Many companies and small business owners have been seeking some form of capital or line of credit, which they can use to grow and expand their workforce. The Small Business Administration has been guaranteeing a higher percentage of small business loans over the past months, but when funding expired for these guaranteed loans with a higher percentage, small business lending dropped. While there are reports that businesses may have access to capital through credit card loans, companies need a more affordable line of credit for their business.
Small businesses are being called on to add jobs so that the unemployment rate in our nation, which has caused many Americans financial hardships and as he bled over into other areas of the economy, like housing. However, businesses who are unable to obtain the credit that they need simply can no longer help this unemployment problem since they cannot afford to add workers, or expand their business, without a business loan or some other form of capital.
Traditionally, businesses will use a small business loan as a form of investment so that they can perhaps hire new workers to deal with a larger workload or customer base, buy new equipment so that they can perform jobs faster or simply take on more jobs, or a small business may use a small business loan to open additional offices, which again would add to their workforce.
There have been troubles when it comes to providing capital for many business owners, but there is hope that in the near future more funding will be made available to the Small Business Administration to provide the loans that many small businesses need. Many feel that the blame for this lack of small business lending lies directly on lenders, as the small business administration simply guarantees these loans and doesn’t make these traditional loans directly to small businesses in many cases.
Lenders, who are cautious and uncertain of the future of our economy, have been hesitant to make small business loans due to the fact that they worry that the default rate might be high if our economy happened to seep back toward a recession. However, many feel that this lack of lending and hesitation on the part of lenders who are waiting for things to get better is exactly what is stopping the job market and economy from growing. Sadly, there are those who fear that until small business lending increases, new jobs are created, and money can be pumped back into the economy, lenders are simply creating a self-fulfilling prophecy by not making loans to businesses until businesses grow.