Top 3 Shocking Facts About Loans Or Lainat paprradmin June 25, 2015 Finance 3 Surprising Facts about Small Business LAINAT One common hurdle faced by startup founders is fundraising. They have to hop through a lot of loops to make seed capital, angel capital, venture capital, etc. to build a sustainable high-growth enterprise. People think that small business fundraising should be much easier as it is primarily loaned. What I did not get is that it is actually not much simpler for main street companies. It is not surprising that a cash flow real business with genuine growth fails to obtain loans with an economical interest rate. Here are three very remarkable facts about small industry loans: 1. Bank loans are remarkably hard to get. SBA loans or Bank loans given through banks that have economical terms: usually 6-8 percent interest rate amortized over ten years. Still, the bar for these bank loans is very high. A standard bank loan borrower need to be two years in business, have around 250,000 USD of annual income, have business credit and good personal, and be cash flow assertive. Even if your business fits all the guidelines, you might still get set down by a bank because you do not have enough insurance. Banks like to give to the strong businesses that have ample assets. Or in simple words, banks like to loan to strong businesses who do not actually need their money but can use the additional capital to fuel growth. Practically, only a little percentage of businesses would fit for a bank loan. 2. Alternative business loans are notably expensive. Up until about a year ago, 24 percent APR for optional business loans were recognized filthy cheap because most of the merchant cash loan and daily debit loan providers are selling 50+ percentage APR even if you have a lucrative business. A merchant cash loan with four-month compensation and 100 percent APR is common. The landscape is fast changing with all the latest online course loan lenders like LendingClub, FundingCircle, Fundation, and Deal struck. But a great alternative loan APR today is still about 15 to 25 percent with 1 to 4-year repayment terms. 3. It is almost impracticable for startups to receive loans. If you are a tech startup with a working idea, you might be capable to convince an angel investor or an accelerator to provide you money for further development of your business. If you are a foremost street small business, it is essentially impossible to acquire a loan pre-revenue. Particularly, you have to be around six months in business with 100K USD annual income to satisfy a loan swindler to provide you a 100 percent APR loan that is supposed to be refunded back within six months. In other words, nobody gives to startups. If you are just beginning out, you have to use your savings, borrow from family or friends or utilize credit cards to finance the business. It is difficult to receive the interest rate down further as the standard rate for business loans is huge and alternative loans are not guaranteed/subsidized like SBA loans. After all, 80 percent of businesses collapsed within five years.