Obviously small businesses who are in need of small business loan funding are looking for affordable loans through various lenders as there are different options which may be accessed for companies who are in need of capital to help them grow or simply establish their business on a more solid foundation. Affordable small business loans can be obtained through either traditional banks, credit unions, or programs like the SBA Advantage Program, but businesses need to do their research before they decide what exactly they plan to do with funds if they are allowed to borrow, as this can help when it comes to seeking out a small business line of credit or capital.
Many of the big banks and national lenders are one of the first places from which small businesses will seek these business loans, as these financial institutions may provide more affordability or access to small business funds simply because they are larger and, in theory, may be able to take more risk on a small business. However, the past months have shown that these institutions have been unwilling to offer a wide variety of small business loans to companies and many banks have been criticized for their lack of lending.
Luckily, there are reports that have stated many of these financial institutions and large banks are beginning to offer small business loans and other lines of credit as there are more consumers and officials who feel that the economy is improving, albeit slowly. Yet, these large financial institutions have not been the only source of small business funding as there are some indications that business owners have looked to credit unions as a way to access affordable small business loans as well.
There are companies who feel that smaller financial institutions or credit unions may be a better option at acquiring small business loan funds simply because these community banks or credit unions are on a more personal level with many local business owners and entrepreneurs. While there is no guarantee that a small business owner will get a loan from a small community bank or credit union, it’s felt that these sources of small business loans can not only be more affordable but could offer small business owners leniency if financial difficulties arise or can offer advice for businesses on how to better use the funds they may receive.
Yet, both large financial institutions and smaller community banks have all taken part in SBA loan programs which guarantee a percentage of small business loans and have allowed for more financial institutions to safely make small business loans in cases where they may have been hesitant to do so. While the Small Business Administration recently launched the Loan Advantage Program in the hopes of offering more small business funds to underserved communities and businesses, business owners who are looking for capital for their company are, again, not guaranteed to receive these funds despite reports that lending practices have loosened.
While a company’s credit score and rating will heavily depend on whether they can qualify for a small business loan or not, many advisers suggest that small businesses who are in the position to not only benefit from a small business loan but also repay this debt should present either a well outlined business strategy or offer explanations as to how they would use a small business loan, as a well-informed lender could be more willing to offer a business loan to a smaller company.