2 reasons why SME Business Owners don't like taking a bank loan

Small and medium-size companies are the core of the European economy. They represent over 99% of businesses in the EU, they employ 2 out of 3 employees and produce 57 cents of every euro of value-added At the same time they struggle with access to working capital and point to this issue as one of the most important challenges SME entrepreneurs face on daily basis.  
Business loans along with credit lines are still one of the most common sources of business financing among SMEs in EU. However, many companies are being rejected by traditional banks or the loan offer doesn’t meet the business owner’s expectations regarding amount or terms. Almost 20% of SMEs did not manage to get the full bank loan they had planned for during 2018.

In general SMEs point to the two most crucial areas where traditional financial institution fail them:

1. Bank don’t really like companies younger than 3 years

A bank may deny a request for a small business loan because the business is too young compared to its requirements due to lack of business credit or low personal credit. Collateral may also be required, which at this stage of the business is almost impossible to have.

2. Time wasting process of proving the creditworthiness of the company

Application and review process may extend over a longer period of time, this combined with the amount of paperwork needed to maintain your creditworthiness will keep SMEs’ plans suspended. Most small business owners require business loans fast enough to fund projects that will make a difference from their competitors if implemented.

It’s clear for every business owner that difficulties in financing growth ideas in the early stages of the business could have an impact on their entrepreneurial journey. Capital at this stage is very important for all entrepreneurs, whether by hiring or training staff, buying inventory, developing new products, or just having access to working capital in low periods.

Business loans should be agile, that’s why CapitalBox sets out to do what conventional banks can’t – move at the speed of your business.

We are the pioneer in financial technology, and we are proud of products that give you key advantages such as:

  • 5-minute application
  • Personal service
  • Fast response time
  • Instant access to money
  • Transparent repayment program

So now you know you have a choice – you’re not left alone. We believe in your company.

If you feel you are missing out check out our products by submitting your application here. We will contact you in no time.

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