• Accel Business Funding

Are Business Loans Actually Helpful to Your Business?

Businesses often look at taking out a business loan when they need additional funding, due to being a well-known financing option. While there are advantages to taking out a business loan, such as being a predictable and temporary financing option, choosing to take a loan from a bank has many downsides that you should be aware of.

Are You Qualified?

One of the biggest disadvantages of a business loan is how difficult it is for businesses to qualify. Banks have to assess the risks for giving out loans to businesses, and often only look towards the applicants that have a sizable and stable credit history. As a result, startups and businesses in higher risk industries like restaurants will often be rejected. Especially during a crisis like COVID-19, banks are tightening lending standards even further to minimize their potential losses. Even after passing the initial screening, the bank is likely to require assets as collateral and utilize variable interest rates depending on your loan terms and the perceived ‘risk’ in lending money to your business.

Have All the Documents?

Applying for a business loan can also be a lengthy process, requiring businesses to provide numerous financial documents from financial statements, business plans, and letters of intent.

Can You Afford to Wait?

Applying for business loans can also take a very long time. Banks are also notoriously slow at informing applicants whether they pass or fail. Even after the slow approval process, waiting for collateral or for other terms to be decided and met can add onto the already sizable time it takes for a bank loan.

When looking for a solution to short-term working capital issues, it would be best to look towards other sources of funding.

Do You Have Sufficient Collateral?

To satisfy another requirement for a business loan, business owners need to put up enough assets as collateral. This collateral often takes the form of real estate properties and has to be worth around double the amount of the business loan. Not only do you have to have enough assets to cover a loan’s collateral, but those assets can be seized if you are unable to make payment.

What About Repayment?

While the repayment schedule for a business loan is predictable, it can also be extremely rigid and unforgiving. When a business faces trouble and cannot make the standard repayment, consequences could include having assets seized, negative credit score reports, or changed terms and rates that can be even harder for businesses to meet.

Can You Afford High Costs?

Business loans also tend to be much larger than some businesses may need, with some lenders being unwilling to provide loans less than $200,000. In addition to potentially high interest rates, businesses can have difficulty consistently making payments.


While business owners commonly look to business loans for their business funding needs, business loans may not be an ideal solution for their funding needs. In addition to a strict qualification process, the repayment and loan terms can also be restrictive for business owners. Before relying on a bank loan, you should always explore all your financing options.

Accel Business Funding has many different funding options for all businesses and funded many businesses more than $380million. When banks say NO, we say YES to funding in 24hrs!


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California's Loans made or arranged pursuant to a California Finance Lenders Law license

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