Small Business Loans | Business Loans

Is State Run Banking Better For Small Business Loans?

December 27, 2011 By loans Leave a Comment

North Dakota Small Business Loans It is not that often that we look to North Dakota as a model for small business loans but the successes of the state’s banking system has spurred other states to take notice. Of all the 50 states in our country, North Dakota is the only one with an official state bank.

The Bank Of North Dakota was founded in 1919 and as the official state bank, all state run agencies are required to bank with them. The bank then serves as the hub of local development by making small business loans, farm loans and other economic development projects. The fact that North Dakota is the only state without a budget deficit since the credit crunch began, has political rabble-rousers from around the country demanding their state’s look into such a system.

There are a lot of factors in play for North Dakota which may be leading to their budget surplus and low unemployment and mirroring their state run bank may not work so well in other areas. Nevertheless, several states have formed committees to do feasibility studies on the subject and within a few years we may other states following suit.

But critics of such measures have some very valid points. The fact that North Dakota has the only state run bank in the Union does not mean they are the only state on the ball. Every state has had the option to introduce legislation and chosen not to. The main reason is that they do not see a need.

The truth is that a state run bank may sound like a good idea, but those claiming they need the state’s help securing favorable small business loans are not going to be good candidates for borrowing anyway. Attractive business borrowers have access to capital in North Dakota and the rest of the country within the private sector. In fact small business loans may be easier than ever to get for start-ups and low dollar borrowers.

North Dakota’s Banking success is very impressive but not really scalable. Local businesses who are able to get business loans from the Bank Of North Dakota are viable candidates at any bank. It is the other borrowers, who may require some creative financing options, which are the ones that need the most help. Legislation and exploratory committees not necessarily the cure the economy.

If you are looking for a small business loan and have not yet established business credit, now is the perfect time to obtain financing. Fewer small business borrowers are looking to banks, state run or not, for loans. The funds with favorable terms are simply not there for most borrowers. Programs like Seed Capital, help put new businesses, franchises and undercapitalized outfits in position to get unsecured business loans with very favorable terms.

All it takes is a free application and any business will find out if they qualify for these type of small business within just a few days. The process is simple and there are programs available for nearly every business type. So if you are in North Dakota, or anywhere else, apply for your small business loan today.

SBA 504 Business Loans Helping Drive Recovery

November 2, 2011 By loans Leave a Comment

We receive a lot of questions about SBA business loans and the one thing we like to make clear is that they are great if you can get them. And there lies the problem. Borrowers hear so much about them and believe they are the only way to get financing, that if they do not qualify, they think there nothing out there for them.

Here is an example of a recent news story illustrating success using the SBA 504 small business loans program. Keep in mind this is the exception and not the norm, which is what draws the ire from critics who believe the SBA is out of touch with today’s business borrowers. We’ll start with a nameless commercial real estate owners and how he got his sba business loans.

The owner wanted revitalize his depreciating shopping center and pump some new life into it during the economic downturn because he believed it would be cheaper to do so while lenders are having a hard time finding qualified borrowers. In his case he was correct and found an SBA backed loan for $3million dollars to complete his west coast project.

The SBA 504 program is nothing new. It was developed over 30 years to help small to medium sized business secure financing but is becoming more popular now do to incentives being offered to lenders by the SBA. The main one being a federal guarantee of up to 90% on business loans which significantly reduces a lenders exposure.

They are becoming more attractive to business owners as well because they have good rates and long terms. With commercial real estate being as cheap as it is right now, many borrowers are looking to the program to reduce their barriers to entry and/or enticing them to renovate. Our example owner was able to tap the SBA when most lenders without such backing would stay away.

The SBA is making a concerted effort to drive investment toward expansion and hiring wherever possible and this is great news to hear as we see their number of such business loans increasing but the problem is that this does not really represent the needs of small business owners in general. People who qualify for SBA 504 loans or other SBA programs are extremely well qualified and seeing stories about these type of transactions send out false messages.

Business owners who need to pay off accruing debt before they hire and expand may be out of luck. Debt and repayment of that debt has been a problem for many over the last 3 years and this will keep them out of an attractive program like the 504. Restructuring debt is a huge concern for small businesses but the Government isn’t interested in partnering up with those people.

The point here is that even though our example owners is one of the “little guys”, he was at the helm of medium sized fluid venture. Most of us are not and seeing puff pieces about our fellow “little guys” on the news is more propaganda than anything else. When people see this, they rush out to the banks for business loans and when they are rejected without even going through the application process they believe they are out of luck.

Instead of publicizing the SBA 504 Business Loans program on the national news, perhaps it would better serve the community to run stories on small business owners who are finding creative financing through non-traditional lenders offering business lines of credit or unsecured business loans. Borrowers are having huge success getting business loans this way and pointing this out might actually make for some real human interest stories.

