Banks Want Collateral for Loans

FOR IMMEDIATE RELEASE


Are Banks Really Lending?
“Collateral is key when it comes to interest rates”

PHILADELPHIA, May 31, 2011 — A Broad Axe-based startup located outside of Philadelphia called MultiFunding has announced its National Small Business lending snapshot results. MultiFunding is a technology-based business designed to help small businesses find the right lender. Its survey concluded some surprising results. Research showed that in today’s economy, collateral is a key factor in determining interest rates. Credit and cash flow, previously important in assessing a small businesses’ credibility has taken a back seat to equity according to its survey.

Multi-Funding‘s Chief Executive Officer, Ami Kassar, the former Advanta executive who started MultiFunding said its research team examined 250 geographically diverse small business owners referred to the company for the lending assistance. “All of the participants had an annual revenue averaging 750k and sought an average of 325k in funding, and the business owners were divided into three groups by lenders,” said Kassar.

1. Asset Rich Business Owners – (31 percent in our study)
These are business owners with assets and/or cash. They are fortunate in that they still have equity left in their homes, buildings, and equipment that is sufficient enough to meet the collateral requirements of banks and SBA lenders. These borrowers benefit from interest rates between 3 percent and 8 percent a year. Ironically, the government supported SBA programs favor this group. They can benefit from a commercial mortgage or a loan program backed by the SBA.

2. Marginal Business Owners (47 percent in our study)
Business owners who fare well with credit and cash flow, but do not have assets backing their business. Thought of as “B Borrowers” these businesses will have to turn to Factoring, Merchant Cash Advance Loans, Unsecured Loans and Private Money Loans. They pay a high premium because of their lack of collateral.

3. Non Lendable Business Owners (15 percent in our study)
Due to bad credit, poor cash flow and lack of collateral, these are small businesses that are not eligible for any type of financing.

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Media Contact: Jennifer Sherlock| 609-369-3482| jsherlock@jennacommunications.com

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