Loan Turndowns and Viable Financing Options

Loan turndowns are not unusual for new and small businesses. Traditional loans have prohibitively high accessibility requirements, pushing many businesses to the sidelines when they need capital the most. When your business is turned down for a loan, what options are available?

Loan Turndowns Aren’t Bad

First, being turned down for a loan is not a reflection on you or your business. Traditional lending channels are still reeling from the recession a decade ago, and are trying desperately to protect themselves by reducing the risk factors. Unfortunately for business owners, this means higher financial requirements and more collateral. Taking out a loan also means businesses are vulnerable to interest rate hikes, as we saw multiple times last year. Loan turndowns may seem bad on the surface, but that just means businesses have to seek out alternatives and think outside of the box.

Not All Alternative Financing Options Are Beneficial

Finding a stable financing alternative requires a bit of research, or discussions with people who are familiar with that arena. Many lenders offer cash advances as an alternative to traditional loans, boasting about the debt-free model along with its flexibility. While cash advances do not place any debt on the books, the flexibility is only superficial. There are no scheduled payments with cash advances, but there are numerous fees and a high interest structure which is not mentioned upfront. Unless a business makes an incredible amount of sales, overcoming the balance owed before the end of the terms is night impossible. This leaves businesses with extremely large balloon payments at the end of the agreement, and that ends up placing a huge strain on finances.

Leveraging Assets for Working Capital

Instead of being indebted to a bank or predatory cash advances, businesses are using their own assets for working capital. Asset based financing offers a revolving line of credit structured around the hidden value of things like receivables, equipment, and much more. There is no debt, no impacted credit ratings, and no exorbitantly large balloon payments. Additionally, the amount of financing available increases as your business grows, giving you an edge over the competition. Business owners who experience loan turndowns and who want a stable, manageable and renewable form of financing prefer asset based lines of credit over both traditional loans and cash advances.

CNH Finance specializes in asset based lines of credit for businesses across all industries. Our team has the years of experience and depth of knowledge to create working capital solutions tailored to your needs. Contact our offices today to get started.


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