If you have watched prime time television over the last few months, you would think that business loans are easy to get and literally driving the economy.  The large banks, like Bank Of America, are running very heart warming commercials touting their successes and their commitment to the little guy.

The ads run the gamut from Small Town America to the mean streets of Los Angeles, but true to form, they are nothing more than clever marketing strategies to counter the bad press they have been receiving on other fronts.  For the chosen few there certainly are business loans available from the big monster mega banks but these are the exceptions and not the rule at a time when small businesses need help.

If you refer back to the countless mentions of the Small Business Jobs Act of 2010, you will remember that this legislation was touted by Politicians as the way to turn the economy around.  Getting business loans into the hands of small business owners to hire and expand was seen as the best way forward, and for anyone just interested in photo ops and fluff, it was a momentary political victory.

But, for the small business sector, it yielded little fruit.  The business loans programs were certainly a good idea but government red tape and mismanagement clogged the pipeline and the money did not begin to trickle down until early July 2011, a mere 6 months before the program was slated to end.   However, the well intended funds were never meant to fall into the hands of the undeserving.

Extremely attractive borrowers were the ultimate target for these business loans so for those trying to stay afloat in this down economy, help was never really on the way.  The majority of small businesses who are “burdened” with fixing the economy are drowning in the debt they have taken on over the last 3 years in order to survive.  Even the most successful ventures could not have foreseen the rough waters ahead so letting their business credit scores slip and overextending themselves may have seemed like the best option at the time.

But believing that the easy access to capital promised by government officials was on the way was a pipe dream for most, and seeing commercials about how their friends and neighbors are flourishing due to the help of banks with well endowed advertising budgets should be seen as nothing more than time fillers between contestants on Dancing With The Stars.  The fact remains that small business owners with decent track records and solid business plans are being routinely turned downed for SBA business loans regardless of what the banking industry’s creative statistics show.

Where To Get Business Loans

Bankers are not shy about pointing the finger at the SBA for dragging their heels but are skiddish on making realistic business loans to reasonably qualified applicants due to perceived risks.  Pushing through applications is no longer the goal of originators who are spending more time trying to figure out how to keep more cash on hand as assets.

The only real solution for small business owners to find suitable business loans is to turn to small community banks and non-banking lenders.  The community banks are more willing to lend than their larger counterparts but their underwriting guidelines are increasingly stringent.  However, the ability to cultivate relationships with local banks will be helpful if not for now, but for the future.  Getting on the radar screen of your local lenders can pay off down the road.

For those with less than stellar business credit there are myriads of non-banking lenders out there to serve you.  Learning about unsecured business lines of credit might actually surprise people when they discover the friendly terms and ample loan amounts. These types of business loans are generally easy to secure, easy to apply for and have lightning fast turn around times.

It is shocking to find out that business loans experts are reporting that demand is the lowest it has been since 2003. How can this be? With more business owners wanting money you would think that the numbers reported would be through the roof.

But what is not being considered is the turn down rate and the perceived turn down rate. That is to say a majority of people who want business loans do not even apply because they believe they will be turned down. Even though they can qualify for many types of programs the numbers of people who do not bother to apply should somehow be included so that it shows demand is still there.

Tough economic times have meant changes for everyone. The consequences for the past culture of pushing through risky financings are being realized at one of the turning points in our plans for economic recovery. Banks are now held to a tougher underwriting standard and have been bailed out while the small business owner’s bailout is not coming.

It would not be a stretch to say that the small business sector is probably a little more deserving of some sort of bailout than an industry who knowingly made bad loans and is largely responsible for the entire scope of the credit crunch, but things are the way they are. What the current situation shows more than anything is what a bad job lenders are doing to educate their market.

Business Loans For Most Who Apply

The burden of recovery and job creation are clearly being put on small business yet the business loans programs promised by the creation of the Small Business Jobs Act of 2010 are proving to be out of reach for most who need them. There is absolutely no reason why federally backed money should be handed out at high risk to the taxpayers leading potential borrowers to believe that help in on the way benefits nobody.

