5 Money Mistakes That Could Sink Your Business

5 Money Mistakes That Could Sink Your Business

| September 18, 2019

If your business needs to borrow money, you’re not alone. In 2015, small businesses borrowed a total of $593 billion. However, not all businesses look to traditional lending options like banks for financial support. In fact, there are countless other options available for getting a business loan. The key to picking the right one is to understand your business’s needs while staying aware of what’s out there.

To make sure you pick the right lender for your business, you’ll want to avoid making these 5 mistakes:

1. Not knowing your lending options.

The rates, terms and fees of small business loans can vary greatly. Before you rush into getting a loan or even just trusting your friend’s recommendation, do your own research. There are more lending options available than you may realize.

For instance, say your friend’s business gets their loan from a traditional bank. They even recommend their bank to you. Before you go by their recommendation, take a second to consider your options. Bank loans aren’t always as good as they seem. In fact, they can sometimes offer higher interest rates than other lending options. They can also be difficult to qualify with. This can translate into:

  • Less short-term spending money for your business
  • A smaller yearly profit
  • A longer and more stressful loan search for your business

The Solution:

When your business is in need of funding, less cash and a longer wait can slow down your operation significantly. To avoid this, consider other options like OnDeck Simple Business Financing. OnDeck offers loans up to $500,000 with rates as low as 9.99% Assumed Interest Rate (AIR). They also offer lines of credit up to $100,000 with rates as low as 13.99% Annual Percentage Rate (APR).

Lower interest rates mean you’ll have more money to spend on your business’s growth. This can be significant, even in small amounts. For instance, with extra cash you can replace old furnishing or equipment in your office. Small improvements like these are often important for providing a quality customer experience. 

To top it off OnDeck will evaluate your business and make a decision on lending within minutes. This means you’ll receive money within 24 hours of applying. With funding that fast, you’re business won’t miss a beat. 

2. Not applying for enough money.

Borrowing the correct amount of money to fund your business is essential for success. You don’t want to take out a loan, only to find that it’s not enough later in the year.

For instance, say you take out a loan for $100,000 which was the same amount you took out last year. At first, your operation is running smoothly but then unforeseen expenses start to pop up like:

  • Your essential equipment breaking down and needing repairs. In most cases, broken equipment needs to get fixed as soon as possible in order to stay profitable.
  • Your manager giving a two week notice. Not only will you need to spend time and resources replacing your manager but your business may get disorganized in the meantime. 
  • A competitor opening a new location right across the street from you, which diverts some of your usual sales. This may not sound like a big deal but just know that 19% of startups fail because they get outcompeted.

In cases like these, the $100,000 you borrowed can get used up quickly. This can make it difficult to pay your expenses and keep your business afloat. In 2018, 29% of startups failed at overcoming cash flow challenges and had to close.

The Solution:

In scenarios like this one, Kabbage® can offer you access to the additional funding you need.

With Kabbage you can:

  • Get quick access to working capital with a line of credit up to $250,000*
  • Qualify in as little as 10 minutes1
  • Apply right from your phone
  • Choose 6, 12 or 18 month terms2

Loans from Kabbage also come with no obligation for using your line of credit. You won’t have to pay anything until you actually withdraw funds. This means you’ll have a financial buffer all year.

So, that new equipment you need can get covered right away, if approved. You’ll also be able to spend your time interviewing new managers instead of worrying about paying your bills. Oh, and that competitor across the street? They won’t stand a chance.

3. Not staying on top of your credit score.

It doesn’t matter who you are, your personal and business credit score will come into play when applying for a loan. Lenders consider your personal credit score because it represents your creditworthiness. It also shows your ability to pay your debt back. A score of 700 or higher is usually considered a good personal credit score.

Your business credit score will typically range between zero and 100 but a score of 80 is a good score.

