Businesses in need of financing and who are researching traditional bank loans for the opportunity to either establish or grow their company do still have options for aid despite the fact that there have been alternatives to traditional small business loan financing made available over the past months. However, these major financial institutions that are able to offer small business loans do still heavily scrutinize companies that may be potentially looking to borrow and, for this reason, there are certain factors that small businesses need to consider before seeking out a loan from these major lenders.
As an example, businesses that simply must make sure that they have outlined their business model, plan, and can either show data that they will be in a better than average position to repay their debt from past earning reports or projected earning may help sway a small business loan in their favor. Obviously, companies that may be established could stand a better chance at getting financing from any lender, but some major financial institutions are also looking to help new businesses and established businesses find the financing they need, despite the fact that last year there was a great deal of concern when it came to the practice of small business loans from these banks.
Also, many small business advisers make it a point to remind these companies who are seeking a small business loan to remember that the effects of the recession are still present in the economy in certain areas and, simply because a business may be doing well at the present time does not mean they need to take on debt. However, when it comes to businesses who have researched these financing options, there are those who may be in a position where borrowing can be beneficial and affordable if a small business loan is reasonable in terms of the repayment obligations.
This is one of the main areas where small businesses must take caution and look at offers from multiple financial institutions, even though many are drawn to these major banks primarily. Small business loans may be available from credit unions or regional and banks so, as a result, there can be more affordable options in some cases when a business is looking for this financing that may help their company expand into other market areas, increase their workforce, or simply grow their customer base by offering new products, as an example.
Yet, businesses also need to remember that there are options like SBA loans that may be available and helpful, especially since recent programs like the Small Loan Advantage initiative was begun to help companies both get a more streamlined application in the hopes of getting funds in a timelier manner or simply as a way for companies to find financing in underserved areas. A report on BusinessWeek.com mentioned this SBA program and stated, “The Small Loan Advantage will be for 630 of our preferred lenders, including the largest banks, such as Wells Fargo (WFC), Bank of America (BAC), and U.S. Bank (USB), as well as regional banks.”
Essentially, reports indicate that many major financial institutions, despite feelings that many borrowers were having trouble finding financing, did increase their small business loans last year, but there are some companies who simply may not qualify at the present time due to their current state, or in some cases, businesses may simply want to look for options outside of the traditional bank loan as affordability could be found in other areas, even if the business does qualify for financing from a large bank.