[MCAVeteran]

SeanBash- We would have to have Nigel Morris address your concern for 24 months. They are going to more traditional financing so these 6 month turns are not going to be the norm for certain businesses needing financing..

http://www.capitalaccessnetwork.com/...of-capital-acc

[Sean Cash]

If you're going to do 2 year deals, do monthly payments and there must absolutely be a PG. If the business fails, the owner needs to be fully liable. The loan should be reported to the credit bureaus every month. Even still, I wouldn't do a 2 year deal. A friend of mine works for a large bank and it's their internal policy to decline 100% of all retail and restaurant loan applications they get, no exceptions. It's not because the loans are too small, but because the default rate for brick and mortar businesses is so high. I asked if they would do a 50 location restaurant chain with each location having been in business for 10 years, the owner having a million in the bank, no debt, and 800 credit. He said ABSOLUTELY NOT.

Lending Club does personal loans for 3-5 years. What do you think about that?

[jbrown]

If you're going to do 2 year deals, do monthly payments and there must absolutely be a PG. If the business fails, the owner needs to be fully liable. The loan should be reported to the credit bureaus every month. Even still, I wouldn't do a 2 year deal. A friend of mine works for a large bank and it's their internal policy to decline 100% of all retail and restaurant loan applications they get, no exceptions. It's not because the loans are too small, but because the default rate for brick and mortar businesses is so high. I asked if they would do a 50 location restaurant chain with each location having been in business for 10 years, the owner having a million in the bank, no debt, and 800 credit. He said ABSOLUTELY NOT.

Lending Club does personal loans for 3-5 years. What do you think about that?

I like this thread. Some very good thoughts here. The problem with a PG is that without collateral, it doesn't mean a lot. We all know what it means to chase a PG on a small business owner who has closed their business. I can sell anyone lots of that paper at pennies on the dollar if anyone is interested.

[Sean Cash]

I should also mention that another friend of mine underwrites credit card applications (I thought computers do the approving but apparently this bank does them all manually). They won't approve credit cards for small business owners and I don't mean credit cards in the business's name, but in the owner's name. I asked how that could be and he said because people that own a business are far more likely to default on debt than a typical consumer. These wasn't his opinion, but rather the banks position. I can't finger the name of the bank here but they are big.

The consensus I hear in the banking world is that small business owners default much too often for anyone to get comfortable with.