Small Business Loans From Traditional Banks–How Businesses Are Qualifying For Borrowing Options

Small business loans available from traditional banks are obviously one of the more common routes that business owners will take when they seek to find borrowing options that will help them expand their company, grow to a more profitable level, and ultimately these loans will hopefully bring more success in the long run as they are seen as investments in a business. However, businesses were seeing tight lending practices in 2010, but there have been reports lately that show not only are alternative small business loans being made more available, through options like SBA programs, but traditional banks may look to lend more in the coming months as there are some financial institutions that saw increases in their lending in 2010.

It was reported that both the Federal Reserve Chairman, Ben Bernanke and Shelia Bair of the FDIC have predicted that they expect small business lending to improve in 2011, which is still one of the main goals and initiatives that many organizations and officials have set in the hopes of combating problems like unemployment. Small businesses that can grow with the use of loans are obviously going to be in a better position to hire, and despite reports that more private employers are adding to their workforce in certain areas, the amount of individuals who lost their job and are suffering as a result is still exceedingly higher than the number of jobs being added.

There are arguments that small business loan options from traditional banks can greatly help businesses with their financing and growth needs, and many smaller institutions like credit unions and, again, SBA programs are also hoped to add to the infusion of capital in lending which small businesses need to, again, begin growing and hiring more workers. It was also reported that major banks like Wells Fargo, Bank of America, and J.P. Morgan Chase did continue to lend to businesses last year, and some of these financial institutions even saw an increase in the percentage of funds made available to small businesses.

Obviously, some consumers have still had trouble when it comes to small business financing, but with not only the federal government incentives and programs in place to help more traditional borrowing options along or offer alternatives to the traditional small business bank loans, major financial institutions are, again, being said to have begun the process of making more capital available in certain cases. However, when it comes to qualifying for these borrowing options, there have been some general pieces of advice that are being offered to business owners who may have either had trouble finding funds or may be beginning a startup which could lead to difficulty when persuading a lender to make a loan.

Understandably, some banks are hesitant to offer companies financing if they are new or have not shown themselves to be a safe risk, when it comes to paying back these loans, but entrepreneurs are being prompted to still seek out the small business loans, but they must be prepared to highlight their company to a lender in many cases. While showing past success and income is helpful, giving reasons for a small business loan, how funds from the loan will be used, and expected growth and earnings are all pieces of a small business pitch that must be widely implemented by a borrower. There are also advisers who have suggested that companies may want to develop a relationship with a small business lender at their local bank, which could also offer general small business advice or aid when using current income from business, but if a small business loan is needed in the future, these companies that have an established relationship with a financial institution may find that their lender is more willing to work with them not only to get capital into the hands of their company but when it comes to repaying its debt obligation.

While small business loans might be more available in the coming months, they are not a guarantee for any business and, again, for those who may be a hard sell to lenders, taking stock of one’s business plans, income and expenses, as well as, even detailed outlines of how a small business loan will be properly invested are just a few steps which may help companies who are in need of small business capital but may be dealing with a hesitant lender.