Numerous small business owners have sought out small business loans in order to help their company grow and expand their operations. Recently, lending opportunities became available as legislation has provided funds for the Small Business Administration to guarantee a higher percentage of loans made from certain financial institutions.
Business owners have claimed that many banks were unwilling to offer small business loans due to fear associated with an uncertain economy. Unemployment remains high and housing difficulties are still present, which has caused a great deal of strain on numerous consumers. Many financial institutions felt that businesses would be unable to thrive in the current economy, and as a result, were unwilling to lend at high levels due to fear of defaults.
However, banks also countered with arguments that small businesses were unwilling to borrow small business loans as taking on debt in the current market was risky. However, SBA small business loan opportunities may now be open to more companies as a higher percentage of these types of loans will be covered if a business owner defaults.
These guaranteed loans from the SBA give lenders more reason to make small business loans, but simply because funds are available doesn’t mean that all companies should seek credit or capital from these sources. Understandably, small businesses need access to credit and money before they can grow and expand, and hopefully add new jobs in the future, but as some areas of the economy are still on shaky ground, small business owners are being cautioned before seeking out SBA loans.
While other incentives for small businesses are in place, like a health insurance tax credit and hiring tax credits, it’s hoped that small businesses who can benefit from SBA loans may now find the opportunities they need for funding. Other organizations may look to hire workers, and may qualify for tax credits if they do, but there are those who say despite SBA lending opportunities, many companies may take time before they add jobs since most organizations will not add workers after they have acquired debt.