Managing Director, BRP Onesta – 21st Century Perspectives

Need a Bank Loan for Your Small Business? Don’t Bank On It!

The Landscape of Small Business Lending Suggests Banks are Less Interested in Lending to Small Business Owners

By Thomas W. Tramaglini, BRP Onesta

Since the Great Recession of 2008, banks have continually made it harder for small businesses to borrow money.  If you are a small business owner and have applied for an SBA, USDA or bank loan, you will agree that the banks will ask you for everything including your 3rd grade report card.  Most small business owners do not have the time and in many cases the expertise to have adequate P&Ls or an accurate up to date Balance Sheet.

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However, regardless of the business entity or industry, many businesses need to borrow money.  In fact, according to NerdWallet, 29% of all small businesses fail because they run out of capital.1 Inherent in the same dataset, 57% of small businesses sought loans for their businesses of denominations of less than $100,000. “Most small businesses that apply for financing aren’t asking for much…20% [of small businesses] sought less than $25,000 and only 8% sought more than a million.”1

So What?

At the core of small business lending are banks and alternative lenders.  However, according to Anna Serio2 of the combination or PPP and EIDL funding and small business loans have more than doubled since 2019 to cover all types of business needs, including operating costs, payroll, investments, or to pay down other debt.

The Small Business Credit Survey (2021) 3 found the following regarding small business owners:

42% applied to large banks for loans

43% applied to small banks for loans

20% applied to online lenders for loans

27% applied at other alternative lenders, credit unions or CDFIs. 

However, while banks were more popular for loans, they were the hardest to get before March 1, 2020 and are harder to get approved for after March 1, 2020. 

Merchant Cash Advances and Equipment Lending

The Federal Reserve Small Business Credit Survey (2021) also suggests that 87% of small business owners were able to get auto or equipment approvals and 84% of small businesses were credit worthy.  However, only 65% of applicants who applied for SBA loans were approved for some credit, followed by Bank loans (57%).

What this still means is that Merchant Cash Advances and Equipment Loans are simply much easier to get than bank loans.

Some Pros of Merchant Cash Advances and Equipment Lending (Learn more Here)

  • Fast
  • Lower Credit is Okay
  • Most Loans and MCAs do not require financials or taxes
  • There are many different products to choose from
  • Most MCAs and Equipment Loans are Unsecured
  • Driven by Revenue and Not Credit

Some Pros of Merchant Cash Advances and Equipment Lending (Learn more Here)

  • Expensive
    • MCA Factor Rates are usually 20% or more and in most cases above 40%
    • Equipment loan rates tend to be better but still usually carry a higher cost than bank loans
  • Payback is usually daily or weekly (not monthly which most small business owners want)
  • Shorter terms (usually 6 months and under for MCAs)
  • No regulation of MCAs (See my review here of MCA nightmares)
  • Some brokers shop your application with 10-20 companies each time, leading to hard pulls on credit ultimately lowering your credit score




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Dr. Thomas W. Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico and Canada.

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