Perhaps surprisingly, more than three-quarters of people who have operated small businesses for less than 10 years have never applied for business or personal loans to keep the company afloat. Many of these business owners did not wish to take on the extra debt or doubted that a bank would approve their loan, especially before the recession began to recede.
At the same time, many small business operators feel like they have no other choice than to turn to a loan, especially if they do not have friends and family, or even a personal savings account, on which to depend. These individuals must consider a couple of important factors before they begin the application process.
First, the loan application process often requires weeks, and banks have become pickier since the recession. Today, business owners will have to submit more paperwork than ever before to gain approval for a loan. This process can harm business processes and disrupt a company’s workflow.
Second, debt can consume a company. Small business owners must figure out how they can incorporate paying the debt into their business model without letting the goal of becoming debt-free overtake the goal of healthy, sustainable expansion. When a business focuses on how to pay back a bank loan, it can often let other important business considerations go unattended.