Issues related to small business lending and borrowing opportunities for business owners have been in the news as of late due to the fact that some owners have felt that lending practices were too constrained, but SBA initiatives set to be launched in early 2011 are hoped to address small business borrowing needs and assist businesses in areas where they have been underserved. However, there are some business owners who may not need a great deal of capital and as a result are relying on programs like the SBA micro-loan program or peer-to-peer lending networks for borrowing opportunities.
Many small companies may not have enough influence to qualify for a small business loan or even be considered by a major financial institution. Yet, there have been options that small businesses have used from peer-to-peer lending services as this can eliminate banks altogether from the borrowing process and bring business growth opportunities. Obviously, many companies have got their start through investors outside of formal financial institutions and, as a result, were able to gain access to capital and allow them to invest in their company, grow their operations, and ultimately become more productive.
These investors which may offer capital to small businesses may work in a very formal fashion, almost similar to banks, but there are also informal investment opportunities which may be available to certain companies as a simple meeting with a potential investor could result in the capital that a company needs to get on their feet and running.
Yet, options from the SBA’s micro-loan program is one of many micro-lending opportunities that companies may also have when a small amount of capital may be needed. Some small business owners feel that they will not qualify for a small business loan and simply avoid trying, but when it comes to accessing a small amount of capital for a new company or a small operation, there are these micro-loan options which can bring capital that can help companies either purchase equipment, use as working capital, or simply purchase supplies to get their organization up and running.
Obviously, micro-loans and peer-to-peer lending options are no guarantee as there are some investors who simply will not offer funding to companies or some individuals who may not be in a position where qualifying for a micro-loan will is an option. Yet, these alternatives to traditional small business loans can be helpful to certain companies with as small startups or organizations who only need a limited amount of capital may have a great deal of potential for growth but are finding financing difficult through larger financial institutions.