While there are still those who feel that business loans, particularly for small companies, are difficult to get and that lines of credit may still be closed for certain companies looking to grow, but this does not mean that all opportunities for small business are necessarily off the table. There are banks, both large financial institutions and smaller banks, that continue to offer small business loan options to companies that are beginning or looking to grow, but during this time of uncertainty where national debt issues are still being discussed and many businesses are unsure of what may become of the economy if agreements are not worked out in a timely manner, it’s plain to see why some businesses may be hesitant to borrow as well.
Many feel that it is the hesitation on the part of small businesses coupled with tight lending practices in the arena of small business loans that have led to the continued dismal job reports that have been seen over the past few months, with unemployment rising in June to 9.2%. Yet, there are still some companies that are looking to borrow, grow, and thrive even in what many deem to be an economy that has a long way to go before a full recovery is seen.
For businesses who are in this category of those seeking out a small business loan, it needs to be understood that smaller banks like credit unions or community banks, as well as large financial institutions, do offer potential lending sources for companies, but there are some aspects of getting a small business loan that many commentators feel may have gone overlooked by business owners. Obviously, in a pitch for a small business loan a company must make sure they have a well-outlined business plan and, for some, this may be their downfall.
Obviously any lender or investor will want to see a great deal of research done on the part of the business but presented in such a way that is clear-cut in what the business will do with their funds, why they feel they are projected to grow in this down economy, and what aspects of their business are currently in place and have been successful. Some banks or investors may simply look at a company’s management to see how well a business is doing, as there are lenders who feel that some businesses may believe a loan will be the answer to their problems, but of course this is viewed as more risk by the lender when a business feels like a loan may be their lifeline.
Without getting too technical, banks want to see that a business is using a loan to improve an already stable or successful business model, rather than to simply stay afloat and see whether they can recover from setbacks. Sadly, there are some businesses that have been denied loans even though they are in a position to hire new workers and expand with this funding, but it needs to be understood that the way the business is presented to a lender will heavily influence whether a business owner will get the funding they need.
The steps that each company takes will be different, but again, businesses that are established and looking for a small business loan to help further their enterprises need to make it a point to explain how their success has been accomplished during these difficult economic times, certain aspects of the business that are sure to grow and be profitable in terms of an overview of the entire market of this specific area within the company, and how a business plans to use the loan they receive to further their current situation and, ideally, pay back this debt as quickly as possible.
While there are no guarantees when it comes to small business loans, and even the best small business plans and pitches can fall short, business owners may want to explore not only large banks for their small business needs but community organizations as well, due to the fact that some financial institutions might be more willing to take the risk on a borrower in their area, as there could be certain insights into the likelihood that a business owner will indeed be able to pay back what they owe.