Many small businesses claim that loans were incredibly difficult to obtain when funding ran out that allowed the Small Business Administration to guarantee a higher percentage on certain types of small business loans. Yet, recent legislation was passed that, not only provided some tax incentives for businesses, but also extended funding that will allow the SBA to guarantee a higher percentage of small business loans once again to small businesses in need of credit.
However, there are arguments that the small business lending opportunities from the SBA will not create more jobs as companies will be unlikely to hire new workers when they have acquired debt. Also, some financial institution state that, at the present time, businesses are unwilling to borrow at all due to the uncertainty of the economy and questions as to whether they will generate enough income to repay these debts.
There are arguments that certain tax credits, like the HIRE tax incentive, do more to promote the addition of new workers than loans, but some small businesses still say that access to credit which can be used to reinvest in one’s company is vital. There are some businesses who claim small business loans will allow them to employ new workers as they may be able to buy new equipment, expand their operations, or simply use these funds to handle a higher number of customers, yet there is question as to whether the overall benefit of small business loans will be seen when it comes to employment.
It’s hoped that these SBA small business loans will now provide companies who are looking to borrow the opportunity to do so since lenders are likely to be less stringent with their lending practices, but also, tax incentives are hoped to be used by companies to add more workers, which will obviously combat the unemployment problem and can be beneficial for the overall economy. While small business loans are no guarantee to make a business more successful or profitable, it’s hoped that those companies who can benefit from these lending opportunities will now be able to work with lenders to gain the credit they need.