Filed Under: Business Loans Tagged With: Business Loans, SBA, SBA 504, small business loans

Solyndra’s Business Loans Go Bust

October 15, 2011 By loans Leave a Comment

Solyndra Business Loans We have certainly had our share of business loans news over the last few months regarding the Solyndra debacle but people want to know what really happened. For the most part, we like to discuss small business loans and how they can help you, but sometimes these big stories are perfect examples of what not to do.

You may or may not understand that Solyndra was a solar panel company which received government backed business loans as part of a restructuring deal early in 2011. The point was to help the ailing company get through its troubles and keep from laying off over 1000 employees. After all, this was the perceived point of the Small Business Jobs Act of 2010 and everyone knows that the running points of the next Presidential election would be jobs, jobs and more jobs.

So what is the problem then? Well for starters, the small business loans received by amounted to over a half a billion dollars. That’s correct, I said billion! As part of President Obama’s green initiative, moneys would be earmarked to help push “Green” businesses participating in the renewable energy field. It is certainly a well intended initiative and common sense would dictate that this is the right direction for energy businesses to head, but Government help was not a good idea in this case.

Under new legislation, Solyndra was the first company to receive such funds and perhaps somebody should have looked at their books or their business plan before making the loans. The industry itself is years behind China, who often points out that they plan on dominated the industry in the future. China’s plans to develop solar and sell it to us before we can develop our own industry are very well known. So why throw money at Solyndra?

The reason was politics. The Department of Energy was bold in encouraging the lender to push through business loans that did not make sense in order to win a political victory for the democrats. Whether this violates any laws remains to be seen but politicians will weasel out of it as they always do. But, the issue is this. During the restructuring of their loans, private investors were given a first lien position on their money in case Solyndra defaults on the loan.

It all sounds good but the problem is that the private investors here, many whom have strong financial ties to the democratic party, were put ahead of the taxpayers who effectively made the guaranteed loans in the first place. This is clearly an example of abuse of power and cronyism at its finest. The taxpayers are footing the bill and guaranteeing the loans for the private investors. Let’s keep in mind that there is no way the public would agree to do this if they were given advance warning of the deal, but this is the situation.

So why then did Solyndra not have to go through the same strict underwriting process that you or I do when we apply for small business loans? You will have to ask the Department of Energy, but they may to busy leaning on lenders for their next big business loans project to give you an answer.

Filed Under: Business Loans Tagged With: Business Loans, small business loans, Solyndra

Was Obamas Busines Loans Plan Doomed To Fail?

October 12, 2011 By loans Leave a Comment

Several stories have come this week about the flop of the federal business loans program related to the Small Business Jobs Act of 2010 and they are a bit misleading. We have long taken the stance that the entire program would be nothing more than political posturing and never reach its intended goals and now that the handshakes and ribbon cuttings are over, President Obama is being blamed for the program’s shortcomings in what we shall call some reverse political posturing.

Regardless of the successes or failures of this business loans program there was never any doubt that politicians would prepare to capitalize on the comings and goings of the program just like they do with ever other issue, and the reasons for the small business loans programs failures have little to do with the Politicians who created such a flawed plan and more to do with the fact that Politics and Government simply do not mix.

In order to run an effective program, the politics need to be left out of administrating such and important initiative, and unfortunately for us, this will never happen in the United States. But now that this program has ended with results exactly as we, and anyone else with any sense at all would have predicted, let us take a closer look at exactly what happened.

From the get go, the Small Business Jobs Act of 2010 was designed to incentivize banks into granting more small business loans by guaranteeing higher amounts and lowering administrative costs. The thought was that small businesses fuel the economy and this sector would do more hiring if they could get better access to favorable business loans.

It all sounded great and lately we have been seeing headline after headline about community banks receiving funds to lend and businesses who were saved because of it. But $30 billion was earmarked for the program which ended in September, but most of the money went unclaimed and unborrowed. Of the $30 billion to invest in the small business sector, only $4 billion has made it to the lenders for business loans and $26 billion is headed back to the Government. I bet you didn’t see that coming!

The fact is that there were over 7500 eligible banks which could have participated in the program and less than 1000 actually applied for funds. At least that indicates that there were at least 6500 banks out there with some sense! Those that participated in the program had applied for about $13 billion in funds for business loans and less than half of them were approved leaving only a small portion up for grabs by borrowers.

The problem was that, as usual, government works slowly. Everyone knew that the program was slated to end in September but the money only started flowing in late July. On top of that, several complaints from eligible banks regarding the confusing and stringent application process were largely ignored and this effectively clogged the pipeline.

Any small business relying on Government backed business loans to make it through the rough spots would be out of luck and those waiting on new capital for these so called new hires would not be able to pay the salaries of new employees. To say the President was at fault for this would be irresponsible, but anyone believing that help was on the way because of government backed business loans was being foolish.

