Small business loans had been made available from sources like major banks to SBA programs over the past months, and there are initiatives that are in place to help some businesses find the capital they need to grow and expand, but recently there have been some reports concerning trends in the early part of 2011 and the rate at which small business loans are being made. It was recently stated that lending to small businesses had fallen in the first part of 2011, but this may have been simply the result of major banks failing to offer more small business loans, as there are indications that some companies may be turning to credit unions or smaller, community banks for their small business needs.
Yet, the question of credit to small businesses and the need for access to credit has been a debated topic ever since the recession first began, since businesses cannot grow and create the jobs that are needed if they have no capital which they can use to restock their shelves, open new locations, and ultimately prosper in such a way that they can hire new workers. Understandably though, there are many businesses that are still hesitant about borrowing and taking on debt as there are signs that the economy is, if truly improving, doing so at a very slow rate and may not warrant the risk of a small business loan at the present time.
For this reason, some businesses that may need capital have been looking to either angel investments or venture capitalists for the assistance they need, not only from a monetary standpoint but from an informational standpoint as well. Many investors, like an angel investor as an example, will have had experience and usually a great deal of success in a certain area which they are offering capital as an investment, so business owners are finding that when they can attract this particular type of financing they are not only getting the funding they need to pursue certain goals, but they can get invaluable advice from someone who has seen what works in their industry.
While there are also some indications from the SBA that major banks are beginning to loosen lending standards in some areas, businesses may still be either unwilling to borrow, or those who may want a small business loan may still be in the category of companies who are finding it difficult to acquire this type of funding. Small business loans from major banks, credit unions, or even microloans that are available from various sources have all been utilized by businesses in the past, but as lending has reportedly begun to slow, companies who are in need of financing and cannot find the borrowing options they need may be left with few alternatives other than these outside investors.
What businesses are wondering though is if they cannot get a loan, why would they necessarily be able to attract an outside investor? While there are no guarantees in the world of venture capital, businesses who set up a well-outlined and detailed business plan, but will present their company to an investor, who understands their industry, with new ideas or plans that may be attractive to a certain investor may find that, even if they are denied a bank loan, a particular investor who may take a hand in the company would be more willing to offer them financing so that they could grow in their success.