Small Business Loans And Lines Of Credit Beyond Traditional Bank Loans–What Options Are Businesses Using?

Small business loans and lines of credit are said to be becoming more available to many businesses through programs funded by the SBA, traditional bank loans, and alternative options that many businesses have used over the past months when access to credit was tight. However, there are still some companies who fear that a traditional bank loan may be either too costly or unavailable for their situation, as there are some situations, like a startup for example, where a track record for their business may not be well established and could result in a borrower being denied capital for their business. Yet, there are options outside of these traditional bank loans that are being used by many businesses to acquire the credit they need.

Obviously, small business credit cards are one of the forms of credit that companies typically turn to if a small business loan may not either be available or if a company does not want to acquire a sizable amount of debt all at once. Small business credit cards, along with other lines of credit, were hard to come by for many over the past months, but there are many indications that the credit card industry is beginning to offer more options for credit cards to a variety of borrowers, and some businesses have simply begun researching credit card options that can be available for their personal situation.

Small business credit cards can be used to purchase inventory, products, or simply as a way for a business to further their endeavors if a sizable small business loan is not necessarily needed or available. However, small business credit cards may also be one area where companies have struggled to find access, so further alternatives have also been used by many businesses over the past months. Again, the SBA has offered guaranteed loans to many companies and new programs in 2011 are hoped to further these lending initiatives, but many businesses have turned to credit unions as an alternative to borrowing from major financial institutions.

Recent reports showed that small business lenders like J.P. Morgan Chase, Wells Fargo, and Bank of America saw increases in the percentage of small business loans they made in 2010, but there are still companies who have used these credit unions as a way to find the financing for their business when they may have been unable to gain access to funds from these major banks. Credit unions can offer a great deal of affordability as borrowers must be a member of a particular credit union, which usually requires an application process, so many members are usually in a decent financial position and there have been requests by credit unions to change laws that prevent them from lending a higher percentage of their assets to small businesses.

However, credit unions are not a guarantee when it comes to these loans, so businesses have also been prompted to explore options from microloans or peer-to-peer lending networks, as these are also additional sources of small business revenue that can help a company grow, expand, and increase their profitability. Yet, there are some small business advisers who suggest that businesses that may find small business loan resources difficult to come by, simply step back and review whether they are in the financial position to afford the costs that come with repaying small business loan debt. Some companies have been in a position to benefit and repay small business loans, but were denied access to capital.  However, there are those businesses who may simply not be in a position at the current time to repay these debts, so before exploring these alternative options for small business capital, businesses must be sure that they are in an excellent position to combat the debt associated with a small business loan or line of credit.