may never become apparent.
 
Trying to overcome this initial obstacle by visiting additional banks to submit applications will probably increase the danger of this approach substantially.  That's because each bank will see you applied at the previous banks and will begin asking why the others turned you down.  Their logic is that if Bank A rejected this application, there must be something they uncovered that we should also consider.  This increases the chances that they will turn down the applicant.

In addition, each time another bank pulls your credit, your score drops, making the applicant less attractive for approval with each application he submits.  A major fallacy is that having an established relationship with a bank increases the possibility of favorable decisions.  The bank's decision will be based on risk and their current guidelines.

2.  SBA Loans may sound attractive, but the application process can be equivalent of a college course.  The amount of paperwork required is staggering and the process usually takes from 3 to 6 months, if you are lucky enough to get it approved.  This goverment agency requires your business plan, tax returns and financials, usually business and personal and a complete resume.  Even after submitting the documentation, most people are denied funds.  This can be a tremendous amount of work for a person with a business to run - with very little chance of success.

3.  Be very aware of Invoice Factoring because this will make you pay on outrageous yearly APR of 60% -120%.  Many consider this financing to be equivalent of a PAY DAY LOAN for businesses.

4.  Merchant Cash Advances should also be avoided.  Although not as devastating as Invoice Factoring, you'd still pay an APR of 36% to 60% APR and you would be limited to a maximum of only 110% of your average monthly credit card sales.

5.  Personal credit cards should not be used because increasing your outstanding balances can drastically reduce your credit score, making it impossible for you to be approved for additional credit until those balanced are repaid.

6.  Family Loans.  The amounts you can acquire in this manner are limited and these loans may lead to family members and friends constantly evaluating your decisions and criticizing your every move.  Family gatherings may change forever if everything does not work according to your plans but Murphy's Law usually works pretty well.

7.  The Solution:  Before doing any of the steps mentioned above, contact a professional business financing company that specializes in Unsecured Lines of Credit.  This type of company will work with you prior to submitting your application to make certain that all of your documentation meets the current underwriting guidlines of different banks that offer this type of financing.  They analyze your credits and prepare your submission according to current bank standards and requirements.  They will also prepare you for interviews with the decision-maker of the proper banking department for your specific application.  In other words, your chances for being approved have increased to near-certainity.

In Summary, there are methods of financing that are still available to qualified borrowers.  But being quailified does not mean that these borrowers are capable of simply walking into a bank or other lending institution and being approved.  Substantial preparation is necessary and this should only be done through companies that specialize in the desired type of business financing and have relationships with several different lending sources.

CapitalManagers, LLC Equipment Leasing and Finance is a company that offers Unsecured Business Lines of Credit.  Our company focuses on providing solutions that help business owners overcome the obstacles created by the current economic and financial crisis in the United States.