Filed Under: Business Loans Tagged With: Business Loans, small business loans

Small Business Loans Still Problematic

August 27, 2011 By loans Leave a Comment

Business Loans Still Problematic

Small Business Loans are always a hot topic around here and contrary to popular thought, they are not getting any easier to get. Sure, there are SBA programs and new initiatives by government to help prime the pump on hiring but the reality facing small business owners has not changed much since the credit crunch began.

The truth is that the numbers have not supported the claims of proponents which say that small business loans are more readily available than ever before because of the SBA. What we are seeing is that most business owners who really need loans do not even bother applying because they believe they will not qualify. Many are simply afraid of being turned down by lenders while others do not want to pay high interest rates because their credit might be less than appealing.

While waiting until their credit improves might be a common misconception when applying for business loans, still others who want to borrow do not even know where or how to apply. How can this happen when all we hear about on the news is that small businesses are getting loans through community banks thanks to the efforts of SBA lending programs?

The reality of the landscape paints a far different picture of what business owners really face as the struggle to navigate this down economy believing that help is on the way. The application process for business loans has proven difficult and confusing many, while those who do manage to muddle through find themselves with far less money than they want or need. It is abundantly clear that relying on funds that may not come as core component of a business plan will not be enough to ensure success.

One of the biggest challenges right now is to get business owners who are put off by the process to understand that they have more options when it comes to small business loans than the SBA. Perhaps the news that money is available for this segment of the economy is not all that bad if it compels owners to seek out alternative funding. It is the pessimistic attitude which needs to change and the fact that SBA is just being the SBA really won’t matter.

In an economy like we’ve seen since the credit crunch of 2008, it may be better for small business owners to accept unsecured business loans with absolutely no restrictions on how the proceeds are used. Did you that SBA small business loans cannot be used to pay off existing debt? Or that underwriting guidelines have become more stringent at the very time they need to be relaxed in order to get some of this stimulus money into the economy?

While SBA small business loans are indeed a great option for people trying to find funds but it is important to know that there are other alternatives which are also viable. Working with a quality company like Seed Capital with no application fees can help you understand all options and or challenges facing your small business.

Most people do not realize that unsecured business loans can be based on an owners personal credit, can be used for any purpose, can help establish good business credit and are absolutely free to apply for. Further, the application process takes only a fraction of the time it takes to try and push something through the SBA. Knowing where your business stands in regards to securing money is very important when needing to make business decisions and the SBA process can string along business owners with no guarantee of success.

Filed Under: Business Loans Tagged With: Business Loans, SBA, small business loans

Small Business Loans Are Not For Small Business

August 24, 2011 By loans Leave a Comment

FDIC: Business Loans Fall

It has finally been long enough to prove that small business loans are not really for small business. Since the announcement of the Small Business Jobs Act of 2010, business owners have been waiting for the funds they heard about on the evening news.

It seemed at the time that these programs were nothing more than political mumbo jumbo and would provide little more than photo ops for statesman who said they thought the whole thing up. My contention has always been that if you hear good news, then good things will follow and the news being true or not is irrelevant. We are a reactionary economy and really all it takes is the planting of economic news in any form to control the behavior of the people contributing to it. So believing that help was on the way in the form of business loans was just as good as the loans themselves.

A shift in perception is all it would take to get the economy moving and people believing they would qualify for loans got them thinking about borrowing again. But getting SBA business loans in today’s economy is harder than ever before and that is how it should be. The government programs increased the guarantees to banks and lowered the cost for securing loans but in return the underwriting guidelines are tougher than ever.

The days of pushing through unworthy applicants are over and the irresponsible lending practices of the past only serve to punish the people who these loan programs were originally intended to help. If small business really drives the economy, then small business owners will have to look elsewhere for capital to get us out of this mess.

Do not let the news headlines fool you. The FDIC has announced that bank failures were slower in the 2nd quarter and that loan portfolios were growing. The growth was the first in many quarters and inter-bank lending and industrial loans made up the majority of it. So what does this mean? It means simply the business loan portfolio did not grow and does not really contribute to the positive report.

In fact loans to small business actually fell by nearly 3% in the quarter which means that the money promised to small business in late 2010 has not shown up yet. The problem here is that the Act was sold to the public as a means to help struggling small business make it through the rough periods and actually begin to hire in order to turn the tide for all of us. Anyone who expected that to happen through a government program probably shouldn’t be running a business.

So if you really need money what can you do? The good news is because of the headlines, people are looking to borrow again and learning to explore non traditional ways to secure financing. Unsecured business loans have always been an option and they have always been simple to get. Many are based on an owners personal credit score and the application process is fast and has no cost. Unlike small business loans, there are no restrictions on how the proceeds can be used so owners can pay off debt, invest in production or new employees. The spirit of the Small Business Jobs Act is alive and well but just not through the SBA.