You can check your personal credit score with:

  • Equifax
  • Experian
  • TransUnion

You can check your business’s credit score with:

  • Dun& Bradstreet
  • Equifax
  • Experian

So what happens when you or your business have a lower credit? In cases like these, you may struggle to get financing from traditional lending options like a bank. For instance, say you were late on a few loan payments for your bank loan from last year. Now, you can’t qualify for another loan with them because your credit went down. This can cause your business financial strain. As you spend time searching for a new lender you may not be able to:

  • Buy necessary equipment
  • Stock your shelves with inventory
  • Pay your employees

This can lead to:

  • Falling behind competitors
  • Not meeting customers’ expectations
  • A lack of growth and expansion in your business

The Solution:

Bad credit doesn’t have to stop your business from succeeding. Lenders like FundBox can offer you a loan even if you have a lower credit score. In fact, they strive to support businesses with low credit. This means you’ll not only have a shot at getting the funding you need but you can improve your credit score with each payment you make.

FundBox also doesn’t just focus on your credit score when they evaluate your business. They review your business’s transaction history and data thoroughly. According to FundBox, this information is more relevant to your business than a credit score.

Other perks of getting a loan with FundBox include:

  • Getting a credit decision in under three minutes
  • Getting funds the next day after applying
  • Only paying for what you use

All of these benefits add up to one result – a thriving business. You’ll get the funds you need to grow and expand your operation in no time. They’ll even reward you with money savings if you repay your loan early

4. Not researching credible lenders ahead of time.

Instead of waiting until hard times hit your business, you want to have research done on lenders ahead of time. This can save you stress and ensure you work with a lender that has a good reputation.

For instance, say your ice cream shop makes the majority of it’s sales in hot summer months. Based on last year, you already know your shop makes enough in sales from June through August to cover your business expenses all year. But what happens when it rains all summer and customers stop coming? If you don’t get enough cash flow to cover your expenses quickly, your business may have to shut down. In a situation like this, you need to take out a loan quickly and work with someone you can trust.

The Solution:

If your business needs a credible lender that can provide cash fast, consider BlueVine. Not only has BlueVine received an A+ rating from the Better Business Bureau, but they have countless reviews from happy customers.

BlueVine can approve your business for a loan in as little as five minutes. They also offer:

  • Business loans up $5 million dollars, ensuring you can get enough cash to cover your seasonal dip in sales.
  • Interest rates as low as 4.8%, which help keep spending money in your pocket
  • Advisors that can walk you through the whole process and help you get the funds you’re looking for
  • Online applications so you can get started anywhere

If your cash flow dips, lenders like BlueVine can help you cover necessary expenses all year, like:

  • Payroll
  • Inventory
  • Equipment

5. Not realizing there are flexible payment options.

When you’re in a pinch, a loan can provide the funds you need to improve productivity and survive. However, before you rush into getting a loan you want to make sure you can pay if off later with a repayment schedule that fits your business. Otherwise, you can risk getting locked into a payment schedule that you can’t keep up with. When this happens, you risk:

  • Damaging your credit
  • Owing more money as interest accrues
  • Reducing your paycheck to pay your bills

These can all lead to business failure.

The Solution:

Fortunately, you can avoid this by looking for a lender that offers payment flexibility like Biz2Credit. Advantages of getting funding with Biz2Credit include:

  • Loans as big as $5 million depending on what you choose. This ensures you can get enough money.
  • Loan terms going beyond five years, depending on what you’re looking for.
  • Quick deposit of funds, to keep your business going and avoid stress.

With Biz2Credit, it doesn’t matter if you choose a business loan or line of credit. Your business will be able to get the money it needs to operate on a payment schedule that works for you. This means you can take longer than five years to pay back your loan. You won’t have to stress about paying in a shorter time than that, unless you want to.  


Getting the funding your business needs doesn’t have to be stressful, time consuming or an unpleasant experience. With the right planning and research you can narrow down lenders that fit your business perfectly. So before you rush into signing on the dotted line for any loan make sure you look at what they offer in detail.


* Credit lines and pricing are subject to periodic review and change, including line and pricing reductions, line and pricing increases, or line eliminations. Individual requests for capital are separate installment loans. All loans are subject to credit approval. All Kabbage® business loans are issued by Celtic Bank, a Utah-Chartered Industrial Bank, Member FDIC.

  1. Kabbage can approve you in minutes for up to $200,000 when we are able to automatically obtain your business data and verify your bank account. Lines of credit over $200,000 require a manual review. In some situations, errors may occur during the sign up process, or we may need to send micro-deposits to confirm your bank account for security purposes. If this is the case, it may take up to several days to provide you with access to funding.
  2. Not all loan term lengths are available to all customers. Customers can view their available term lengths after qualification.