It is no great secret that people in business face challenges and money is one of the biggest. Today, most people believe that it is small business that will turn things around. So why is it so hard to get a loan?
Part of the problem is the size of government. Believe it or not, it is shrinking. Cutting the fat saves on costs.
Spending money to attract business has always been important, but it has been cut back in many areas. Cities and States have problems just providing basic services. So priming the pump is now not an option for some areas.
Providing loans to create more jobs is the goal, but few seem willing to step up to the plate to make it happen.
Why Lenders Won’t Lend
Even the Federal Reserve low interest loans program has not made it much better for business owners tap into the funds. Lenders are trying to clean up their balance sheets so the process has simply gotten tougher.
Lenders want to write off bad debt. They also want to avoid future risk. As a result, it is now just harder to get business loans.
Because so many people need help finding loans, the Small Business Authority is trying to step in. They offer services which help to find and structure business loans.
The goal is to help businesses survive tough times and prepare them for future growth. Here are 3 of their current programs. Are you prepared to take advantage of them?
Flexible Term Lending Program: This program provides loans from as little as $50,000 and up to $5million. The terms range from seven to twenty five years and depend partly on how the proceeds are to be used. The rates can extend up to 2.75% over prime and float. Any “For Profit” Business in the United States can apply.
Fixed/Floating Rate Program: Here the terms are much the same as above but rates can be fixed based on current market rates. It should be noted that neither program allows proceeds to be used for real estate.
Conventional Real Estate Loan Program: This is the program which allows proceeds to be used in buying commercial real estate. You can even use the loan to upgrade, refinance or expand your property. Rates can float or be fixed with terms up to 30years with loan amounts up to $5million.
The fact that such programs may be welcomed news to some but how hard is it to get approved? Like most loan programs these days, lenders are looking for low risk applicants. Many small business owners feel they no longer appeal to lenders.
The truth is that many small business owners have had change their approach to business. Times are tough, and have been since 2008. Many owners have been forced to find creative ways to keep their doors open. But it can come at the expense of their business credit.
We hear a lot about late payments on business loans along with downsizing of employees and shrinking services. During this credit crisis people who have had to make tough choices when managing their money. The result for many has been denial of new credit.
It just does not seem fair but there is good news for business owners who are looking for loans. There are great business loan programs out there for nearly every one. In fact those looking to avoid government backed loans that contain limit use of proceeds may be in luck.
Borrowers want to be use to use their money how they see fit. But most business loans contain several restrictions. Did you know that very few people even know they can get approved for a loan using their personal credit?
Being turned away by the big lenders may not be such a bad thing. It has allows small business owners to learn about other ways to find loans. In many cases the loan terms are even better for the borrowers.
If you have not explored other types of business loans seek them out. If you would like some guidance, you can get pre-approved for free by filling out the form on the right. Getting a business loan has never been easier than it is right now.