Small business loans have been said to be difficult to attain as many lenders are hesitant to make funds accessible to small businesses while the economy is still slow. However, business owners are asking for more access to capital so that they may improve their company, buy new equipment, or simply afford to handle a larger number of clients and customers.
Arguments for small business lending to help job creation have also been developed over the past months as many believe small businesses must have access to capital before they will hire. Yet, those who disagree with this notion say that more tax credits need to be made available so that businesses will be prompted to hire workers and save money since many businesses usually will not hire workers after acquiring debt from a small business loan.
Yet, there is the need for more business funds for many companies and, over the past months, many small business owners have turned to microloans in order to keep their company from sinking. While there are microloans offered from the Small Business Administration, as well as other sources, many companies who are not able to gain a larger loan for their small business have turned to these microloans in order to purchase inventory, supplies, machinery or, in some cases, to pay debts.
Also, Bank of America stated they will be offering microloan grants to nonprofit lenders in order to help community development institutions who may be able to assist small, community businesses that are struggling. One reason Bank of America is said to be offering these microloan grants is because “many lenders have been unable to meet reserve requirements in order to make these loans, which limits access to capital for small businesses who need this support.” (Source)
While some companies do need access to capital before they can expand their business, there is concern that small businesses will not hire workers even if access to small business loans or microloans are available. It’s for this reason that extensions to current tax credits have been proposed that would allow business owners to write off certain expenses if they hire workers who have been unemployed for a set period of time.
Yet, no matter the outcome of small business lending or tax credit arguments, one thing that is agreed upon by many across the nation is that before the unemployment situation can be corrected small businesses must start hiring, but this has been slow to occur since the economy has seen lower levels of spending and many business owners are simply waiting for things to get better before adding to their workforce.