The Small Business Administration has been able to put more money into the hands of small businesses by guaranteeing small business loans from many lenders across the nation. This has been a great help to many small businesses who have been attempting to grow their workforce, expand their operations, and overall, become more profitable. However, since additional funding to the SBA has recently been exhausted, the small business loans backed by the SBA have a smaller percentage guaranteed.
This has caused the lending of these types of SBA loans to drop and many business owners are again saying that financial institutions are unwilling to make the loans that are needed to help the small business sector grow. However, a report on CNNMoney.com made mention of the fact that many banks are offering credit card loans to businesses who are asking for more capital but may be denied a small business loan.
There have been mixed feelings about this as there are many who feel that this practice by banks will only do more to create credit card debt for businesses and small business loans can be more affordable and beneficial than credit card loans. However, on the other side of that argument, there are analysts who cite the fact that the many businesses already rely on credit cards anyway and, according to the CNN report, 80% of small business credit card users pay their credit cards off every month.
While SBA loans are still available, since the Small Business Administration still can guarantee a small business loan, only they cannot guarantee as high of a percentage on a loan as they would have been able to with past incentives in place; many business owners are simply being denied loans altogether. However, business owners who are in a position to financially handle the responsibility of a credit card loan may be able to benefit and obtain the credit that they need for their company.
There’s no doubt that small business growth is going to be key to economic recovery and employment opportunities, and it is hoped that there will be more federal incentives given to the SBA so that a higher percentage of small business loans can be backed and lending will rise again. However, at the current time many feel that these credit card loans to small businesses can be beneficial and allow them access to the money they need to hire new workers, buy equipment, or simply handle a higher volume of business, which is an investment in their future and can create business growth.