Small business loans have been needed by numerous companies over the previous months as there are more companies which are attempting to test the waters of the economy in the hopes that more consumer confidence will be present, purchasing may begin to grow, and through these small business opportunities, companies can begin to invest in themselves once again to become more successful and profitable. Yet, there have been complaints by some companies that small business loans in the form of traditional financing through major banks has been difficult to come by, and this has led some business owners to seek alternative sources for borrowing for their business.
Obviously, one of the more popular options for small businesses when it comes to borrowing is SBA loans, but even these options have been limited in some cases. A new SBA loan program in 2011, known as the advantage program, which is hoped to offer SBA guaranteed loans through the Small Loan Advantage and the Community Advantage Program is planning to not only offer more borrowing opportunities for small business through their preferred lender program but smaller, underserved communities may also find borrowing options from certain community service organizations.
Yet, some businesses have turned to smaller financial institutions when seeking these SBA loans as, again, some major lenders have been hesitant to offer funds even when they are guaranteed by the SBA. Yet, smaller banks like Community Banks or regional financial institutions may be an alternative source for small business borrowing opportunities when business owners are seeking SBA loans, but in some cases, business owners have also turned to other sources of financing like credit unions.
Reportedly, credit unions have begun seeing increases in their small business lending programs, and there are some areas of the country where these credit unions are attempting to offer even higher amounts of small business loans to their members. Typically, credit unions have a cap on the percentage of money they can lend to small businesses in relation to their members and assets, but businesses do still have borrowing options from these financial institutions as well.
There have been some companies who may be attempting to acquire a traditional small business loan for a small amount, and have been met with difficulty, but there are some companies who have turned to microloan programs as a way to find the funding they need when a loan for a small amount will do. Typically, programs from sources like the SBA’s microloan program will offer loans of up to $35,000 to companies, but obviously these microloan programs differ from lender to lender. However, for a business who may not need a large amount of capital, these types of loans have been accessible as, again, they are smaller in amount and may help businesses with options like purchasing equipment and inventory or simply as working capital.
While these alternative sources of small business funding are not always guaranteed, businesses who are in need of capital so that they may expand their company and, hopefully, begin to hire new workers and address issues like unemployment do have options outside of traditional, big bank business loans which may be unavailable at the present time. Obviously, a great deal of research needs to go into a company’s financial position and borrowing options before financing is sought out, but companies can explore options from smaller financial institutions, loans backed by the SBA, or micro-lenders as a way to find the funds they need if their business is ready for financing to begin growing.