RevenueLoan Blog

November 1, 2010

Secure a cash loan with cash. Really?!?

Filed under: news — Christian @ 10:45 am

As property values decline alongside the economy, small businesses looking for a bank loan to fund growth are being told something pretty shocking: Show Me The Money.

Increasingly, banks are requiring small business owners to provide cash as collateral against a loan!

The thinking here is complex, but no matter the path you take to get there, the end result is still ridiculous: Having to provide a cash guarantee for your bank loan.

Emily Maltby – a reporter for the Wall Street Journal – does a great job illustrating the problem in her article, Collateral Damage in Lending.

As we get the word out to the world that revenue-based financing is a viable and effective model for financing small business growth spurts, I expect we will see more customers coming to us after hearing crazy requests like this from their bank.

In the article, Joseph Jackson of Jackson Pianos LLC is looking for a loan so he can expand into a larger building. The bank’s stumbling and fumbling has caused him to miss several great properties already, despite reducing his loan request to less than 20% of the original amount.

This is perfect territory for a revenue-based loan. He gets his money up front, and then pays us back a percentage of his increased revenues. This way, he gets the cash he needs to expand, and we – the investors and the business owner – are both motivated to make his business grow.

It’s a win-win situation. Too bad his local community bank that he has been dealing with for years doesn’t have this kind of vision.


1 Comment »

  1. […] did hear about the $1-for-$1 loan, right? As long as the banks continue to do stupid things like that, filling their vaults with more […]

    Pingback by Emptying Hoover Dam with a Garden Hose « RevenueLoan Blog — December 22, 2010 @ 11:48 am | Reply

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