The underwriting guidelines for SBA business loans through the program are strict and these loans, as they should have been all along, only go to the well qualified. But the well qualified and attractive do not represent majority of borrowers shouldering the responsibility of creating jobs. The group with the most power are those drowning in debt who have mortgage the farm to keep the doors open and their employees working through one of the toughest periods in America since before World War II.

There is however, a segment of small business who are in terrific shape to borrow for expansion but they lack the collateral which banks want to lessen their exposure to risk. Many borrowers have devalued real estate which made great collateral in the past, but banks do not want to be stock with real estate in areas where there is high unemployment and little growth.

It sounds like a catch 22 for all but those with money to lend, especially to borrowers of higher risk, need to advertise and educate potential borrowers to how they might fit perfectly into certain programs which are not represented by the SBA initiatives we hear so much about in the news. The money is there, people just need to learn how to get it.

Look For Alternative Business Loans

There are business loans available to just about anyone who applies. Look for alternative programs that provide free applications and approve borrowers within only a few days. Pay attention to those who will lend based on personal credit with no required collateral. Make sure read all disclosures and ask for references. Any reputable lender will be up front about the types of business loans they provide and the repayment terms and schedules.

Just because the numbers reported in the news say demand is low, does not mean that people do not want business loans. The number of potential borrowers out there is staggering and the number of lenders willing to provide capital is equal to the task. The worst thing you can do is assume you will not qualify for competitive business loans and not even bother to apply.

For anyone following news about business loans since the onset of the credit crunch, the Small Business Jobs Act passed in late 2010 was supposed to help turn the economy around by injecting capital into small businesses in the form of SBA Loans.  Our initial study of the Act made us believe it was nothing more than political posturing and any real help it would provide would be merely luck and the result of the best laid plan.

A glowing example of just how so political well intentioned ideas like business loans for businesses that actually need can be, Senator Maria Cantwell who helped get the business loans program passed through Congress, was out in front of it on Sunda at a Seattle brewery that is expanding its operations.  That’s right, Cantwell was present as the Elysian Brewing Co. announced Sunday that they would be adding 35 additional jobs at their brewery in Seattle.

To nobody’s surprise this tiny news was picked up in almost every news outlet on Monday and even though 35 jobs is certainly good news, it can be taken to mean that the Small Business Jobs Act is a success.  Elysian now has a $5 million business loan to finance the expansion and credits the access to that money to the Small Business Jobs Act.  In a nutshell, the Small Business Jobs Act helped to decrease fees and increase loan guarantee limits for up $5.5 million for certain businesses.

This is the premiss of the Act passed last year which was supposed to make life easier for small business and allow them to help cure the economy through job creation.  Senator Cantwell feels that this is exactly what the Act will do.  We are not so optimistic.  It just might too little too late.

First, business loans are not available to everyone.  Small businesses that don’t have stellar business credit are going to have a hard time getting approved for loans under the act.  Further, the application process is a perfect example of government red tape because it is not easy to understand and approvals are not quick.  The problem with the lag is that businesses that need capital to survive in the short term may go through the process believing they have a chance to qualify, and when they don’t, they are in even more trouble than they were initially.

I like to think as the business loans trickling into the economy as icing on the cake.  They remind of scoring 5 runs in the top of the 9th inning in a baseball game when your team is already up by 10 runs.  The runs are great but you are already in great shape to win the game.  A business trying to survive in this bad economy needs faster and more concrete help and a Senator hanging around at a brewery taking photos is not really the answer.

Small Business Owners need to understand that business loans have always been available regardless of the state of the economy and the health of their own business credit.  Firms like Seed Capital can help owners understand the process of securing financing for start up, day to day operations or expansions.  In fact, for those who qualify, there is a $50,000 guarantee the business loans close quickly.  Those who feel they have troubled business credit will be surprised how far Seed Capital will go to find creative ways to obtain financing and create healthy business credit for future financings.