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Small Business Financing Blog
There has been some good news regarding small business lending over the last few months. Several reports have come out stating that overall small business loans are up across the nation – with small banks and credit unions holding their loan funding steady while larger banks picking up their efforts.
Plus, with new small business loan products coming on the market – these revenue based loans – we might finally be seeing small business lending making a come back.
But, not all small businesses qualify for bank loans or these private revenue based loans or are in areas that have yet to see this slight turn around.
So, if you are one of the unfortunate, what can you do now?
New Locations For Business Funding
Lot of veterans out there especially as the wars wind down and the government works to cut our military. Combine that with high unemployment and you end up with a lot of dedicated and highly skilled people with nothing to do.
Not good for our country.
So, they have two choices. 1) get on those government handout programs which we just can’t afford and I bet (being a vet myself) they would not like or 2) get them involved in starting and growing their own small businesses – businesses that will create jobs, build wealth and contribute massively to their communities.
I know that I would choose the later and I could guarantee that 95% or more of those veterans would as well.
Veterans Loan Programs
For small businesses in seeking a business loan, it use to be that they had to follow the five Cs of credit – which include 1) Character, 2) Capacity, 3) Capital, 4) Collateral and 5) Conditions – especially when seeking a bank funded business loan.
And, up until just a few years ago, all small business lenders just simply followed the same overall risk assessment policies that bank’s created to underwrite commercial debt facilities – like the five Cs of credit.
However, with banks not lending to small businesses and many private non-bank lenders just simply disappearing after the financial crisis, new unsecured business loan players have entered the market and, in creating new financial products, have created their own lending moniker – called CAT.
The 3 Key Factors In Landing An Alternative Loan
When the financial crisis hit, many small businesses took a huge tumble. In fact, many tumbled so hard and so far that they just could not recover.
Yet, some still survived. Even when their bank lines of credit were pulled backed or closed. Even when banks tightened their lending standards so much that no small business could qualify. And, even when other alternative small business lenders dried up and went away.
The question is why did those businesses survive and others did not?
What Your Business Should Do When It Can’t Get A Business Loan
For years, 5 plus years now, banks were not lending to small businesses of any kind. Just too much risk they would say. And, small businesses owners where pulling out their hair trying to find needed financing.
In fact, according to the Federal Reserve Board’s Senior Loan Officer Opinion Survey on Bank Lending Practices, in the 4th quarter of 2008, 74.5% of banks reported tightening their lending standards to small businesses – a trend that would continue through 2010. During the same period, small business loan demand remained somewhat steady.
Last April (April 5, 2012), there was a government bill passed and signed that was suppose to help small businesses get the capital they need to grow and succeed.
Since the financial crisis (and even before really) banks and most private small businesses lenders ignored the bulk of smaller firms needing financing – especially those companies right there on Main Street that help both their local communities and those communities’ consumers (not to mention the amount of jobs they create).
So, this JOBS act was passed with the provision that these small businesses could raise money from their friends and family or even from their customers or others in their community and that those investors do not have to be accredited investors or extremely wealth people. Further, instead of accepting this money as a loan with monthly payments and high interest rates, these small businesses could give equity (ownership) in their companies in exchange for that investment.
Thus, small businesses gets the capital they need to expand and their investors get the upside potential in owning parts of these companies – not to mention the ability to help some businesses stay open, remain in their communities as well as develop and commercialize new products and new industries.
So, What Happen?
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- New Small Business Loans For Veterans
- The Best Place To Locate Your Small Business
- 3 Key Factors To Landing An Alternative Business Loan
- When You Can’t Get A Business Loan, What To Do Next
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If your business is not accepting credit and debit cards from your customers, then you are losing bigger sales.