11-27-2017, Life Insurance for SBA Loans -- There’s no doubt about it: growing a small business is no small challenge. No matter how amazing your idea or product, you’re bound to encounter some serious mountains.

According to aTD bank 2017 Business Survey, some of the key challenges that small US-based businesses face today are rising interest rates and rising healthcare costs, both of which can be at least partly attributed to uncertainty surrounding the state of political leadership.

And these days, more and more small businesses like startups areturning to credit cards and other forms of financing over bank loans than ever before. This is partly because someone in four businesses applying for credit were denied, and the ones who received financing did not get as much as they needed.

According to theFederal Reserve Bank of New York:

“… although many employer small businesses were profitable and optimistic, a significant majority faced financial challenges, experienced funding gaps and relied on personal finances. These issues were even more pronounced for the smallest firms, which were less likely to receive necessary funding and more likely to rely on personal finances to operate.”

Despite the fact that the vast majority of businesses in the United States are classified as small businesses – that is, they have employee bases of 500 or less – approximately half of all businesses fail in the first 5 years.

Many of these fail due to lack of funds and a lack of finances.

On top of that, even the businesses that succeed don’t even break even for 2 or 3 years, making financing at the outset crucial. The tricky part is that securing financing is also the most difficult part, which is why so many small businesses are denied financing. And owners are understandably frustrated.

Here are a few key reasons why small businesses are often denied funding.

An Uncertain Economic Climate

Uncertainty behind the local and regional economy is a basic stressor and reason behind the struggle many small businesses encounter. This very uncertainty is why so many businesses are likely to seek financing.

Unfortunately, this problem is also a reason why banks are less likely to give loans. When times are tight, lending is too. Banks aren’t inclined to lend when it’s possible the economy will take a dive, tanking many small businesses.

Because of this, many people are turning to personal savings, lines of credit, and even loans from family and friends.

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