Small businesses have been called on to create more jobs in order to combat the high level of unemployment our nation is currently facing. Yet, there are small business owners who say that without access to capital from small business lending they are unable to grow and expand their company in a way that allows them to attract or handle more business, which is necessary for more jobs to be created.
However, there have been reports that lenders are beginning to loosen their small business loan lending practices. It’s been stated that some of the nation’s big lenders are willing to make more small business loans in the hopes pushing the economy forward in its recovery.
While small community banks were more likely to offer SBA loans when funding was available that allowed for higher percentages to be guaranteed on small business loans, these funds have expired and complaints arose over smaller financial institutions not providing the funds businesses are seeking. Yet, it’s been said that larger financial institutions may be offering small business loans but there is concern that businesses will not borrow.
A tax credit for hiring new workers has been offered to small businesses, and many believe incentives like tax credits are the only way to get companies to hire. Many small businesses will not hire new employees after they take on debt from a small business loan, but there are still calls for more lending. Typically, businesses that obtain a small business loan do so to, for instance, purchase equipment, expand their operations, or as a means of simply handling more clients and customers. When more business comes to a company more hiring usually follows, but many believe that small business loans will not promote more hiring.
However, there is legislation in the works that is hoped to make capital through small business loans more available since the SBA would guarantee a higher percentage of small business loans and there are also proposals to extend tax credits to businesses who hire new workers. It’s hoped that these proposals will make funds available to companies who want small business loans and prompt hiring in companies who may be hesitant about acquiring debt but still may be able to add to their workforce.