Small Business Loans From The SBA–Traditional Loans And Microloans To Help Businesses Grow

Recent legislation has provided funding to the SBA so that small business loans may be made from certain lenders to companies who are in need of credit or funding to expand their business and help their operations grow. Small businesses have been looked to for the job creation that is needed in our country, but many business owners have said that the inability to hire has been related to constrained lending practices on the part of many banks.

While some small businesses have sought out microloans from the SBA, there are companies who are looking for traditional small business loans, which may be more helpful in growing their company, establishing a larger client base, or simply setting their company in a position to add more jobs in the near future.

Microloans can be helpful when it comes to smaller costs or assisting companies that may not be incredibly large, so this type of funding has been made available from the Small Business Administration. While microloans and traditional small business loans are somewhat similar, the amounts and their purposes can be quite different. As an example, some microloans are usually used to purchase equipment or inventory, but cannot be used to pay a business’s debts or buy property, according to the SBA website.

Recent legislation is hoped to provide more small business loan opportunities since the SBA will be able to guarantee a higher percentage on these loans. Many banks have claimed that small businesses have been hesitant to borrow and there are arguments that companies who acquire debt will not be likely to hire new workers at the present time, but it goes without saying that access to capital is needed for a business to grow.

As far as accusations against lenders who were reported to be tight with their small business loan practices, there are those who feel that these banks were simply worried that small businesses would be unable to repay these debts, thus they tightened their lending. However, it’s hope that with more funding to the SBA that companies will now not only have access to traditional small business loans, but may also be able to gain funding from microloans as well.