So, at ComCap, we love a good metric. And our friends at Biz2Credit do a great job of compiling and presenting this type of data for all to see.
The good news is that year over year, across all bank types, loan approvals for small businesses have increased.
The BAD NEWS is that bigger banks still routinely turn down 2/3 of the loan requests they see. Credit unions are better, but still only approve around 40%. Finally, your local community bank hits the high water mark at 50.4%. The glaring message there obviously being that they deny one for every one they approve.
The numbers get even worse when you factor in loan fallout during the process or the scores of other requests that never make it past the Q&A call with the commercial loan officer.
Now, not to get too hyperbolic here, because we do love our bank partners and we all have our areas of expertise - Our sweet spots if you will, and big banks certainly fill their own unique spots within the marketplace. The problem is that too many small businesses are getting passed over way too often by way too many traditional banks.
For example, do you think your bank - big, little, local, or otherwise, would ever REALLY entertain a 100k UNSECURED line of credit?
If we're all being honest here, most banks will not only want to see a minimum loan size of 250k for that loan, but will want personal & corporate tax returns, bank statements, full financials, and 4-6 weeks to process it. AND they will want to secure it with something - commercial real estate, a junior lien on a residence, receivables, SOMETHING...
To be certain, if you can qualify for that loan, it's a great product - A low fee line of credit with an interest-only feature and rates in the fours or fives. What’s not to like about that? In full disclosure, we in fact offer that product through our network of banks and capital partners and will not hesitate to advise our clients to go that route.
IF. THEY. ARE. ABLE.
Many are not, however. Apparently at least half are not. That’s why it’s so very important to engage an independent brokerage to be your advocate, to work FOR you, and to get you to the good half...The better half...The APPROVED half. We do it every day, from two person salons to two hundred million dollar companies.
Wouldn’t it be amazing if next year when those numbers came out, you were on the right side of them, instead of on the outside looking in?