Traditional small business loans and micro-loans are some of the more common lines of credit which businesses have sought throughout the year, but there remain complains over tight lending practices from many banks as businesses have struggled to gain access to capital in some areas. However, new programs from the SBA which can provide smaller loan amounts, similar to micro-loans, may be available to more businesses and underserved areas and could allow for more borrowing opportunities in 2011.
Typically, businesses who seek out loans like micro-loans are not in need of a great deal of capital and may therefore find easier access to these funds. Yet, businesses that have attempted to acquire traditional small business loans may have been denied these funds as uncertainty in the economy and the ability of businesses to repay these debts led many banks to restrict their lending practices, which many feel is one of the reasons for slow recovery in the job market.
Small businesses are felt to be the key to getting unemployment back to manageable levels, but there are those who feel that if credit and access to capital remain tight, businesses simply cannot grow. Understandably, many small businesses who are allowed to borrow a small business loan may not immediately hire new workers or add to their workforce, but there are those who feel that access to capital is vital for a company to begin the process of growing and expanding so that additional workers may be needed.
Yet, business loans for smaller amounts through the new SBA program may be more beneficial to certain companies who are not looking to access a large amount of capital, and lending opportunities may be made available to certain community organizations in areas where financing has been sparse. Also, the new SBA small business loan program is hoped to offer financing opportunities to underfunded areas and promote hiring and community growth through the access to these lines of credit and funds.
While traditional micro-loan programs are available from banks and the SBA, it’s hoped that the new small business loan initiative which the SBA is rolling out in 2011 will create an environment where companies who can benefit from small business loans will be able to access these lines of credit as more lenders may be made available, like community service organizations, and companies will once again he able to become more profitable and hire more workers as a result.