Why Do Banks Decline B2B Financing Clients

Posted in: B2B Financing, B2B Invoice Factoring, B2B Invoice Financing, B2B Invoice Financing News- Sep 04, 2013 Comments Off

Why Do Banks Decline B2B Financing Clients?

We often get calls from companies that need business financing and have been turned down by traditional financial institutions. Many of these prospects consider their experience of trying to get bank financing/loans to be a sour experience. Traditional banks don’t really understand your business and how fast it can grow.

Start by looking at the typical b2b financing client. Many clients companies have a short amount of time in operations, but some may have more. Some of them have no hard assets for example: Real Estate or Equipment for the company or for the business owner. Also a number of them are in a rebuilding process; basically they are turning around a troubled business.

How do Traditional Banks Lend? Banks lend against assets you own, exceptional performance or a combination of both. To meet their standards you must have assets, good credit history or both. They want to see businesses and their owners have rock-solid balance sheets with assets that can be used as a guarantee. No real assets means no real collateral. Sometimes they can make somewhat of an exception to the asset rule, but in reality they want to see unrivaled performance showing a long excellent track record of success. And they will usually lend on a combination of these qualifications.

Now, if you look at the typical b2b financing client described above you will see that the majority of the time they will not meet the standards to get traditional bank loans/funds – even if you try really hard. With B2B businesses it’s better to go with a Specialty Financing Company like Transfac Capital’s B2B Financing Company, where we know your business and how you conduct business, so we can help you succeed and are here with you well you grow and expand your company.